Africa needs to shift from resource curse which have marked it for so long to a resource blessing. This requires a fundamental change in the attitudes of Africa’s leadership, which in the past only looked at short-term gains through extraction while being in power and to hell with rest, ignoring the long term benefits the country could have drawn from its resources not only for a few but for the many including one’s own offspring. The signing of quick and opaque deals to secure immediate cashflows at the expense of the long term benefit of the nation should be abandoned by the leaders of Africa. They should transform themselves from landlords of their soil to becoming strategic architects of the industrial future of their countries.

Many hail the Botswana model of 50/50 profit sharing as a major achievement in Africa, but that remains just profit sharing and in that past. The world is looking already at many other alternatives to secure sovereignty over one’s resources. In this regard, one should note that there is today a desperate need for Africa’s wealth in terms of minerals like lithium, cobalt and copper and much more, including oil and gas. This denotes an environment where a better deal is not just sharing money but an industrial integration.

African leaders can copy the Indonesian model, which banned export of raw materials and negotiated manufacturing at home. African leaders can and should negotiate with foreign parties and investors to build smelters, refineries and factories within the country. This moves the money sharing, say 50%, from a line in a balance sheet to a physical infrastructure on the ground. Building a refinery in Lughaya or Mogadishu, creates a permanent ecosystem of jobs, technology transfer and tax systems that cannot easily fly way to opaque foreign bank accounts. 

As things stand today, Africa enjoys almost similar resources and, of course, they compete with each other, offering the lowest taxes to potential investors. This triggers a race to the bottom, which only benefits the foreign investor(s). As a body of countries like AFCFTA, the African Continental Free Trade Agreement Area or even regions like the dysfunctional EAC, the East Africa Community, they should set unified minimum standards, which makes foreign investors lose the ability to play one nation against another. This is called collective bargaining, which can benefit the continent converting it from a price taker to a price setter.

When the people can track mineral revenues from the pit to the national budget, the incentive of leakages to foreign accounts diminishes. Ultimately the goal is to move from  resource extraction benefiting a few to a resource extraction benefiting the many. Leaderships should not view mineral exploitation as paychecks but as a leverage at global industrial tables. The path forward is clear: value the minerals enough to walk away from any deal that does not build a factory alongside the mine.

© Eurasia Review