Dec 16, 2008

World - How to use Africa’s natural resources

R. Anthony Hodge

The Mo Ibrahim Foundation, an Africa-based good governance group, recently 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 Botswanan 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.

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 per cent annually since 1966, and citizens share in a substantial slice of the benefits derived from its major diamond mines. The Botswanan 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 per cent 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 per cent between 1999 and 2005.

Research conducted by the International Council on Mining and Metals (ICMM), together with host governments, international donors and civil society groups, 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.

Further, mining companies can help kick-start growth in developing countries. Case studies in Ghana, Tanzania, Chile and Peru revealed that mining investments proved especially beneficial to nations in the midst of economic revival.

In Ghana, for example, more than $5 billion has been devoted to new mining projects over the past two decades. During that time, the national poverty rate has fallen 12 per cent. Of Ghana’s 138 districts, its four mining districts have the lowest poverty levels in the country outside the capital city Accra.

Effective disease control programmes have been a key component of this success. Between 2005 and 2007, in Ghana’s Obuasi district, the mining firm Anglo Gold Ashanti developed a malaria control programme that brought incidents of malaria down by 73 per cent — with an average monthly reduction of 4,550 cases.

The Lubombo Spatial Development Initiative — a partnership between mining company BHP Billiton, the governments of Swaziland, Mozambique, and South Africa, and local organisations — has helped reduce malaria deaths by nearly 80 per cent 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.

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.

This is why the ICMM strives to convene industry and key public and private stakeholders to explore the challenges accompanying natural resource management — and find solutions. As more success stories grow out of the mining industry’s work — and as more players come to the table — one gets the confidence to guide the industry, informed by a constructive multi-stakeholder partnership. These kinds of collaborative efforts are essential to achieve the United Nations Millennium Development Goals and lifting Africans out of poverty.

It is 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 fuels are inevitably doomed to predatory governance and poverty.

Thanks to President Mogae’s efforts, Botswana is helping put such concerns to rest. His work should serve as a blueprint for governmental reform in Africa — and for how to put a country’s natural resources to the good use of its people. Citizens in other African countries anxiously await such leadership.

(Dr. R. Anthony Hodge is president of the International Council on Mining and Metals.)


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