Africa needs to diversify from mining, oil and gas - ACET

sQuashie

February 18, 2016 3:20 PM

At the Kigali Forum, experts from industry, the African Mining Vision, and the African Development Bank will share the latest thinking on how Africa’s bountiful minerals can be a base for diversifying African economies

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One of the loudest messages from Africa’s biggest mining conference last week in Cape Town, South Africa is clear: Low commodity prices are here to stay for a while.

The case is now more urgent than ever for resource-based African economies to diversify.

At the African Transformation Forum (ATF) in Kigali, Rwanda from March 14 to 15, economists, policymakers, investors, and civil society will apply their minds to breaking the dependence of many African countries on raw natural resources.

In the African Center for Economic Transformation’s 2014 African Transformation Report, Chief Economist Yaw Ansu argues: “Two essentials in economic development are acquiring the capability to produce a widening array of goods and services and choosing which ones to specialize in.”

Also in the seminal report, ACET argues that the mining, oil, and gas sector in itself is a potential springboard for diversification through smart local content rules and practices and value addition to commodities before export. Zambia, for instance, currently adds value to only 1 percent of its copper before export.

The downside of dependence on raw natural resource exports is being felt around the continent: for example, Nigeria, which has been dependent on oil exports for 70 percent of government revenue, faces a huge budget gap in the face of dropping oil prices; Zambia had lost some 80 percent of the value of its currency against the dollar since October 2015 as China’s demand for the red metal cooled down, resulting in prices half of what they were a few years ago; Angola has cut its budget by 40 percent from two years ago, resulting in reduced public services.

At the Kigali Forum, experts from industry, the African Mining Vision, and the African Development Bank will share the latest thinking on how Africa’s bountiful minerals can be a base for diversifying African economies and making them more resilient to external shocks.

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