African Development Forum discusses how Africa can benefit from its natural resources

By Emmanuel K. Dogbevi

There is no doubt that the African continent is rich in natural resources.

The continent with an estimated over one billion population is rich in renewable and non-renewable natural resources, however, there is general agreement that the continent does not benefit from its vast resources. These resources are mined and exported in their raw form.

Africa produces more than 60 metal and mineral products and is a major producer of several of the world’s most important minerals and metals. But issues about Africa’s natural resources are vexatious.

Some of the minerals mined out of Africa include gold, diamond, PGE’s, silver, iron, uranium, bauxite, manganese, chromium, nickel, bauxite, cobalt and copper. Platinum, coal, and phosphates are also mined on the continent.

Africa also has rich forests, marine and aquatic resources that have been exploited for years, but Africa’s share of the revenues, “have been miniscule compared to what the mining companies have realised,” said Dr. Stephen Karingi, the Director, Regional Integration, Infrastructure at the United Nations Economic Commission for Africa (UNECA) in 2011.

Dr. Karingi has also said the top 40 mining companies operating in Africa reportedly made net profits of about $110 billion in 2010 alone. And these companies have a net asset base which exceeds $1trillion.

Information available also indicates that mining has come to dominate the export earnings of many African countries. In 2005 minerals accounted for more than 80% of exports in Botswana, Congo, DRC, Guinea, and Sierra Leone and more than 50% in Mali, Mauritania, Mozambique, Namibia and Zambia. By 2008 sustained demand from a burgeoning Chinese economy had seen prices for minerals reach new heights.

Jean Noel Francois, the Acting Director, Department of Trade and Industry at the African Union (AU) Commission has also said in 2011 that even though Africa’s mineral resources are fuelling growth and development in many industrialised and emerging economies of the world, Africa still remains poor, under-developed and dependent on donor assistance for national budget support.
He further reiterated the fact that Africa consumes very little of its own mineral resources and exports most of it as raw materials, “with little or no local value addition and beneficiation.”

The Eighth African Development Forum (ADF VIII) held from October 23 to 25, 2012 sought to discuss these issues and chart the way on how Africa can harness it’s natural resources to benefit its people.

The conference jointly organised by the UNECA, the African Union Commission and the African Development Bank is under the theme “Governing and Harnessing Natural Resources for Africa’s Development”.

“The ADF, an ECA) flagship biennial event created in 1999, is a multi-stakeholder platform for discussing the effectiveness of Africa’s development policies and strategies…. It is to establish an African-driven development agenda that reflects consensus, and has the  potential to yield specific programmes for implementation,” the conference concept paper has said.

The Concept paper further states that the Forum will build on the outcome of the Fifth Joint African Union (AU) Conference of African Ministers of Economy and Finance and ECA Conference of African Ministers of Finance, Planning and Economic Development held in March 2012 in Addis Ababa under the theme “Unleashing Africa’s potential as a pole of global growth” and the analytical work carried out in the Economic Report on Africa 2012 under the same theme.

It adds, the platform offers as much an opportunity to build partnerships as for the occasion to further deepen discussions on implementation of: the Africa Mining Vision (AMV); the AU Declaration on Land; the Framework and Guidelines for Land Policy in Africa (F&G); the Implementation Strategy for the Accelerated Industrialization Development for Africa (AIDA); Voluntary Guidelines on the Responsible Governance of Tenure of Land, Fisheries and Forests; and other frameworks for best practices in the management of mineral, land, fisheries and forest resources.

The overall objectives of the Forum are to  raise awareness and cultivate deeper understanding of the role of Africa’s natural resource governance in its economic transformation. It will also provide an opportunity to discuss frameworks, policy options and strategies to better integrate mineral, land, fisheries and forest management into national resource management programmes, strategies and policies.

And some of the specific objectives include to demonstrate the role that Africa’s mineral, land, fisheries and forest resources could play in its broad social and economic development; Deliberate on the challenges that mineral, land, fisheries and forest resources mismanagement pose to Africa’s development, and offer governance and management models that can best support the continent’s transformation; and promote sharing of models, experiences, best practices and lessons learned in enhancing the role of natural resources in development in Africa among others.

Some of the expected outcomes include the following; Better-informed stakeholders about the role of natural resources in Africa’s development; Deeper understanding of stakeholders on how to translate frameworks and visions for natural resources management into practical policies and actions; and Strengthened capacity of stakeholders to advocate for prudent management of minerals, land, fisheries and forest resources to enhance their contribution to development.

African countries must go beyond talk to action. The global economic crisis and the eurozone crisis are enough evidence for action now.

The citizens of Africa have waited long enough. The teeming youth of Africa need jobs.

The 2012 African Economic Outlook (AEO) argues that youth unemployment figures will increase unless African countries move swiftly to make youth employment a priority, turning its human capital into economic opportunity.

The AEO has also warned of looming domestic and external risks posed by the continued economic crisis in the eurozone.

This crisis, according to the AEO, threatens to constrain growth by lowering the demand for Africa’s exports, reduce tourism earnings and financial flows from foreign direct investments, Official Development Assistance and remittances.

Dr. Emmanuel Nnadozie, the Director of Economic Development and NEPAD Division, United Nations Economic Commission for Africa (UNECA) has also argued that, “Exporting raw materials is equal to exporting your jobs.”  He indicated that, processing those raw materials on the continent would offer jobs to citizens and add value to exports.

According to him, it is important to get Africans into the global value chain. He said that can be done through natural resource governance, knowledge and human resource development and growth that is strong and broad-based.

Ghana expected to shift attention from mining to oil

By Emmanuel K. Dogbevi

The government of Ghana is expected to shift its attention from the mining sector following the emergence of the country’s oil sector, which is seen to be leading the economy since commercial production began on December 15, 2010, according to a Business Monitor International (BMI) Ghana Mining Report for the third quarter of 2011.

The report says the shift of attention from the mining sector over the next few years will be necessitated by a drop in revenues from mineral output, expected to fall to 2.4% of GDP from 7.4% in 2010 by end of BMI’s 2011-2015 forecast period.

Despite the fall however, BMI says it still sees a healthy mining sector growth going forward, “particularly as regards gold production, as a number of new projects come on line.”

“We see further opportunities outside of the gold sub-sector with Ghana’s bauxite industry hoped finally to begin operating at its full potential following the acquisition of a majority share in the country’s Awaso mine by Chinese mining firm Bosai Minerals Group, ” it says.

The takeover is expected to coincide with the building of an integrated aluminium production facility at the mining complex and we project overall bauxite production to increase by more than 60% over the forecast period, it indicated.

According to BMI, Ghana’s share of global gold production has risen gradually in recent years as foreign investment in the mining sector has increased.

“The country’s contribution to African gold production has grown more markedly still, increasing from 14.1% of overall output in 2006 to 19.7% in 2009 while gaining ground on the continent’s largest producer, South Africa. We expect production to continue to trend upwards over our mid-term forecast period,” it says.

Citing preliminary statistics from Ghana’s Chamber of Mines, it says the country’s gold production grew at 2.5% in 2010 to 2.97 million ounces reflecting the positive trend in international gold prices over the year.

It says gold production will continue to drive industry growth with several major new projects due to come on line over its mid-term forecast period.

“The largest of these, Newmont Mining’s Akyem mine in the country’s Eastern region will add an additional 500kozpa to Ghana’s production when it begins operations by end-2013,” it adds.

Mining has been going on in Ghana for more than 100 years. Oil production started on December 15, 2010.

Meanwhile, Ghana’s Minister of Finance, Dr. Kwabena Duffuor said the government is expecting to earn GH¢1.2 billion from oil in 2011.

On Thursday July 14, 2011, when he went to Parliament to seek approval for a supplementary expenditure for 2011, he said the estimate was based on the new oil price assumption of $100 per barrel as well as the revised estimated average oil production of 84,737 barrels per day and the new exchange rate assumption, total revenue from oil including the National Oil Company’s carried and participation interest.

He however indicated that, of this amount the Benchmark Revenue is estimated at GH¢923.4 million.

The remaining, he said is the amount due the Ghana National Petroleum Corporation (GNPC) as its equity and cash ceded to it.

Source: ghanabusinessnews.com

$5 billion invested in mining in Ghana

By Emmanuel K. Dogbevi



More than US$5 billion have been devoted to new mining projects in Ghana in the past two decades, the President of the International Council on Mining and Metals has said.

Dr. R. Anthony Hodge, who is a leading authority on sustainable development in mining, said in an article published on the online version of the Sunday Monitor, a Ugandan publication that “during that time, the national poverty rate has fallen 12 percent.”

He said of Ghana’s 138 districts, its four mining districts have the lowest poverty levels in the country outside the capital, Accra, adding “effective disease control programmes have been a key component of this success.”

The article which appears to be a strong reaction to critics of the mining industry is titled “How to use Africa’s natural resources sustainably.”

Dr. Hodge who has worked as a professional engineer and consultant to industry and as an advisor to governments in his career cited numerous success stories in African countries where minerals are being mined.

He noted the recent honouring of former Bostwana President by the Mo Ibrahim Foundation, an Africa-based good governance group.

The Foundation honoured the former Botswana President Festus Mogae with its annual Achievement in African Leadership award.

Mr Mogae has been widely praised for promoting transparency and accountability in the Botswana government. Thanks in large part to his efforts, the small African nation has evolved over the past several decades into one of the continent’s great success stories, he wrote.

He said, Botswana’s history demonstrates that a developing country’s natural resources can be a blessing for economic development and democratic reform efforts.

Botswana has a bounty of natural resources, particularly diamonds.

Its economy has grown roughly 9 percent annually since 1966, and citizens share in a substantial slice of the benefits derived from its major diamond mines.

The Botswana government has funnelled much of the revenues generated by those natural resources into public works projects, including Aids treatments, road reconstruction, and education.

The Debswana mines in Bostwana, for instance, subsidise 100 percent of the anti-retroviral therapies, infection treatments, and related monitoring for employees and their families.

These efforts have been credited with reducing Aids-related employee deaths by 13 percent between 1999 and 2005.

Dr. Hodges’ findings are as a result of research conducted by his organisation, the International Council on Mining and Metals (ICMM), together with host governments, international donors and civil society groups. The study he said, found that Botswana was not alone among developing countries in benefiting from its natural resources.
Mineral extraction has positively contributed to economic and political progress in nearly half of the 33 countries studied, he said.

He stated that, beyond the achievements made so far, mining companies can help kick-start growth in developing countries, and cited case studies in Ghana, Tanzania, Chile and Peru as good examples. He said the studies revealed that mining investments proved especially beneficial to nations in the midst of economic revival.

On mining companies’ contribution to Ghana’s healthcare system, he said between 2005 and 2007, in Ghana’s Obuasi district, the mining firm AngloGold Ashanti developed a malaria control programme that brought the incidence of malaria down by 73 percent - with an average monthly reduction of 4,550 cases.

He also cited the Lubombo Spatial Development Initiative — a partnership between mining company BHP Billiton, the governments of Swaziland, Mozambique, and South Africa, and local organisations – which has helped reduce malaria deaths by nearly 80 percent in southern Africa.

This initiative is widely regarded as one of the most successful public-private partnerships to control disease and drive regional economic growth, he said. Adding, such examples show that mining firms can make a significant contribution to both a country’s economic development and its social well-being.

Working in partnership, industry and governments can strengthen local land rights, erect proper protections for the environment, control disease, and ensure that revenues are channelled productively back into communities — where they can make tremendous improvements in the quality of life.

These kinds of collaborative efforts are essential to achieving the United Nations Millennium Development Goals and lifting Africans out of poverty, he suggested.

Addressing critics of the mining industry, he said, it’s rare this case is heard, of course. Critics often suggest that the mining industry takes much more from local communities than it returns. According to the “resource curse” theory, countries blessed with minerals and natural fuels are inevitably doomed to predatory governance and poverty.

Dr. Hodge is also currently Kinross Professor of Mining and Sustainability in the Department of Mining Engineering, and Helen and Arthur Stollery Professor of Mining Engineering and Geological Sciences and Geological Engineering, at Queen’s University, Kingston, Ontario, Canada.

Source: www.ghanabusinessnews.com

Mining in Ghana – paradox of profits, pollutions and poverty

By Emmanuel K. Dogbevi


Mining in Ghana has been going on for over 100 years now. And 100 years of any business venture is long enough to show visible signs of progress and understandably positive returns, both economically and socially.

But whatever benefits mining in Ghana has brought the country, can best be seen mostly in the mining entities. Not even Ghana as a nation can boast of any appreciable return on investments in mining, having invested lands, people and to some extent the humanity of some of its people including their culture and traditions.

The mining companies rake in huge profits from their activities in Ghana. For in stance, in 1995 a mining company operating in one of Ghana’s mining towns made a profit after tax of US$105 million.

The mining sector in Ghana earned an unbelievable US$ 2,099.43 million in 1999. But these huge earnings were made at the expense of lives and property belonging to ordinary Ghanaians whose peaceful and subsistent lifestyles had to be sacrificed on the altar of national economic expedience. But these benefits in terms of their national dimensions remain, ever questionable.

What is however, interesting about the contribution of mining to the national economy shows glaringly when it is compared to the agriculture sector.

Between 1993 and 1997 mining contributed just 1.5% to Ghana’s GDP as against agriculture’s 40%.

It is estimated for instance, that since 1985 Ghana has attracted external investment in the gold sector alone to the tune of over US$ 3.2 billion in new mine development and expansion.

Despite these huge figures, it is widely believed that only about 10% of the value of gold comes to the country.

Unlike agriculture though, the mining sector is spiced with so much incentives for investors, making it the most attractive and lucrative sector to invest in.

But strangely, Ghana is an agricultural country. However, the country doesn’t seem to pursue a vigorous agriculture expansion programme, at least not for the moment.

Mining as a sector, makes minimum contribution to employment and offers very high wages than the local average. Yet less than 8% of Ghanaians are in formal employment in the mining sector.

Meanwhile, over the last decade, mining has significantly added to the country’s ecological destruction amounting to around 7% of the country’s GDP.

Enter any mining community in Ghana, and what hits you right in the face is abject poverty.

The first middle aged man you are likely to meet might look older than his actual age. He is obviously hit, knocked about and tossed around by poverty. He is listless, and despondent. He might also be suffering from a disease resulting from mining pollution.

These people strut around hopelessly in their native lands, and they are typical examples of casualties resulting from the uncontrollable urge and penchant for profits by mining companies.

These companies have the unflinching support and backing of the governments in power. They needlessly carry on their operations with impunity and gross disregard for human life and right to property.

I have had the privilege of working in some mining communities in Ghana. It is not only appalling poverty and resignation that greets you, but also grim pessimism of local people.

While we are it, every year government declares how much profit the country has earned from mining activities. But even then, the suspicion among mining industry watchers is that, government does not declare the true figures. The figures that governments declare are not the true reflection of how much is made from the venture.

Royalties that are paid to stools in these communities hardly reach their intended target, but no one cares. To most of the people in charge, it is only important that the royalties are paid. They care less if any one benefits from the income. This meager royalty that is paid to local people is supported by laws, laws that seem to only favour the multi-nationals and protect their supreme interest for profits.

A few individuals are believed to pocket royalties meant for communities. And often these monies are shared in phony contracts of some sorts. Some of the roads and schools that are constructed from these monies do not last, because they are hurriedly and poorly constructed to cover up the greed and corruption of the few soulless individuals for whom the majority are a bunch of weak ignoramuses whose plight one must exploit to make some money.

The effects of mining on Ghana as a nation have been downplayed over the years. The profits are used to placate a restless populace. We are told to shut up when some of us want to cry foul and demand proper accountability.

Interestingly, for the most part, some of the people who speak for the mining companies are powerful fellow Ghanaians. They are catered for very well by these mining companies, their heels are well oiled. They are often noble Ghanaians who have spoken so loud about equality, justice and a fair country for all some time past, but they have suddenly turned coat and joined the powerful miners.

And when they do, they unleash on the rest of us a cacophony of raucous tunes that persistently jar our ear drums. They do these with unmatched alacrity in impeccable Queen’s English, making the rest of us look like less mortals, who must acquiesce and believe everything they are telling us.

But all that glitters is not gold. It is not all that is said in faultless English that is the truth.

Agriculture in Ghana has suffered the most palpable neglect and slow development including the adoption and adaptation of modern technology.

And that is not withstanding the fact that the agriculture sector is the single most important sector of the country’s economy. The sector employs about 70% of all Ghanaians employed in the country and contributes about 40% to GDP.

It is the main source of sustenance for the country. But mining is favoured against agriculture.

So many cocoa farmers have had to reluctantly give up their ancestral farmlands spanning four to five generations to mining companies. It is usually the case that when mining companies acquire a land in a community for prospecting, that local farmers are required to abandon their farms. They are paid some compensation, though, but these compensations never meet any economic or moral requirement for such huge losses.

Pittances are paid to these farmers and their cocoa trees and other crops are destroyed to make way for mining.

That would not be the end. And once the mining itself begins, there appears more serious challenges to contend with. The modes of operation of these mining firms dispose most residents to health and environmental risks.

Usually, these companies involve in surface mining instead of the better option of underground mining. They do because surface mining is cheaper.

The process of gold mining involves the blasting of rocks, which is accompanied by deafening noises, vibration of the ground which sends dust and particles in the air and water.

To extract gold, toxic chemicals such as cyanide, arsenic, sulphur dioxide are used and other gases are produced with serious health consequences - these chemicals leak into underground sources of drinking water, exposing local inhabitants who most of the time lack potable drinking water to danger.

Local people might drink water from poisoned streams or even eat fish from polluted rivers.

Large craters resulting from blasting are left to collect stagnant water, and these breed mosquitoes leading to high incidents of malaria in these areas, part of which the country spends over US$77 million yearly to treat. Skin diseases and diarrhea are common in these areas.

Following in tow are sexually transmitted diseases, pulmonary tuberculosis, acute conjunctivitis, poverty and a rising crime rate.

The pull factors of mining communities are not only the lure of gold, but also the attraction for other jobs, which are often non-existent.

Prostitution is very common in these areas also because not only do both men and women troop there to grab a share of the hard cash that is to be made, but even local women and girls whose husbands and fathers have lost their sources of livelihood, which used to be the farmlands they once owned, tend to become merchants of the flesh. They are both compelled and attracted into the sex trade.

The cost of living in these areas is so high because there is expatriate money to be made, and local people are forced to live like paupers in their own land.

They fall prey to all kinds of NGOs who hold claim to their salvation. While some of these groups are genuine and they fight relentlessly for the rights of these people, there are charlatans among them who feed fat on the misfortune of local people like leeches.

They sometimes exaggerate the real issues without particularly having a good understanding of the situation on the ground. They make so much noise and in some cases they even attract the attention of the international community. But in the end, they benefit at the expense of the victims of mining.

Local people are dispossessed, displaced and divided. The few who know what ‘is good’ for them betray the majority and side with the merciless exploiters.

As we all watch in dismay, some mining companies play the corporate responsibility card and win a few favours and applause from the absent minded crowd who only watch at a distance, but see only these ‘kindness’ of the mining companies.

In any case, should we as a country continue to favour mining at the expense of agriculture? When in reality the mining industry has a very short life span? When all the deposits are mined, the mines close down and often the towns and villages are deserted turning them into ‘ghost’ towns.

What are often left behind are degraded lands that can not be reclaimed or farmed on, and with these, a dark cloud of uncertainty, pollutions, poverty and even death.