The Role of the Extractive Sector in Africa's Industrial Transformation

The 50th Anniversary of the African Union (AU) last year set the tone for Africa's renaissance and the Agenda 2063 will place the extractive sector at the heart of Africa's industrial transformation. Could you share with us what are the key policy priorities for countries to harness their mineral potential?

Commissioner Fatima Haram Acyl: Africa faces an imperative for structural transformation. This structural transformation is needed to ensure economic growth and development, which will create sustainable jobs to improve the well being of Africans. That transformation is dependent on the effective management and utilization of African natural resources, particularly mineral resources and the extractive sector.

In order to fully harness their mineral resources potential, African governments need to align their policy priorities on the extractive sector towards:

• first, financing their economic development and growth as it is important to ensure that adequate revenue and receipts are received from these resources so that the government can invest in critical infrastructure, as well as the health and education of its citizens which are important for development; and
• second, for the resources to serve as the basis and foundation for their industrialisation and economic transformation through value addition of these natural resources, with more linkages created to the local economies.

The AU Heads of States endorsed the Africa Mining Vision (AMV) in 2009, the flagship continental framework for transparent, equitable and optimal resource exploitation. Where are we today with the implementation of the Vision into Action? How far have countries and regions embraced this framework into their own national and regional processes? 

First of all, let me thank here countries for their full commitment to the Africa Mining Vision policy. The goal of the African Mining Vision is the effective management of Africa’s natural resources for Africa’s development and structural transformation – not just increased revenues. This shared vision will comprise: a knowledge-driven African mining sector that catalyses and contributes to the broad-based growth and development of, and is fully integrated into, a single African market through six key points, which are:

(i)    downstream linkages into mineral beneficiation and manufacturing;

(ii)  upstream linkages into mining capital goods, consumables and services industries;

(iii) linkages into infrastructure, power, logistics; communications, water, and skills and technology development, the so-called human resource development  and research and development;

(iv) mutually beneficial partnerships between the state, the private sector, civil society, local communities and other stakeholders; and

(v)   a comprehensive knowledge of its mineral endowment; and last but not least,

(vi) a sustainable and well-governed mining sector that effectively garners and deploys resource rents and that is safe, healthy, gender and ethnically inclusive, environmentally friendly as well as socially responsible.

So, the reality is that the African Mining Vision, since its adoption, has become the framework for developing mineral resources in Africa. At the moment, the African Union Commission (AUC) is working with key stakeholders through the African Minerals Development Centre (AMDC), with key stakeholders including United Nations Development Programme (UNDP), the African Development Bank and UN Economic Commission for Africa on the implementation of the AMV. The AMV is currently being used by several African countries including Mozambique, Ethiopia, Lesotho and Tanzania to reform their own mineral policies, legal and regulatory frameworks and by Regional Economic Communities (RECs) to harmonise their mineral policy strategies.

Many African countries have not benefited enough from their resource wealth. What challenges should countries address to stimulate their extractive sector for sustainable development outcomes? What role do you see for the African Union Commission in supporting ongoing reforms?

African countries have lacked the capacity to effectively implement the policies that would enable them to maximise their mineral resources towards sustainable development. These include technical capacity for managing the industry itself, as well as broader economic management to ensure that it enhances the economy. In addition, there have been governance failures that have hindered the capacity of African countries to effectively manage these resources. It is therefore critical that these capacity and governance challenges are addressed.

Furthermore, African governments do not have the resources and abilities to fully exploit and maximise Africa’s natural resources. They need private investment, private capital, technology, know-how as well as the entrepreneurial abilities of the private sector.

The AUC provides a platform for channeling political will into finding common solutions to these challenges. The African Mining Vision provides a framework for giving technical assistance through the AMDC and other partners in a manner that ensures ownership by African governments of these interventions. The AUC continues to provide a role in sustaining the political momentum towards these reforms, as well as in monitoring and sharing the progress and best practices as they evolve in addressing these challenges.

The transformation of extractive resources into broader economic prospects will also depend on the implementation of other key reforms such as those underpinned by the Programme for Infrastructure Development in Africa (PIDA), the Accelerated Industrial Development in Africa (AIDA), the Boosting Intra-Africa Trade (BIAT) and the Comprehensive Africa Agriculture Development Programme (CAADP). What initiatives have been taken to build synergies and complementarities between the extractive sector and these existing frameworks in order to create linkages and unlock broader economic potential?

As you may be aware, AIDA, BIAT and the AMV are initiatives under Trade and Industry in the AU Commission; consequently there is already a lot of collaborating and synergising towards implementing these programs across the different divisions.

Across the AUC, there continue to be synergies between related frameworks such as CAADP and PIDA. For example, the AUC is currently developing a Strategy for African Commodities which will address the issues in a holistic manner drawing upon all the infrastructure, agriculture, industry and trade initiatives, [A1] because of the clear complementarities between the frameworks and the shared goal towards the eventual structural transformation of Africa. In addition, all the frameworks fit under the AUC’s Strategic Plan for 2014 – 2017 and are all critical pieces of the Agenda 2063. They are all therefore being implemented towards the common goal of Africa’s structural transformation and the continent’s economic development.

H.E. Fatima Haram Acyl is the Commissioner for Trade and Industry of the African Union. Isabelle Ramdoo is Deputy Programme Manager Economic Transformation and Trade Programme at ECDPM.

French version: La place de l'industrie extractive dans la transformation industrielle de l'Afrique