Although Africa’s growth rates of 5-6% have been lauded by the International Monetary Fund (IMF),it comes amidst skyrocketing food and fuel costs that’s rapidly increased inflation and is plunging millions more into poverty, further delaying the attainment of its MDG’s. There is now an ever greater disconnect between high GDP growth rates and the daily reality of poverty ordinary citizens face. The spotlight is on new interventions that promote food security, kick-start a green revolution for agricultural productivity and finding solutions to ‘energy poverty’ in Africa.In his recent book The Bottom Billion, renowned Oxford economist Paul Collier warns of a nightmare scenario of the bottom one billion of humanity who are the most marginalized and structurally excluded from the (perceived) benefits of globalisation. About 60% of those in the ‘bottom billion’ live in Africa! He calls for new models on humanitarian aid, reconstruction, equitable trade and the development of a set of democracy and transparency charters.

The current super commodity cycle, especially in the minerals, oil and energy sectors provide many African countries with a unique window of opportunity to utilize massive income generated from mineral resources and invest them for sustainable growth and poverty reduction. Prices for most minerals such as platinum, coal, gold, titanium, coltan, uranium, oil are doubling and even quadrupling. African governments are cash flush with  forex reservesand FDI.The recent Africa Development Bank’s High Level Panel (HLP) report praised the high growth rate of many African economies, but cautioned that like all cycles, its not permanent. 

But rapid food and fuel price increases mean that many African governments have their work cut out and would have to introduce subsidies and VAT rebates on basic foodstuffs by directing portions of their mineral rents on food security schemes. A new wave of intensive explorations by both global energy multinationals as well as new demands by China and India for a vast range of African minerals and energy resources to fuel their double digit growth rates is seeing record FDI figures. Trade and investment between China and Africa is over $ 80 billion p/a and growing at 25% per year. But the vast majority of base minerals like coal, steel, gold, oil, are still mostlyexported and unprocessed.  

Moreover, the mineral boom has seen many African countries attract the bulk of their FDI primarily in the extractive non-renewable resource sector and enclaves, where there is a high degree of open cast mining, oil and gas flaring production that generates pollution and severe environmental degradation. This comes at a time when the global focus on climate change has called for greater investments in renewable technologies in post carbon economy. At the G-8 summit, the World Bank just pledged $ 300 billion dollars for African to develop the ‘infrastructure for a carbon-based economy.’

How does Africa face and balance complex and often contradictory challenges?

How can it convert this resource base and mineral boom opportunity to become a ‘development blessing’?The following set of interrelated strategies are proposed.  

1.       Confronting the Resource Curse  

It was OPEC’s founding Secretary General, Juan Pedro Perez Alfonso who referred to Oilas ‘that devils excrement.’ Indeed, oil and energy are central calculations in many geopolitical conflicts and have been the root cause of untold wars and suffering in many developing regions, including Africa. The notion of  the ‘resource curse’  has come to hauntrecent  African civil wars, where conflict- commoditiessuch‘blood diamonds’, copper, rubber and titanium-cobalt fuelled the recent Liberian, Sierra Leone and DRC conflicts. The UN Panel on Illegal Exploitation of resources in the DRC conflict, unpacked the complex range of interest groups ranging from MNC’s to local warlords involved in resource looting. Angola ’s long civil war has at various times been fuelled by oil and diamond sales, and oil producing zones like Cabinda are sites of massive human rights abuses by both military and multinational security forces. The African Union (AU) andAfrican Court on Human Rights should prosecute perpetrators and parties involved in resource conflicts and looting.  

At an investment level, the World Banks flagship energy project - the Chad-Cameroon oil pipeline has gone in meltdown with issues such as undisclosed royalty payments and disputes in production sharing saw the expulsion of international partners in the project. The Chad case starkly brings to light how oil/energy fuels instability, and with the ongoing   coup de etat attempts there, it reinforces the already authoritarian government of Idriss Deby. Meanwhile the blowing up of Shell and Chevron Oil pipelines in late June, shutting off over 200 000 barrels p/d adds a few dollars more to the ever sky-rocketing global oil price. These highlight the fissures and inability of oil rich nation states and MNC ’s to deal with equitable distribution of oil windfalls for the benefit of local communities and regions.                          

Another scar on Africa’s resource rich landscape is the horrid conditions under which its more than 600 000 artisinal miners work.Many of these informal miners are children who toil as much as 12 hours a day to eke out miserable existence amidst the most horrid conditions, without any health and safety protection. These ‘zones of silent suffering’ in an age of super commodity profits is the appalling Dickenson tragedy of our times. Perhaps one immediate ‘development quick win’ would be for the AUto regulate this sector by making it illegal to purchase unlicensed commodities and only certify commodities that have complied with UN social codes. Instead junior mines can be developed to encourage normal practices where social codes like the UN’s Global Compact are observed. Moreover, a mass program to get children out of dangerous artisanal mining and into schools and community projects will go a long way in achieving MDG’s and social stability.   

2. Investing mineral windfalls to meet MDG’s  

While African commodity and mineral prices are intoxicatingly high, governments face ever sobering and even declining developmental statistics.The ADB’s recent High Level Panel (HLP) cogently, observes that:

“…. the continent is still home to some 300 million Africans living on less than $1 a day, and Sub-Saharan Africa is the only region not on track to meet the MDG target for income poverty. Much more must be done!” (ADB, 2008).  

Indeed much more can be done and for countries likeAngola, currently pumping out2 million barrels per day at $ 140 bpd,massive windfall injection of capital that can go long way for  social development inclusion. The economic choice and question is should windfalls be spend profligate projects or be part of integrated long term industrial and development strategies.  

A welcome development was the recent UN Economic Commission for Africa ’s (UNECA) Round Table on ‘National Resource Management for Poverty Reduction’ hosted in March 2007. UNECA have recognised that prudent resource management and governance systems should be introduced state develop capacity, systems to manage resources. The roundtable identified key areas for interventions, including i) Natural resource governance and promotion of investment and social codes; ii) Intergeneration equity, iii) the rise of emerging actors and new bargaining power available to African states, iv) Capacity building  and technical support to manage resources.  

Significantly, it calls for new economic diversification strategies such as investment in intermediate technologies and value-adding beneficiation projects. Some innovative tools include developing knowledge exchanges for peer learning amongst African states.  

However, policy prescriptions alone are not enough, given that commodity dependence countries currently facethe‘Dutch disease’ phenomena, wheresudden price increases  create  currency volatilityandFDI is confined to the narrow mineral sector that is capital intensive, with very little job creation prospects. This effect of ‘crowding out’investment and innovation in the manufacturing and agricultural sector has downsides too. They not only make these sectors uncompetitive but there is generally verylittle multiplier benefits for the broader economy, thus delaying an industrialisation path. This is a double edge economic sword that haunts many resource dependent countries.  

3. Promoting Revenue transparency and civil society oversight  

A third pillar, and one that is gaining increasing prominence in international development discourse and gaining traction even in resource rich countriesaremoves to  promote revenue transparency within the extractives industry. The Extractive Industry Transparency Initiative (EITI), of the G-8 comes at a time when the good governance agenda and aid effectiveness seen as critical success factors for development impact.   

The EITI challenges corporations to ‘publish what they pay’ to governments in terms of taxes and royalties to host governments, it simultaneously challenges governments to ‘publish what they receive’ and then publish what they spend. EITI uptake is robust with a total of 23 EITI candidate countries having signed up for EITI validations and 10 have produced yearly reports. By ‘institutionalising  transparency’, it also opens up new spaces for civil society to better engage governments in a variety of ways ranging from public and municipal budgets, to tracking health and education expenditures as well as monitoring MDG’s. The campaign can enhance social accountability as well and corporate accountability.   

On a positive note, civil society is moving in and the Publish What You Pay (PWYP) coalition, supported by Oxfam, OSI and Save the Children UK is a timely one designed to promote public and media awareness on the importance of tracking resource and revenue flows. Many of these coalitions are growing in Africa and enhancing social accountability.  

In the DRC, there are calls for mining legislation to be redrafted and modified to ensure royalties and production agreements are in the public domain. In Uganda for instance, civil society organisations are tracking the education budget and are better informed. They demanding how aid track its use, impact and assess how its meets MDG educational objectives.  

One innovative way is to mainstream revenue transparency in NEPAD programs byintegrating‘ resource and revenue transparency’ as an essential governance criteria factor  in country peer review mechanism reviews.  

Africa also face a tenuous geo-political crucible as its estimated that by 2015 as much as 25% of US oil imports will emanate from Africa’s west coast. The flurry of investment and the scale and scope of the sector is mind-boggling, with oil and mining MNC ’s now occupy the upper tier of Fortune 500 ranks. Consider ExxonMobil, the worlds largest oil corporation just declared a $ 10 billion quarterly net profit (the highest in its corporate history). Elsewhere on the continent.Chinese state owned resource corporations continue exploration unabated, with China’s National Petroleum Company’s (CNPC) just signing off a new $ 5 billion deal with the Niger government. Such energy investments are peppering the African energy investment landscape, and every new deal brings its own mode of revenue models, incentives, human rights issues, production agreements and benefits/risks matrix. State capacity and capability in managing these multiple investments and revenue flow management are crucial.  

In this light Transparency International (TI) recent report,‘Promoting Revenue transparency 2008 Report’ on oil and gas companies makes interesting reading. Its research on revenue transparency of 42 oil companies in the following areas: i) Corporate public disclosure of payments, ii) disclosure of operations, and iii) public reporting of anti-corruption programs.The findings show that progress towards revenue disclosure uptake is slow, a common practice and wide variation exists in company practice. For instance disclosure of different reporting formats and measurement and interpretation of information is very difficult, especially for civil society. Still, this is a positive step and much more needs to be done in terms of awareness raising, a commitment to anti-corruption capacity building and developing a common system of revenue disclosures.  

4) National Patrimony and Local Economic Development  

The final challenge and one gaining increased public attention is ensuring that mineral resources benefits all citizens.National patrimonyand sustainable use of assets are now important policy objectives as mining assets and rights in host countries ultimately belong to its citizens.   Mining and the extractive industries by natureare non-renewable and while the super mineral cycle have seen a boom in many mining enclaves, the challenges of local economic diversification and developing  alternative green energy critical.  

Another key challenge is in local communities where resources are extracted. Local Economic Development (LED) plans promoting value adding small scale industries need support.Corporations should be promoted by assisting local SMME’s in procurement supply chains and technical support. The recent report by ActionAidSA on AngloPlats mining in South Africa’s Bushveld mineral complex has exposed the sensitive fault-lines when benefits derived from mining are not spread locally and where poverty exists in a sea of plenty.Much more social investments must go into rural food production, SMME development, skills development technical support.Governments and corporate need to co-invest in range of local public infrastructure such as rural feeder roads, community schools, libraries and clinics in partnership with local government.  

In short, for Africa and SADC to make the most of its mineral resource base, it requires enlightened leadership and vision by policy makers, corporate and communities, who can navigate the complexities of volatile global market.  

Moreover it requires regional and sub-regional institutions to integrate new models of resource governance in the planning and protocols. For instance SADC can upgrade its energy protocols to integrate resource transparency.Corporates can do more by adhering to global social codes and moving beyond the triple bottom line in an era of sustainable development.  

Finally civil society and community participation essential in enhancing democratic governance and oversight in an era of resource scarcity and quest for sustainable development within intergenerational equity.