27 April 2017

Africa's Natural Resources Fuel Industrialization

After the end of the Civil War until the beginning of the first World War in 1914, the United States of America changed from a mostly agricultural nation to an industrial hub. The US got completely industrialized, even farming itself became an industry.

There were many reasons for the rapid transformation of the United States into industrialization, but the country's access to raw materials and energy and a large workforce were the prominent ones. Natural resources helped to bring about industrialization as they feed raw materials for construction and production. These resources being abundant in Africa as well, what would stop the continent from emulating this kind of industrialization?

Natural resources in Africa have been a subject of paradoxes for decades, with abundance in one side and under-utilization on the other side, cooperation over the resources in one side and conflict on the other side.

Africa has 12 per cent of the world's oil reserves, 40 per cent of its gold, and 80 to 90 per cent of its chromium and platinum. The continent is also home to 60 per cent of the world's underutilized arable land and has vast timber resources, according to the United Nations Economic Commission for Africa. The twist is these resources, however plentiful are not significantly being translated to economic benefits.

For instance, as Africa only sees some 10 per cent of the total income generally generated from its own coffee crop, we can see that much work still needs to be done in fostering the division of value adding industries.

However lately, the idea that these abundant natural resources can be the driver for an industrial revolution across the continent is growing. Recent reports indicate real progress in the continent. Ethiopia's leather industry is not only developing fast but is also increasing high-value-added activities. South Africa and Egypt are making similar progresses. In Ghana and Zambia, the cocoa and mining sectors have long contributed to wider socioeconomic growth. In East Africa, the success of Kenya's fresh vegetable producers in adding value to their exports has been remarkable in the last few years.

Partakers of the Sixth Tana-High Level Forum on Security in Africa, a Forum that focused on the governance of natural resources, also concertedly pronounced the prominence of industrialization and capacity development for effective and efficient governance of Africa's natural resources for a good cause.

"Natural resources, despite their level of abundance and variety can not solely satisfy the needs of the people," states Prime Minister Hailemariam Dessalegn speaking at the Forum. The Premier highlighted that the resources have to be somehow transformed in to manufacturing capital products and services to unleash its full potential for the benefit of the mass.

"Per today's globally interlinked market, the extent to which we can drive benefits from our natural resources highly depends on the extent to which we are engaged in value adding economic activities" exclaims Hailemariam. Henceforth, added the premier, proper level of investment in education, training, science and technology, research and development is required. Similarly, remittances from natural resources should judiciously be invested not only on human capital but also in manufacturing capital.

Social capital is another area of concern that requires due attention for proper utilization of natural resources, according to Hailemariam. The Premier further added: "A host of specific policies that help to take advantage of our social capital without adverse impacts on environment and society apparently matter, however, macro-level governance framework that ensures these policies emanate from the right structure matter most. We need a political economy that is free from rent seeking behavior, since rampant rent seeking behavior can easily turn natural resources to a curse".

Similarly, Olusegun Obasanjo said, "As long as Africa continues to lose its resources to external actors, the continent will continue to face discontentment among its citizenry. This will continue to cause conflicts and threaten peace and stability in Africa. Unlike the scramble for Africa of the yester-century, African citizens have become of age in terms of their knowledge of resource governance. They demand that African resources should be used for Africa's development, and that can only happen if there are measures to institute accountable and transparent governance systems.

"As no problem happen in a silo, no solution can be generated in a silo," declares Olusegun Obasanjo in depicting the importance of continental cooperation in finding answers to African questions in the path to industrialization.

Africa deserves the maximum benefit from its God-given natural resources, to improve and enhance their living standards and the totality of their security, as Obasanjo firmly states. "To this day, we have done well in this sense but not enough, because there is a room for us to do much better than what we did", he exclaimed.

Obasanjo further said, "Poverty in whatever form, we have it in Africa. Poverty of material, idea, thought, strategy, even poverty of ideology. We must accept the fact that we have leadership deficit, generally in all sectors of Africa and in natural resource governance in particular."

President Yoweri Museveni, one of the panelists of the Forum pointed out in the discussion that electrification, industrialization coupled with strong leadership strategy and ideology would put African Nations' to a vigorous position. The president strongly urged African nations to find ways in to translating natural resources to industrialization to accrue the maximum benefit for their people rather than simply exporting them raw.

Henceforth, it is well agreed that Africa's private sector must take the lead in improving coordination between farmers, growers, miners, processors, and exporters; in increasing competitiveness in the value chain, and ensuring the price, quality, and standards that market demands are met.

Africa now has the chance, as never before, to shape its own economic future through industrialization. This will help to spread prosperity throughout the continent. An industrialized Africa will also provide a much-needed new driver of global growth.

The notion for a need to link management of resources to the broad socio-economic transformation agenda of every nation in the continent for a flourishing move towards an industrialized Africa is well articulated.


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