Ethiopia's Mining Sector Has Potential to Stimulate Economic Growth & Poverty Reduction, Says Chinganya

5 November 2019

Addis Ababa — Ethiopia's mining sector has strong potential to contribute to the country's long-term development, social progress and economic growth, says Oliver Chinganya, acting Director of the Technology, Climate Change and Natural Resource Management Division at the Economic Commission for Africa (ECA).

In remarks at a workshop discussing Ethiopia's mining and petroleum sector policies and the strategic road map of the sector, Mr. Chinganya said while Ethiopia was rich in mineral resources, including oil and gas, these remained largely untapped, adding mining's potential to contribute to economic growth and poverty reduction in the country could not be over-emphasized.

The sector contributed to less than 1 percent of GDP, 14 percent of exports, 1 percent of government revenue and was only able to create 4,000 formal jobs in 2018.

In its Growth and Transformation Plan, Ethiopia has set as a target for its mining sector to contribute to 10 percent of GDP by 2025.

"To achieve this target and to successfully leverage its mining sector for economic growth and sustainable development, Ethiopia will have to learn from the experiences and good practices of more mature mining economies and make use of available frameworks and guidelines," said Mr. Chinganya, who is also the Director of the African Statistics Centre at the ECA.

Historically, the ECA Director said, the narrative of the development paradigm of resource-rich African countries has been negative in most aspects of human development, except for Botswana which has succeeded in achieving prosperity through effective management of its diamond sector.

Over the past decade, African-owned initiatives have emerged advocating for a transformative policy directive to harness Africa's natural resources for industrialization through linkages and diversification.

The Africa Mining Vision, adopted in 2009 by African Heads of States, and to which the ECA significantly contributed, represents a paradigm shift, away from commodity export dependency towards enhancing Africa's industrial base through greater local beneficiation and value addition of minerals, said Mr. Chinganya.

"It remains a timely response by African countries to address the resource curse paradox that continues to negatively frame minerals-led development in the continent. It goes beyond improving mining regimes to establish how mining can better contribute to local, national and regional economic development," he said.

In addition, a Country Mining Vision guidebook was developed by ECA and its partners, to assist African countries in domesticating the Africa Mining Vision at the country level.

Mr. Chinganya said it wasencouraging that the Ministry of Mines and Petroleum had drafted a new mineral and petroleum policy, which aims to articulate the potential contribution of the sector to the country's growth and transformation, and how best to harness the benefits the sector could deliver.

"It is also welcome that the ministry is organizing consultative meetings to ensure that all stakeholders are actively engaged as advocated in the Country Mining Vision guidebook," he said.

The new mineral policy extensively discusses the issue of creating linkages in the economy to support industrialization and is also inward looking as it focuses on creating linkages with manufacturing, agriculture, construction, and jewellery, as recommended in the AMV.

"Through these deliberate attempts to link mining to industrialization, Ethiopia can distinguish itself among African countries by turning resources into blessings, especially in light of its ambitious industrial policies that could support the establishment of mineral based supply chains that can boost government revenues, exports and GDP growth," said Mr. Chinganya.

He said for the mining industry to be climate resilient, resources would have to be used efficiently to produce smart-energy systems through an integrated resource management approach for economic growth and environmental preservation for future generations.

"Indeed, while traditionally, industrialization relied on fossil fuels, renewable energy resources, such as water, wind, and sun, can nowadays be harnessed by industrializing countries," added Mr. Chinganya.

The ECA, Mr. Chinganya pledged, will continue to support Ethiopia in its effort to ensure that the mineral policy is of the highest standards and is aligned with the principles of the Africa Mining Vision.

The think tank will also support the ministry in developing an implementation plan for the mineral policy to translate the vision, mission, goals and strategies into tangible and sustainable socio-economic development gains for Ethiopians.

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