Africa strives to move from neo-colonial mining mode

The Africa Mining Vision is an example of the 'breakout' from the mining enclave, a neo-colonial enterprise, to transformative industry through the struggle to control Africa's resources, writes Alhassan Atta-Quayson.

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AS the African Union marks 50 years since its establishment, one question that lingers on the minds of its people is the extent to which the continent has 'broken out' of the colonial approaches used to extract its natural resources, especially mineral resources. A related question is the extent to which these vast resources have contributed to structural transformation or otherwise on the continent.

The vastness of the continent's mineral resources - though declining since they are finite - is not in question, after luring European colonialists into Africa some centuries ago. Thanks to new discoveries - Africans have not been adequately informed of the types, quantities and qualities of the various minerals in their land - the continent continues to retain its global position as a major producer and exporter of mineral resources in addition to hosting a relatively bigger chunk of proven reserves of various mineral resources (see Table 1).

Colonial mining model

The modus operandi for the exploitation/extraction of mineral resources on the continent has however largely not changed after European colonialists were 'politically' returned over five decades ago. This is in spite of recent (from 2008 onwards) moves by African governments to break out of the mining 'enclaves' operative in various countries with the adoption of the Africa Mining Vision (AMV) by AU heads of state and government in February 2009.

The search for and control of raw materials, including mineral resources, is probably the most important incentive for European penetration and eventual partitioning of the once-vibrant continent of Africa. With this motive, mining activities were undertaken with the overarching aim of extracting raw materials to power foreign economies in diverse ways. Consequently, as countries politically fell under European control, so did their rich and vast mineral resources. The approach to extracting mineral resources under these circumstances is not difficult to describe: high capital intensity, dominance of imported inputs, payments of scanty rent to traditional authorities, little or no attention to environmental management, disregard for human rights, no consideration for local enterprise development and development of linkages, and exportation of minerals produced in their raw form.

This model stands in contrast to the approach in Africa on the eve of the colonial period. The cases of gold, iron and copper illustrate this point. Prior to the arrival of European colonialists, west and southern Africa were major exporters of gold to the rest of the world. Modern-day Ghana, previously referred to as the Gold Coast, was for several years the leading producer of gold in the world.

The case of iron and its related products is even more telling. Yatenga in modern-day Burkina Faso, where there existed about 1,500 smelting furnaces in production, epitomises how vibrant pre-colonial mining in Africa was and its strong linkages with the rest of the local economy. The quality of iron ore and related products made in Yatenga and several other places across the length and breadth of the continent meant that even in the face of European imports, local iron ore production survived into the early 20th century. Finally copper production in Africa, from ancient Egypt through parts of Niger, Mauritania and central and southern Africa, also highlights the continent's mining credentials prior to the current colonial model that dominates African mining. In all these pre-colonial mining activities, production processes that were strongly associated with other economic activities covered prospecting, mining, smelting and forging in indigenous ways.

The colonial model of mining has largely remained, although there have been some minute cosmetic changes over time. In the aftermath of the ouster of European colonialists, African governments decided to take control of their mines as well, noting its relevance - jobs, income and foreign exchange - but failed. While that failure is not in much dispute, the causes of the failure continue to be the subject of debate.

Critical voices in Africa point fingers at the nature, design and performance of the global metals market and the US' pegging of her currency against gold value (price) thereby fixing the gold price for some time. These circumstances determined the amount of revenues earned by African governments and the proportion that could be re-invested in mining activities. Those revenues were highly volatile and often at the low ends of the range. This had obvious implications on re-investment, recruiting and keeping expertise and skills, and research - key factors of success in mining. Yet others are quick to point to corruption, inefficiency and lack of foresight in the sector after African governments began taking control of the mines.

The Lagos Plan of Action

By the early 1980s, mining in most countries in Africa had nearly collapsed amid the dire challenges that many African economies were facing around that time. These circumstances forced African leaders to draw up a policy whose implementation had a lot of promise for industrialisation and economic transformation. This policy was the Lagos Plan of Action (LPA). The LPA had some thought on how Africa's vast natural resources (including minerals) could contribute to structural transformation. Its implementation would have clearly improved Africa's economic standing and more importantly broken the widespread colonial mining enclaves on the continent. Unfortunately the policy did not see the light of day.

Instead, international financial institutions (particularly the World Bank and the International Monetary Fund), having emerged as lenders to African economies around that time, reconstituted themselves into economic planning agencies and in the mid-1980s prescribed policies for African governments. These policies were contained in the Economic Reform Programmes (ERP) and Structural Adjustment Programmes (SAP) that challenged the LPA and more importantly deliberately opened up African markets to the detriment of local production. With regard to mining, governments were asked to divest and concentrate instead on providing an 'enabling environment' to attract foreign investors. Besides onerous incentive packages (largely fiscal) offered, mines owned and controlled by governments were 'handed over' on a silver platter to foreign miners.

The ERP and SAP succeeded in attracting investment to the mining sector but failed in addressing the key issue of transforming the sector into a vehicle for sustainable and all-inclusive development. Consequently Africa's mineral resources have not contributed positively to structural transformation. Regrettably, some conflicts on the continent have been linked to extraction of mineral resources.

In many parts of Africa, destruction of livelihoods to pave the way for large-scale mines has been a major source of conflicts as companies hardly pay 'adequate' and 'prompt' compensation to affected farmers and landowners, as required by many statutes on the continent. Various forms of pollution, especially water pollution, and destruction of properties (due to blasting) have also emerged as major contributory factors to mining-related conflicts on the continent.

In the past few years, the failure of the mining regime to produce fair returns to various stakeholders (especially governments) has also become a major source of contention, resulting in what has been described as 'resource nationalism'. These weaknesses are illustrated by how the recent mining boom lifted mining profits through the roof but left African governments with a disappointing share. As communities go through various challenges in containing capital-intensive large-scale mines and the general public fail to benefit from mining because of continued utilisation of the colonial mining model, African governments now feel the brunt from the receipt of inadequate financial benefits.

The Africa Mining Vision

These circumstances have persuaded African governments to rethink the operative mining model. A key development in this rethinking process was the adoption of the AMV and the processes initiated since then towards the realisation of the vision. The vision rightly acknowledges that 'Africa's efforts to transform the mining sector away from its colonially-created enclave features have so far met with very limited success'.

The AMV thus set out its primary purpose as offering 'a framework for integrating the sector more coherently and firmly into the continent's economy and society'. Whereas the AMV is viewed as a breakthrough as far as the goal of harnessing mineral resources for sustainable and all-inclusive development is concerned, challenges and hurdles still remain in the way of realising the vision. While emerging parallel initiatives such as the Natural Resources Charter and the European Union's Raw Materials Initiative could challenge the realisation of the AMV, of more importance is how African governments can 'walk the talk'. The regulatory framework must change to be AMV-compliant following required changes in national mining policies, mining contracts must be renegotiated, and Africans, particularly those with responsibilities, must change their ways.

 Alhassan Atta-Quayson is Programme Officer with TWN Africa. This article is reproduced from African Agenda (Vol. 16, No. 2).

*Third World Resurgence No. 278, October 2013, pp 19-20