Africa: Private Capital Key to Africa's Mining Growth - Premier

28 October 2019

Africa's mining sector is one of the largest in the world and plays a key role in the development and economic growth of many African countries.

Yet, the continent gets a tiny portion of the total revenues generated from the sector.

That is in addition to other series of challenges facing the sector, including the dominance of small-scale miners who contribute less value to the sector.

To turn around the fortunes of the sector, private sector capital will play a big role, Rwanda's Prime Minister Edouard Ngirente told business leaders, members of international organizations and government officials meeting in Kigali for the East and Central African Mining Forum.

Currently, the mining sector is estimated to be creating around 12 million jobs on the continent with each direct mining job-generating around two more indirect jobs through backward and forward linkages.

"To maximise the benefits of mining, African countries need to come together and think about how mining can contribute better to local development. This can be achieved by making sure workers and communities see real benefits from large-scale industrial mining," Ngirente said.

"It is equally important that nations negotiate contracts with mining multinationals that generate fair resource revenues and stipulate local inputs for operations. At regional level, it means integrating mining into industrial and trade policy," he added.

According to the premier, there are still wide-ranging inefficiencies in productivity that waste revenue potential.

Estimates show that over 60 per cent of global minerals are in Africa.

Yet, revenues are still below 20 per cent and exploration investments under 15 per cent annually.

"This situation needs to change," he said, highlighting that a country like Rwanda has moved to consolidate high potential sights previously fragmented to create large scale concession areas for big capital.

Ngirente said the Government of Rwanda has particularly continued exploration and development of geological and mineral information, which he said is currently captured on an online platform that will soon be accessible for free.

"But to complete the process, we need private sector capital to invest, and that is where everyone in this room comes in, to play a role," he said.

Leveraging AfCFTA

It's10 years since African nations adopted the Africa Mining Vision (AMV), a roadmap to advocate for transparent, equitable and optimal exploitation of mineral resources to strengthen broad-based sustainable growth and socio-economic development.

The roadmap also aspires to leverage Africa's natural resources for the industrialisation of Africa.

Ngirente said the recently adopted African Continental Free Trade Agreement (AfCFTA) is a welcome additional support to the realisation of the Africa Mining Vision.

"Through this Agreement, the private sector should leverage increased economies of scale and access to regional raw materials and intermediate inputs to develop better conditions for regional value chains and integration into global value chains," he noted.

This, he added, will sustain the transformation of African economies towards greater utilization of technology for value addition of our mineral resources.

Experts at the inaugural mining event observed that there is a need for more collaborations and partnerships to raise investment profiles of emerging mining countries in the region.

Rwandan officials are trying to sell the country as a favourable investment destination for mining activities.

"There are many projects that are investor-ready in Rwanda," Francis Gatare, the Chief Executive Officer of Rwanda Mines, Petroleum and Gas Board, told participants.

Rwanda has reportedly packaged investment opportunities for five newly aggregated sites, which have previously been held by small miners but were unable to make the most of them due to shortage of capital, technology and expertise.

"The industry (in Africa) has been dominated by artisanal miners on large scale, not by choice but by circumstances. Lack of investment capital is one of those big circumstances," Gatare noted.

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