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Often considered as being on the sidelines of globalization, Africa has during the 2000s benefited from continuously increasing investment and become a fully-fledged player as a result of the boom in the mining sector. Growth in demand for mineral resources coming from emerging countries has transformed Africa, which previously received little attention from the investment community, into an El Dorado for small and major mining companies in Europe, North America, and of course, China. But what are the benefits? Have African governments managed, and will they manage, to capture a share of mining revenues and use it to support sustainable economic and social development on the continent?

Or, on the contrary, is this appetite for African mineral resources going to end up with the continent being stripped of its assets? Part of the answer lies in the fact that Africa has not been left out of the development of the mining sector. Africa itself is part of this trend. Consistent with its mining sector expertise, South Africa has, for example, given rise to a number of global mining giants such as Anglo American (now based in London) and AngloGold Ashanti. South Africa and Zimbabwe hold the bulk of global platinum reserves, and the Democratic Republic of Congo, for its part, remains a “geological aberration” due to the sheer scale of its mineral deposits. It is important to highlight, however, that in addition to the continent’s huge reserves, Africa is also becoming a key industry player with countries like Botswana now leading the world in diamond production. It is not by chance that China and other emerging powers have shown a heightened opportunity. But the question remains whether it will be possible to both exploit Africa’s geological potential and at the same time do so in a sustainable and socially responsible manner. The contribution that the mining industry is making towards development is at times vehemently challenged.

It is certainly true that the way in which the sector dominates certain national economies can sometimes hinder the development of other activities. It can also weaken State budgets if tax regimes are politically manipulated or simply bypassed through unethical practices. From this perspective, mining does not have the same developmental impact as that of the petroleum industry. The issue must be taken into account and addressed with support from the international community. This is especially true when considering that mineral exploitation has at times negatively impacted governance, and even worse, fuelled conflict through misallocation of fiscal revenues. Despite this, the mining sector is, and will continue to be, important for Africa. The exploitation of mineral reserves is the number one source of revenues for countries such as Mali and Ghana. In many other countries (Botswana being one of the most notable success stories) millions of people depend on the mining industry for their livelihood.

From the perspective of a Development Finance Institution like Proparco, the question is not whether the mining industry will develop, rather how it can develop in a way which will ensure equitable distribution of wealth and contribute to poverty reduction. A lot has already been written about the impact of mining on development. This issue of Private Sector and Development is hoping to make another small contribution towards better understanding of the issues. Collective efforts such as this one can provide an impetus for change and help shape industry decisions going forward. I would like to thank all of the authors for sharing their experience and knowledge of the sector, and helping to clarify the means by which mining can make a positive impact on development in Africa.

ABOUT

Private Sector & Development is a bimonthly magazine that compares the views of experts in different fields on issues relating to the role the private sector plays in the development of low-income countries of South countries, particularly in Sub-Saharan Africa. By comparing complementary approaches, Private Sector & Development aims to help us get a better grasp of the mechanisms through which the private sector can contribute to the development of these countries.

This conference aimed at increasing stakeholder’s awareness of the projects’ social and environmental impacts, in particular financial institutions. It sought to provide them the tools of analyze and manage risks.

ABOUT

Private Sector & Development is a bimonthly magazine that compares the views of experts in different fields on issues relating to the role the private sector plays in the development of low-income countries of South countries, particularly in Sub-Saharan Africa. By comparing complementary approaches, Private Sector & Development aims to help us get a better grasp of the mechanisms through which the private sector can contribute to the development of these countries.