Africa can address large-scale unemployment and poverty through mining but it has to embrace the sector rather than treat it as an enemy. This is according to former Nigerian President, Olusegun Obasanjo, who is also the chairman of the Brenthurst Foundation. “Mining has long been the heartbeat of African economies,” he said. “It accounts for 20% of the continent’s gross domestic product and 77% of total exports – not to mention 42% of all government revenues.” Studies by the International Mining and Mineral Council show for every $1 generated by mining in Africa an additional $3 is generated elsewhere in the local economy. Obasanjo said while this high dependency on mining did backfire when commodity prices were low, mining was a sector governments needed to nurture rather than offend. “At the root of it is an inherent mistrust between mining companies and governments,” he said. “Governments believe mining companies have massive wealth and deliberately steal from them. Political instability again leads to investor instability which in turn leads to real tensions between mining and government.” Obasanjo said if African countries wanted to create wealth for their people and address unemployment they would have to work with the mining sector. “The industry needs to be seen as a long-term development partner and not an enemy,” he said. Using Zambia and South Africa as examples he said policy instability had impacted significantly on mining investment – and the price these countries paid was jobs. “In the 1980s South Africa was home to 40% of the global mining projects. Since then the number employed in the mining sector has more than halved.” The industry and government remained antagonistic toward each other and investment was at an all-time low. “Compare this to Botswana where in 1966 the country only had 10km of tarred road with low per capita income, poor healthcare, poor electricity, poor water and so on. It was dependent on British foreign aid,” he said. “Diamonds changed Botswana. The government adopted a symbiotic relationship with De Beers, a relationship that has been likened to a marriage.” According to Obasanjo Chile was another example where mining changed the course of the country. “In 1972 it was the second worst economy in Latin America with inflation over 500%,” he said. “Over the past thirty years the income per person has tripled due to three things. The free market economic reform, the increase in domestic copper production and democratisation.
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The industry needs to be seen as a longterm development partner and not an enemy. – Olusegun Obasanjo
