*Author: Dr Antipas Massawe (Mining Engineer), Dar es Salaam*
Progress in most mineral rich African countries is slow because foreign aid
and investments in their mineral resources appraisal and exploitation
dominate as main source of seed capital for their development.
By deactivating the important role of self-reliance in the struggle of
societies for survival and prosperity in their environments, aid caused
most mineral rich African countries to develop chronic dependence on
foreign investments in the appraisal and exploitation of their mineral
resources.
Domination of foreign investments earns them very little (mostly in the
form of taxes and handouts) of the natural capital extracted from their
mineral resources, most of which is exported for investing in foreign
countries, making the African countries poorer as their non renewable
mineral resources diminish.
Exportation of natural capital for just a mere fraction of it (mostly in
the form of taxes and handouts), stimulates investments and economic growth
in the importing countries at the expense of the same in the exporting
mineral rich African countries.
Most of the natural capital generated from the domination of local
investments in the appraisal and
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exploitation of mineral resources in mineral rich African countries would
remain for local investing to spur economic growth in African countries
instead.
Future GDP (PPP) per capita for 2013, calculated by the International
Monetary Fund in International dollars for some of the mineral rich
countries where local investments dominate in the appraisal and
exploitation of mineral prospects are Australia (6,650), Botswana
(17,595), Brazil (17,340), Norway (56,663), Russia (18,670), Libya (14,474)
and South Africa (11,750), comparatively high.
For some of the mineral rich countries where foreign investments dominate
are Ghana (3,501), Mozambique (1,262), Nigeria (2,883), Tanzania (1,670)
and Zambia (1,841), comparatively low.
Unless reversed, the continuing domination of foreign investments in the
appraisal of mineral resources which has very minimal contribution of
economic growth in mineral rich African countries is going to end up their
future generations without much to stand on in their struggle for survival
and economic prosperity as their non renewable mineral resources ends up
exhausted.
Mineral rich African countries out to overcome chronic dependence on
foreign aid in favour of the natural capital inherent in their mineral
resources as seed capital in their struggle for survival and economic
prosperity by ensuring rights for their appraisal are granted to local
joint ventures involving private and public sectors in collaboration with
employees (through their social security funds), the three main forces
behind economic growth in any country.
The rights would be issued to the local joint ventures on condition that
they can only share portion of the same with foreign investors for some of
the minority portion of seed capital and expertise involved in the
preliminary appraisal to enable attractiveness of the prospects for others
to invest in the main portion of the seed capital required to complete
their appraisal through Stock markets and banks.
Mineral rich Brazil, Norway and Australia also created own local joint
ventures which involve private and public sectors in collaboration with
social security funds and awarded them the rights for major mineral
prospects appraisal in the countries.
This enabled their own world class exploration and mining companies like
the Vale of Brazil, Statoil of Norway and BHP of Australia to evolve and
commanding major stakes of global mining industries and contributing
significantly and on a very sustainable way in the economic development of
their countries.
Starting point in the development of these prosperous mineral rich
countries was self-reliance in the appraisal of their mineral resources
rather than the foreign aid and investments pursued by most mineral rich
African countries in their development Endeavour’s and appraisal of their
mineral resources.
When African governments grant foreign companies rights of majority
ownership in the appraisal and exploitation of their mineral resources,
they have enabled them to use some shares of the rights or the natural
capital inherent in the mineral resources as main of the seed capital
required to carry out their appraisal and initiation of their exploitation.
If African governments would grant the rights to majority owned local
joint ventures involving private and public sectors in collaboration with
social security funds, they would enabled them to do the same as the
foreign companies are doing, but for the sustainable economic growth of the
mineral rich African countries instead.
The local contribution of minority portion of seed capital required to
enable majority local ownership in the preliminary appraisal to enable
prospects attractiveness for others to invest in the main portion of the
seed capital required to complete their appraisal through stock markets and
banks is such a small amount the majority involved local joint ventures in
big mineral rich African countries like Tanzania, Mozambique, Kenya and
Uganda wouldn’t find difficult to mobilize. Regional collaboration could
enable majority involved regional joint ventures in the smallest mineral
rich countries like Burundi, Rwanda and Malawi.
For example, local joint ventures involving private and public sectors in
collaboration with social security funds in mineral rich African countries
wouldn’t counter difficulties in the mobilization of the local contribution
of minority portion of seed capital facilitating majority local ownership
in the preliminary sinking of one or two boreholes per each oil and natural
gas block to enable its attractiveness for the main investing of stock
markets and banks to complete its appraisal and initiation of its
exploitation.
Majority local ownership of appraised mineral resources enables African
mineral rich countries to establish bankable accounts of the natural
capital inherent in them and decide when and how to exploit them in view of
maximizing their contribution of economic growth in the countries.
The same enables mineral rich African countries to make correct decision
not to issue mining licenses or tax exemptions to encourage foreign
exploitation of appraised mineral deposits when market demands and prices
are not optimal.
Also, it enables them to make correct decision to retain their appraised
mineral resources in-situ till market demands and prices become optimal for
their exploitation to deliver optimal benefit to the countries.
They could exploit the appraised capital of mineral deposits retained
in-situ as collateral in the mobilization of loans for investing in other
highly profitable businesses instead.
As the process of loans mobilization and paying back is repeatedly carried
out successfully, the countries are enabled to earn total profits which
could even exceed the natural capital inherent in their appraised minerals
resources retained in-situ, still in their hands.
For example, majority local ownership of the huge uranium resources
appraised in some mineral rich African countries would enabled the
countries to make correct decision to retain them in-situ for use as
collateral in their mobilization of loans for investing in other highly
profitable businesses till high levels of efficiency and safety are
achieved in the development of technology for uranium mining, processing
and nuclear power generation, when African countries would be ready for
nuclear power generation and market demand and price are optimal.
Majority local ownership of the mineral resources appraised in all mineral
rich African countries would facilitate African collaboration and
interdependence in the exploitation of their mineral resources to optimize
their contribution of seed capital in the development of individual
economies which are well interconnected and interdependent to provide for
optimization in the economic growth of all on the continent.
Self-reliance can and should be enabled to dominate mineral resources
appraisal on the African continent because it contributes sustainable
economic development for it when foreign domination does the same for non
African economies instead in a process which makes the continent poorer as
the extraction of its non renewable mineral resources which contributes
little economic development to the continent depletes them.