- Africa is home to nearly all valuable minerals that are essential to generating wealth, producing commodities, and advancing technology.
- The continent is home to about 30% of the world’s entire mineral reserves, but most mineral-rich countries remain poor with little to celebrate.
- Some of the key minerals found in Africa include oil, diamond, gold, silver, copper, cobalt, coal, iron ore, uranium, and platinum.
African countries should stop the era of raw mineral exports and food products from the continent, captains of industries now say, in a fresh call to end what they term “exploitation”.
This comes amid continued mining and exportation of minerals in their original state for processing in Europe, China, US and other destinations across the globe.
Africa is home to nearly all valuable minerals that are essential to generating wealth, producing commodities and advancing technology. Approximately, Africa is home to about 30 per cent of the world’s entire mineral reserves, but most mineral-rich countries remain poor with little to celebrate.
Some of the key minerals found in Africa include oil, diamond, gold, silver, copper, cobalt, coal, iron ore, uranium, and platimum.
Read Also: Why West Africa is becoming a hub for conflict minerals
Top 10 mineral-rich African countries
According to a research by The Economist Group, an affiliate of the The Economist, South Africa, Nigeria, Algeria, Angola, and Libya produce more than two-thirds of Africa’s mineral wealth. This is on account of their their huge oil reserves, with the exception of South Africa, which has an abundance of gold and other precious materials.
The report also indicates that high prices for copper, oil, iron ore, aluminum, and gas have encouraged investments in the continent.
Other top producers are Egypt, Ghana, DR Congo, Gabon and Zimbabwe, where gold, oil, copper, cobalt, iron ore, uranium, coal and other minerals are common.
Nevertheless, African countries export a huge chunk of minerals in their original form, with little or no value addition. There is currently a huge focus on cobalt, manganese and lithium, as the world moves towards EVs (electric vehicle).
Taming export of raw minerals
The African Export–Import Bank, also referred to as Afreximbank or Banque Africaine d’Import-Export, is leading a call on Africa to protect its wealth and stop shipment of raw materials especially minerals.
According to the pan-African lender created in 1993, under the auspices of the African Development Bank (AfDB), the continent has over years been exploited and failed to get the deserved value from its minerals.
“We are sick and tired of our natural resources being produced and exported to other markets,” said Gainmore Zanamwe, director-trade facilitation and IATF, African Export–Import Bank (Afreximbank).
The bank is leading an aggressive campaign to build intra-Africa infrastructure, processing plants and local market capacity to ensure value addition at country source, before exportation. It is also encouraging trade between African countries to support industrialization within the continent, before the minerals benefit other markets.
“The infrastructure that Africa has was designed by the colonial masters to extract raw materials from the continent to their capitals, hence most of the roads and rail are towards the ports as opposed to connecting the hinterlands,” Zanamwe said.
To turn this around, the lender has committed to finance rail, roads, ports and other infrastructure that focuses on Africa.
Read Also: Mining in Africa: Is sustainability far-fetched?
Investing in infrastructure
This includes governments and private sector players willing to invest in shipping lines and vessels that will focus on intra-Africa trade. “We can provide the finances but the effort must be taken by entrepreneurs and the governments themselves,” said Denys Denya, AfreximBank executive vice president-finance, administration and banking services.
The two spoke in Nairobi during an Intra-African Trade Fair (IATF) forum, ahead of the main summit in Cairo, Egypt in November.
Building industrial zones that will add value with a focus on increasing intra-Africa trade could prove a game changer, as the African Continental Free Trade Area (AfCFTA) gains momentum.
Fund for Export Development by the bank supports the building of industrial parks in Gabon, Togo and Benin, with Kenya also a beneficiary in the current Special Economic Zones already underway. They include the Dongo Kundu SEZ next to the Port of Mombasa.
Strategically located at East Africa’s biggest port, it gives exporters an easy access to shipping services for exports while at the same time importing needed materials.
Read Also: Kenya under pressure to retain Mombasa Port as EAC’s leading harbour
Pan-African Payment and Settlement System
Afreximbank has developed the Pan-African Payment and Settlement System (PAPSS) to support intra-Africa trade. This is a cross-border, financial market infrastructure enabling payment transactions across Africa, which allows countries to use their respective currencies.
The system pioneered in West Africa, with the Southern African Development Community (SADC) markets of Zambia and Zimbabwe currently taking it up.
Kenya has agreed to support the roll-out of PAPSS in the East African region, with President William Ruto leading calls for dedollarisation in the wake of weakening African currencies, among them the Kenyan shilling.
A weak currency means Kenya and other African states are spending more to secure dollars and other foreign currencies to meet their import needs, pushing up import bills and cost of living.
African countries have in recent times struggled to build up enough forex reserves to pay for imports.
In Kenya for instance, foreign exchange reserves fell to 10-year low of to $6.56 billion in March exposing the country to increased dollar scarcity, as the import cover went below the preferred four-month cover, at 3.67 months. This had a significant impact on the cost of living and economic growth. The reserves have, however, improved to $7.1 billion, as of August 31.
This meets the Central Bank of Kenya’s statutory requirement to endeavor to maintain at least four months of import cover. “If you trade using your own currencies, you reduce the import bills and it makes it easier not only for large cooperates but also small businesses to trade,” said Denya.
De-dollarisation and trade
Africa is also pushing for de-dollarisation across the continent. If the ambitious push is successful, there will be significant reduction on reliance on the US dollar as a reserve currency, medium of exchange or as a unit of account.
To ease cross-border trade, Afreximbank is working with governments and financial institutions, including insurance firms, to come up with a Single Transit Bond, which will allow one way clearance of transit goods.
It is also funding the construction of rail networks, roads, ports and easing of border clearance.
Between 2017-2021, about $20 billion went into supporting countries industrialization agenda, an amount the bank plans to double by 2026.
African governments have also been challenged to build up energy capacity to support industrial growth, with a key focus on green energy.
“Africa has decided to take charge of its own destiny, investors have no other choice but to come and invest in the industrial zones, so that we don’t continue exporting the raw material,” Denya said.
Afreximbank is supporting the building of industrial zones in Zambia and DRC to focus on electric vehicles value chain. “Most of the minerals are here, cobalt, manganese, lithium is in the continent, traditionally we would ship that,” said Denya.
Read Also: Kenya amplifies de-dollarisation call at Nairobi AfCFTA talks
Green value chains for minerals
Meanwhile, African countries need to prioritise green value chains for minerals. The UN Economic Commission for Africa (ECA) Acting Chief Antonio Pedro said the continent has opportunities from the global green mineral boom and the African Continental Free Trade Area.
To meet the goals of the Paris Climate Agreement, the SDGs and Africa’s Agenda 2063, the world must decarbonize its growth models and shift to renewable energy sources, Pedro said.
Speaking during a panel discussion on ‘Building a regional battery mineral value chain in Africa,’ Pedro said the shift to renewable energy sources was a resource-intensive path. With this, it required greater production of a variety of minerals that are central to de-carbonisation.
Africa is home to many of such minerals. The DRC, for example, produces over 70 per cent of the world’s cobalt. DRC and Zambia together supply 10 per cent of global copper while Mozambique and South Africa hold significant reserves of graphite, platinum metals, lithium and more.
“We have clear opportunities not only from the global green mineral boom but also from our domestic achievements, such as the African Continental Free-Trade Area to facilitate the development of regional value chains for these green economy products,” Pedro said.
Set up of e-vehicle value chains in Africa
According to Pedro stakeholders have developed several innovative financing mechanisms to support initiatives such as the battery and electric vehicles value chains.
“In the last two decades, we have seen that without the right enabling policies and incentives, commodity super-cycles come and go, leaving our countries dependent on resource extraction,” said Pedro.
He deplored the fact that about 70 per cent of the region’s exports are unprocessed commodities, a situation that can change with the right policies that prioritise industrialization and value-addition in mining and other resource sectors.
Oluranti Doherty, director of export development at the Afreximbank, noted that it was disappointing that despite Africa’s mineral wealth, the continent has not yet made the energy transition.
Read Also: Africa Climate Summit: President Ruto’s Roadmap to an Eco-Friendly Africa
