Africa Business Communities

[Column] Bob Koigi: Mining in Sub Saharan Africa: Bane or blessing?

Sub Saharan Africa is increasingly becoming a mining hub as more countries in the region continue discovering lucrative resources and minerals that have catapulted them to international limelight while seeing numerous investors pitch tent.

From the oil find in Kenya’s north to Uranium in Zambia, these countries are now betting on these goldmines to bolster national purse, grow their economies and improve the wellbeing of their people.

According to a report by the World Bank dubbed ‘Mining in Africa, are local communities better off?’ the heightened extractive activity has lifted the share of natural resources in Africa’s exports. During 2001–14, extractive industries made up nearly two thirds of exports from African countries, oil and gas alone accounting for close to 50 percent of total exports, a substantial rise from the 48 percent share in the previous 10-year period.

But the curse associated with such finds is shaping up as protracted battles pitting government, locals and investors escalate with each of the three branded a villain depending on where you stand.

While investors count on these resources to grow their businesses and solidify their base in international markets, the government has been counting on the prospecting of these resources to attract the much needed foreign direct investment and earn from payment of royalties.

The locals, from where the resources are found, see this as an opportunity to get jobs and lift their livelihoods. But contribution of the sector to the GDP has always not translated to actual impact among the ordinary people. In Mali, for instance, large-scale mining accounted for about 7 percent of GDP in 2015, but less than 1 percent of the population was employed by the industry.

 Missing clear cut policies on compensating those displaced from the mineral rich lands has been threatening to put the brakes on the region’s efforts to reap the expected fortunes.

Though there have been substantial efforts to breathe life into the nascent sector, clear cut compensation strategies hold the key to unlocking the potential of the sector.

The legal lacuna in spelling out compensation terms which has been occasioned by lack of political will, and investors’ apathy at what they call mistreatment by the powers that be, have further blighted the prospects of the sector. The elephants in the room have always been sharing of revenues and environmental protection.

Tanzania has been a classic case study of the delicate balancing act in trying to fulfill the interests of all players.

With government spelling out its strict terms, which include a higher percentage of royalties and stake with the argument that it is acting on behalf of the people and protecting their interests, investors have termed the move as selfish, unrealistic and unsustainable with most of them closing shop or ceding some zones to the government.

Their argument is that prospecting is a capital intensive affair, which has seen them public fundraise through cash call to meet their investment targets.

Still bad blood and mistrust persists between the players. While governments have tried to put this in order by ensuring that the state, investors and local communities share the mining proceeds equitably, investors feel this is unfair because they do the bulk of work and have the greatest stake in the prospecting.

With more resources bound to be discovered and the extractive industry set to enjoy a major boom, the question still remains. Are the local people better off than they were when prospecting happened in their area? Have livelihoods improved?

To quote a study by the International Journal of Development and Sustainability , “It is undeniable fact that mining as an industry has contributed some marginal gains to the local economies by creating jobs, creation of markets and boosting of ancillary industries as well as expanding the local market economy. These gains are however, invariably being eroded by the higher burdens of marginalization and the drastic shifts in the local economic paradigms through loss of livelihoods and socioeconomic instabilities. All these have largely aggravated underdevelopment.”

Multiple award winning Kenyan journalist Bob Koigi  is the Chief Editor of East Africa at Africa Business Communities


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