Infrastructure funding deficit holds back Africa's mining sector

African countries might
account for significant
volumes of the world’s
resources but without
robust financial structures to
develop infrastructure a thriving
mining sector was impossible,
said Nigeria’s Emir of Kano and
chairman of the Black Rhino
Group, Lamido Sanusi.
“As commodity prices have
declined and public sector wages
have shrunk, the domestic
consumption-led growth model
has become unsustainable in
Africa and the need for a new
growth driver has been declared,”
he said. “Some countries
have implemented a state-led
investment growth trajectory like
Rwanda, Kenya and Ethiopia and
deliver high growth, but there are
many countries that have failed
to do so. Nigeria and Angola are
prime examples.”
Sanusi said Nigeria had been
running fiscal
deficits even in
commodity price
boom times and
was severely
constrained now
that prices had
dropped.
“In the absence
of available
funding, African
countries will
depend more and
more on their
ability to attract
local and foreign direct investment
into key sectors like infrastructure
and energy.”
Africa accounts for 9.5% and
7.9% of global oil and gas reserves
respectively while 33% of the
world’s solid mineral deposits
reside in Africa – with potential to
generate over a quarter of a trillion
dollars annually.
But, said Sanusi,
less than 5%
of the mineral
deposits were
being tapped –
largely due to
infrastructure
and financing
constraints.
“Unlocking
the bottlenecks
in infrastructure
and energy
basically
addresses supply side constraints to
growth.”
According to Sanusi some 30
new mining projects requiring
a total of $18 billion in capital
investment would be developed
between 2015 and 2018 in Africa,
but of this only $1 billion would be
African sourced.
“Africa needs to look at
attracting capital. Efforts need to
be intensified towards deepening
capital markets, while streamlining
its trade and industrial policies to
promote investments.”
It’s a theme that has been
recognised by African heads of
state who last year acknowledged
at a financing summit that the
continent’s lack of infrastructure
was directly affecting its
competitiveness.
Sanusi said with inadequate
funding of infrastructure African
countries would find their
growth impaired making it near
impossible to address the real
issues of food security, poverty
reduction and job creation.
INSERT & CAPTION
Unlocking the bottlenecks
in infrastructure and
energy basically addresses
supply side constraints to
growth.
– Lamido Sanusi