Resource-rich Africa owes it to the poor
Booms in in oil, gas and mining.
Natural resources are already driving significant growth on the continent. Combined with better policies, this growth is reducing poverty. More children are in school and fewer are dying before the age of five. Botswana shows how we can use natural resource wealth to transform the lives of millions.
However, most resource rich countries in Africa still have a road to travel. They account for nine of the 12 countries at the bottom of the United Nations's 2013 human development index and 11 of the 20 countries with the highest child mortality rates.
Africa must up its game. We need more transparency, fairer contracts with big business and more equit-able public spending. South Africa, as a G20 country, a mining giant and home to the JSE, has an important role to play.
First, it must help to develop a global transparency standard. Transparency is critical because it reduces opportunities for corruption and improves accountability. When local communities know how much revenue is being paid to their government, they can also demand that this money is spent wisely and fairly.
A lesson from Marikana may be that mining projects that benefit local communities also build trust. In the long run, this means less political risk.
To be sure, more and more African governments are making contracts on oil and minerals publicly available. Many major mining companies have strengthened their transparency and accountability standards. Global partnerships such as the Extractive Industries Transparency Initiative have helped to build a new culture of openness.
Many of these moves have been voluntary, which has its advantages, but we need more rigorous standards. New American and European legislation requires extractive companies to disclose all significant payments to governments: this legislation is the first step towards a transparent, rules-based, legally enforceable multilateral regime for the global petroleum and mining industry.
Over half the world's total value of extractive market capitalisation is found on United States exchanges alone.
Firstly, South Africa must adopt and implement these rules to show leadership on behalf of Africa. As a gateway to mining investments around Africa, the JSE also accounts for a significant value of extractive market capitalisation. At the end of 2011, for example, the value of mining shares listed on the JSE was about $153-billion.
Secondly, South Africa must find new ways to share its immense mining experience with other countries on the continent. African countries have not been getting fair deals with big business, for example, based on unequal access to information and technical know-how. Even big business wants to support capacity building on the continent. Fair deals mean stable contracts. That is in the interests of everybody.
Thirdly, public spending must be used to reduce inequality. Public spending is the primary mechanism for linking Africa's citizens to their country's natural resource wealth. Governments must spend more of their revenues on the poor.
Research for this year's Africa Progress Report looked at four resource-rich African countries and found increasing inequality dampening the effects of growth on poverty reduction. South Africa, for one, has been disappointing, with its failure to convert mineral wealth into health and education. It is not the only example.
Fourthly, we call on South Africa and other G20 countries to step up and show leadership in the development of a credible, effective, multilateral response to tax evasion. This has become critical for Africa. Many extractive companies in resource- rich countries use off-shore companies or tax havens to minimise their stated profit and tax liability. One study puts Africa's average annual loss between 2008 and 2010 at $38.4-billion.
Today's favourable market conditions provide no guarantee of future success. If governments seize the moment, however, and put in place the right policies, Africa's resource wealth could permanently transform the continent's prospects. South Africa must take the lead.
Strive Masiyiwa is the founder of Econet Wireless and a member of the Africa Progress Panel. The Africa Progress Report will be launched on Friday May 10