World Bank study calls for increase in mining procurement in West Africa

As one of the biggest mining conferences in Africa, Mining Indaba takes place in Cape Town, South Africa, one of the countries in Africa hosting some of the biggest mining companies on the continent, a World Bank study is calling for increased local procurement in the sector to promote economic growth.

In a press release issued Monday February 6, 2012 the World Bank study says mining companies can boost economic growth in West Africa by purchasing more equipment, supplies and services from local companies.

The study titled, “Increasing Local Procurement by the Mining Industry in West Africa”, shows that raising the share of local procurement by mining companies would spread the benefits of mining more evenly across a country’s economy, creating jobs and stimulating the sustainable development of local enterprises.

The study focuses on Ghana, Guinea and Senegal, and recommends that West African governments should work with mining companies, suppliers, and civil society to strengthen definitions and indicators for measuring local procurement, as well as urging mining companies to develop and implement local procurement plans.

Even though mining has been going on in Africa for over a century, African countries do not seem to benefit very much from the sector. Foreign mining companies operating on the continent are reported to make huge profits from their operations.

For instance in the first six months of 2009 gold mining companies in Ghana repatriated a total of $469.64 million from the country and the top 40 mining companies operating in Africa reportedly made net profits of about $110 billion in 2010 alone. And these companies have a net asset base which exceeds $1trillion.

Commenting on the report, Obiageli K. Ezekwesili, the World Bank’s Vice President for the Africa region, said, buying local goods and services is a catalyst for private sector development and sustainable growth, adding that, a key message of this study is that mining companies need to be transparent about informing local communities on procurement opportunities, so that these communities can benefit economically from mining operations.

“Mining companies should not only extract wealth, they must inject opportunity,” she said.

The study indicates that West Africa supplies about nine percent of the world’s bauxite, and eight percent of its gold. This contribution, it says is expected to grow, with large gold, iron ore, and bauxite projects in advanced planning stages, along with unexploited uranium, copper and diamond deposits across the region.

According to Paulo de Sa, manager of the Oil, Gas and Mining unit in the Bank’s Sustainable Energy Department, local procurement by mining companies can bring significant benefits to a wide range of stakeholders in resource-rich countries.

“Due to the large scale of current and potential mining activity in West Africa, countries have a huge opportunity to realize these socio-economic benefits,” he said.

By Emmanuel K. Dogbevi

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