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Africa’s mineral resources fuel development elsewhere but continent poor, dependent – Francois

Even though Africa’s mineral resources are fuelling growth and development in many industrialised and emerging economies of the world, Africa still remains poor, under-developed and dependent on donor assistance for national budget support, Jean Noel Francois, the Acting Director, Department of Trade and Industry at the African Union (AU) Commission has said.

He was speaking at the opening of the second conference of African Ministers responsible for mineral resources and development which started today December 12, 2011 in the Ethiopian capital Addis Ababa.

The theme of the conference is “Building a sustainable future for Africa’s extractive industries; From vision to action.”

Mr. Francois reiterated the fact that Africa consumes very little of its own mineral resources and exports most of it as raw materials, “with little or no local value addition and beneficiation,” he said.

He said the 2000 commodity boom and price increases that triggered competition for Africa’s natural resources and the willingness of the emerging global players to link mineral resource exploitation to infrastructure development, provided Africa with a unique opportunity to extract better benefits from its mineral resources to promote broad-based and integrated growth and economic development.

According to him the presence of this window of opportunity compelled African leaders and policy makers to renew their commitment to developing common and consistent positions on issues concerning the management of Africa’s mineral resources. This development, he said led to the convening of the first African Union Conference of Ministers Responsible for Mineral Resources Development.
Making his presentation, Dr. Stephen Karingi, the Director, Regional Integration, Infrastructure at the ECA expressed frustration over why Africa has to continue to be poor given its abundant natural resources wealth!

He said, “we are all well aware that since about 2003, mineral commodity prices have surged on account of high demand in emerging nations like China, India and Brazil which are going through an unprecedented phase of industrial expansion. Yet we are further told that Africa has not really benefitted from these high prices due to a number of structural weaknesses in its mineral sector.”

He pointed out some of the weaknesses as the fact that “we are told that fiscal frameworks in Africa’s mineral sector are not optimised – that we have signed mineral development agreements that provide far more incentives and benefits to mining companies than anyone else.”

Adding that, “we also now know that during the recent – and continuing boom I must add – our own share of the windfall earnings have been miniscule compared to what the mining companies have realised.”

According to Karingi, “the  figures are there for all to see – in 2010 alone,” he said, “net profits for the top 40 mining companies grew by 156% to $110 billion and the net asset base of these companies now exceeds $1 trillion.”

He said the high earnings in the last seven years or so prompted countries like Australia and India to increase taxes on windfall earnings, “and yet here in Africa we are hesitant to do so on account that we might frighten away the goose and hence have no more golden eggs! I am not sure that so far, we do have the golden eggs and how many!,” he retorted.

He argued further saying, “we are also told that part of the reason we do not benefit as much from the mineral sector is that our economies lack various economic and social linkages to the sector!” Adding that “today African mining regimes remain narrowly focused on the direct export of strategic minerals to industrialised countries at the expense of African development. This is a situation which has changed little since colonialism and is unlikely to change unless we deliberately do something to change it!” He said.

The conference being organised by the African Union Commission (AU) and the Africa Economic Commission (ECA) brings together senior officials in Africa’s extractive sector to look at the way forward on how African countries can benefit from the large mineral deposits on the continent. It ends on Friday December 16, 2011.

By Emmanuel K. Dogbevi, in Addis Ababa, Ethiopia

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