Africa’s natural resources no longer a curse?

The Hollywood blockbuster movie, Blood Diamond, tells a gripping story of how diamonds fuelled Sierra Leone’s 11-year civil war, which erupted in 1991. It depicts kidnappings, use of child soldiers, amputations, rape, killings and destruction of bridges and hospitals, among other atrocities.

The movie brought world attention to the campaign against “blood diamonds”, described as diamonds used to finance conflicts. Sadly, West and Central Africa have been fertile grounds for blood diamonds, notes the World Diamond Council, a body that represents the diamond traders.

One often hears that mineral resources are a curse rather than a blessing. That may be an exaggeration, but for the people of the Central African Republic, currently caught up in a war fuelled by diamond mercenaries, the statement rings true. Conflicts in the Democratic Republic of the Congo (DRC), Sudan and South Sudan have also been linked to the fight over control of mineral resources.

East Africa bureau chief of the New York Times Jeffrey Gettleman highlights the curse/blessing dichotomy. The DRC, he points out, has an “embarrassment of diamonds, gold, cobalt, copper, tin… trillions’ worth of natural resources” including deposits of tantalum, an element used in computer microchips. “But because of never-ending war, it is one of the poorest and most traumatised nations in the world.”

Other mineral-rich countries like Zambia, Mozambique, Mauritania and Guinea, while not at war, present an unnerving paradox of poverty amid plenty. Guinea has “some of the planet’s most coveted mineral stocks”, writes the Financial Times, including 40bn tons of bauxite, the world’s largest reserve, over 20bn tons of iron ore, diamonds, gold and undetermined quantities of uranium. But 55% of Guinea’s 11m people live on less than US$1.25 per day, states the African Development Bank (AfDB), while it ranks 178 out of 187 countries on the 2013 UNDP Human Development Index, which measures a country’s living standards.

A mining vision

Guinea’s mineral wealth and its socio-economic situation mirror that of the continent. UN Economic Commission for Africa (ECA) data show that the continent has 54% of the world’s platinum, 78% of its diamonds, 40% of its chromium, 28% manganese, among others. “Nineteen out of 46 countries in sub-Saharan Africa have important reserves of hydrocarbons, oil, gas, coal or minerals and 13 countries are in the process of exploring additional reserves,” notes UNDP. Yet the World Bank says Africa is the world’s poorest continent.

Carlos Lopes, ECA executive secretary, insists in a blog post that “Africa’s natural resource is a blessing and not a curse”, but wonders why “the continent continues to struggle with limited economic transformation, low or no resource rent and scarce employment”. It should be a blessing, says AfDB – a rather polite way of saying the blessing has been slow in coming.

In 2009, African Union (AU) leaders adopted the African Mining Vision (AMV), a framework for developing mineral resources. The AMV makes a number of recommendations, including better negotiations of mining deals, more attention to the environment, value addition to natural resources and capacity training for Africans. Its goal is to ensure countries earn more from mineral resources to stimulate socio-economic growth. Mining earnings should be invested in roads, rails, ports, energy, water and telecoms and there should be more resource-processing local industries, a knowledge economy and an active service sector. The AMV envisages institutions strong enough to stem illicit financial flows.

Renegotiating mining deals

African leaders approved the AMV’s action plan in 2011. Last December, the continent’s ministers of mineral resources, civil society and other experts gathered in Maputo, Mozambique, to launch the African Minerals Development Centre (AMDC) to help implement the AMV plans.

Participants at the Maputo conference spoke with unusual candour. Antonio Pedro, director of the ECA sub-regional office for Eastern Africa, told the ministers: “The continent is impatient, expectations are high and benefits are not equally felt.” The buzzword was “reform”, which is a word elastic enough to mean renegotiating, if need be, existing mining deals or increasing mining taxes. Fatima Denton, of ECA’s Special Initiatives Division, underscored that contract negotiations must “reflect the true worth of our resources”, inferring that this hasn’t been the case. She is probably right because an expert committee that reviewed 61 mining deals in the DRC announced in 2009 that they were all bad deals. It recommended cancelling 22 of those deals and renegotiating 39.