"Africa loses from poor management of natural resources, says Lopes "

UNECA Release: "Africa loses from poor management of natural resources, says Lopes "

Africa loses from poor management of natural resources, says Lopes

ECA Press Release 174/2012

Addis Ababa, 22 October, 2012 (ECA) – UN Under Secretary-General and Executive Secretary of the Economic Commission for Africa (ECA) has come out strong against the immense losses Africa incurs yearly through lack of adequate strategy and focus on the management of its natural resource base.

In a statement at the opening of the 8th African Development Forum which kicked off in Addis Ababa today, Mr. Carlos Lopes drew the attention of African policy makers and politicians to four situations in which deals of global magnitude are made on the African continent with little or no financial benefit to the impoverished people and their economies.

He cited the Glencore-Xstrata merger which is expected to create a US$ 70 billion mining powerhouse that will control over half of the global zinc and copper markets, but  noted that little of the value created is likely to benefit the Democratic Republic of Congo, the host country.

Lopes described the recent South African  Marrikana incident as one where there is “power asymmetry between mining companies and their workers, and the lack of institutional protection of workers leaves them exposed to poor working conditions and minimal remuneration”.

He recalled that while the Marikana tragedy resulted in the death of 34 people,  the  news headlines wrongly focused on the violence and economic impact of the incident, while “there is an untold story of marginalised workers and limited communal benefits”.

“It is about workers who cannot survive on R4000 a month because they have to pay R800 rent for one room in corrugated iron shacks, pay their living expenses and also send money to their families back home”, he said.

He also mentioned “the annual losses of $629 million from illegal fishing along Africa's coastline”, saying it “could have bridged the financing gap for infrastructure development in a country like Mozambique, whose economy depends on fisheries”.

Stressing the theme of this year’s Forum which is “Governing and Harnessing Natural Resources for Africa’s Development”, Lopes said “time has come for Africa to profit from the 156% increase in mining companies' profits”.

He did not stop at cataloguing the ills, but proposed four principles that Africa could adopt to ensure that the vast natural resources of the continent effectively serve the people of this region and transform their economies.

Focusing on mining which one of the Forum’s sub themes, he proposed that rather than focusing mainly on collecting taxes on the sector, Africa ought to be using the sector and its resource rents to drive socio-economic development.

“This means investment in infrastructure, research and human capital development, through conditionality for local content. This is what other regions have done; this is what Africa needs to do”, he said.

He insisted that Africa’s natural resources sectors must become socially and environmentally accountable, implying increased public participation, “so that a broader share of citizens contribute to policy and benefits from economic and social returns in the natural resources sector, including gainful employment.”.

His third proposal is for Africa to use its natural resources as a springboard for diversification and eventual industrialization.

“This would require policies that deliberately encourage innovation and that establish local content goals. It would require ensuring backward and forward linkages to promote internally articulated economies and regional value chains”, he explained.

In the fourth place, he urged Africa to continuously build human and institutional capacities, to create knowledge-based and competitive natural resources sectors.

“This requires strengthening our bargaining power to negotiate better contracts. Notable examples are unjustifiable tax holidays, illicit financial flows, or poorly articulated resources for infrastructure swaps”, he cited.

Mr. Lopes  suggested the building up of domestic capacities and skills to participate in the natural resources value chain, stressing the need for Africa’s institutional frameworks and political processes to steer the natural resources sector in such a way that its supports transformation.

He said although seven of the 10 fastest growing economies in the world are in Africa, the continent continues to host six out of the ten most unequal societies in the world.

Therefore, “our challenge is much more than scaling up current good growth performance. It is also to take into account the interests of the most vulnerable”, he stated.

He acknowledged progress made by formulating credible blue-prints such as the African Mining Vision and the Land Policy Initiative, “which, if implemented, would ensure inclusive growth and economic transformation”.

Mr. Mekonnen Manyazewal, Minister of Industry of the Federal Democratic Republic of Ethiopia; Dr. Nkosazana Dlamini-Zuma, Chairperson of the African Union Commission; and Mr. Aly Abou Sabaa, Vice President, Sector Operations, at the African Development also addressed the opening session ofADF 8.

The newly appointed Chairperson of the African Union Commission, Dr. Nkosazana Dlamini Zuma pointed out that since Africa was colonized because of its natural resources, its future will be determined by the manner in which the continent's natural resources are utilized.

She urged ADF participants to develop ideas that help decision makers to assess the state of affairs today.

"The Forum should help to chart a path to the future in which Africa uses its natural resources productively, in a sustainable manner, to the benefit of its people; indeed, a future in which the use of our natural resources leads to Africa's development and a future that claims an equal and dignified place in the global community of nations," she said.

For his part, Mr. Aly Abou-Sabaa, vice president of the African Development Bank (AfDB) speaking on behalf of Dr. Donald Kaberuka, President of AfDB, said that the African continent has the potential for its wealth of natural resources to serve as a robust catalyst for economic growth, poverty reduction and sustainable development.

He outlined some of the critical factors that are needed for Africa to shift from being "resource-cursed" to "resource blessed", citing the promotion of responsible investment for broad-based growth; strengthening governance for enhanced transparency and accountability; and building capable and responsive states for human development and socio-economic effectiveness.

Mr. Manyazewal officially declared the meeting opened by sharing Ethiopia's economic development efforts which he attributed to the Growth and Transformation Plan which runs from 2010 to 2015.

He called on participants to translate the perspective they will gain from Forum into action.

Issued by:

ECA Information and Communication Service

P.O. Box 3001

Addis Ababa Ethiopia

Tel: 251 11 5445098 Fax: +251-11-551 03 65

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