high level expert group meeting report & …...2015/02/24 · implementation of the amv and the...
TRANSCRIPT
1
High Level Expert Group Meeting Report & Recommendations
“Towards the Post 2015 Development Agenda and the African Union Agenda 2063- Enhancing the management of Africa’s Extractive industries to promote sustainable
and inclusive industrial development, structural economic transformation and inclusive and resilient economic growth”
24 February, 2015, UN Headquarters, New York (Conference Room 6)
2
Overview of Contents
I – Introduction, p. 3
II- Summary of the substantive sessions
- Session 1: Opening, pp. 4-7
- Session Two: African Social and Economic transformation through inclusive and
sustainable industrial development, pp. 8-13
- Session Three: Implementing the African Mining Vision in the context of Africa’s
development aspirations: between challenges and opportunities, pp. 14-20
- Session 4: Closing, pp. 21
III – Preliminary Recommendations
- Salient points of the discussion, pp. 22-24
- Preliminary recommendations, pp. 24-26
3
I – Introduction
The meeting took place on the 24th of February 2015 and was organised by the Office of the Special Adviser on Africa (OSAA) in collaboration with the African Union Commission (AUC), the African Development Bank (AfDB), the UN Economic Commission for Africa (ECA), the United Nations Industrial Development Organization (UNIDO) and the United Nations Department of Public Information (DPI). Given that the realisation of the objectives of the African Union Agenda 2063 adopted at the recent African Union Summit in Addis Ababa, Ethiopia is premised on the optimisation of Africa’s natural resources for the benefit of its people, proper management of the natural resources is key to Africa’s sustainable development. As part of its mandate, OSAA is supporting ongoing efforts of the African countries and the African Union to maximize the developmental impact of natural resources through the promotion of inclusive and sustainable industrialization and value addition. In this regard, the United Nations Office of the Special Adviser on Africa (OSAA) convened a High-level Expert Group Meeting with the theme: “Towards the Post 2015 Development Agenda and the African Union Agenda 2063- Enhancing the management of Africa’s Extractive industries to promote inclusive and sustainable industrial development, structural economic transformation and inclusive and resilient economic growth. The specific objectives of the meeting were to:
1. Assess progress, achievements and challenges in the implementation of the AMV and
AIDA, and explore prospects and opportunities for accelerating its implementation towards Africa’s structural transformation.
2. Draw out relevant lessons and best practices from the implementation of the AMV and AIDA to inform the discourse on the role of value addition through inclusive and sustainable industrial development as a means to promoting job creation and eliminating poverty, particularly in the context of the Post-2015 Development Agenda, the SDGs and the African Union Agenda 2063.
3. Identify concrete recommendations that would greatly contribute towards strengthening the institutional capacity of the African Union to implement AIDA and the AMV.
4. Seize the opportunity to build and renew partnerships among stakeholders,
governments, and the donor partners with the intention to facilitate the implementation of the AMV and the AIDA.
The meeting was attended by representatives of permanent missions accredited to the United Nations, Government Officials from African countries, United Nations officials, private sector representatives, NGOs, academia and the media.
4
II – Summary of the substantive sessions
Session One: Opening
Welcoming all participants in his opening remarks, Under-Secretary General and Special
Adviser on Africa, Mr. Maged Abdelaziz, underscored the timeliness of the High-level meeting, as
it is convened at a time when both the United Nations and the African Union (AU) are stepping up
efforts continentally and globally to advance inclusive and sustainable development. Mr. Abdelaziz
drew attention to the recent adoption by the African Heads of State and Government of the AU
Agenda 2063, which represents the Continent’s strategic framework for its future socio-economic
transformation. Similarly, he referenced the ongoing negotiations at the United Nations on the post-
2015 development agenda, which would serve as a blue print for global development cooperation and
sustainable development efforts in the future.
Mr. Abdelaziz underlined that both agendas prioritize industrialization and value addition to
reduce poverty and create employment, particularly for women and youth. The AU agenda 2063
adopts a people-centred approach by emphasizing inclusive growth and sustainable development, in
which the extractive industry sector can play a large role. He noted that the representatives of
governments, the private sector, civil society organizations and the academic community participating
in the meeting are all important assets that will strengthen the people-centred approach to guide
development efforts at all levels. Mr. Abdelaziz informed the meeting that discussions at the meeting
would lead to recommendations to be shared with the General Assembly and the Economic and Social
Council, and would also provide an input to the negotiations on the post-2015 development agenda
and the shaping of the first ten-year action plan for Agenda 2063.
In his introductory remarks, delivered on behalf of the President of the General Assembly,
Mr. Der Kogda, Permanent Representative of Burkina Faso to the United Nations, stated that
natural resources were among the basic pillars that African countries depend upon and that the
increasing demands for commodities allowed several African countries to witness marked growth in
their export over the past decade. He noted that African countries in 2009 adopted the African Mining
Vision, abandoned the then current model for resources and moved on to one which allowed them to
boost overall inclusive growth throughout the continent. He stressed that African countries have taken
the correct steps towards beginning to strengthen extractive industries through human resources and
technology. However, he noted that some challenges remain, such as lack of adequate investment and
infrastructure. Mr. Der Kogda recommended that African countries ensure that extractive industries
play a mobilizing role for economic development, mainstreamed throughout their respective
economies, to enable the continent to reduce dependency and promote growth. He also noted that
5
African countries need to take adequate measures to protect the environment and promote sustainable
and inclusive development. Mr. Kogda lastly recommended that African countries adopt a regional
policy that support the development of trans-boundary infrastructure and promote trade, improve
productivity and partnerships and stressed that Africa needs the international community to move in
this direction to bring about transparency and proper management of natural resources.
Her Excellency Ms. Fatima Haram Acyl, the African Union Commissioner for Trade
and Industry, stressed the importance of the mineral sector for job creation, especially for youth, as
well as for poverty eradication, inclusive growth, and sustainable development through social and
economic transformation. She described Agenda 2063 as the global strategic framework which would
optimize the use of African resources for the people and noted that Agenda 2063 was an opportunity
for African countries to learn from the past and build a strategic framework to obtain social and
economic transformation for the next fifty years. In particular, Ms. Acyl referred to Agenda 2063’s
goal to “Silence the guns by 2020” and that Africa should take control of its resources in order to gain
optimum benefit. She stated that the Continent’s Mining Vision aims to encourage African countries
to achieve social and economic development through the control of their resources and also to
encourage Countries to develop mining policies at the national, sub-regional and continental levels.
The Chair of the African Group for the month of February, the Permanent
Representative of the Republic of Mozambique to the United Nations, His Excellency, Mr.
Antonio Gumende, noted that Africa is known as the richest region in the world in terms of natural
resources. Ironically, it is also classified as the least economically developed continent. It had
generally derived limited resources from its vast mineral wealth. He underlined that African countries
have committed to promoting inclusive development that is driven and managed by its own citizens.
He stressed that African growth has been propelled by exportation of raw-commodities and it was
clear that this trend had deprived the continent of a better share of global trade and concluded that
there is no doubt that industrialization will lead to development in Africa and economic policies
should create businesses to encourage trade and diversification.
The Chief Executive Officer of the NEPAD Agency, His Excellency, Dr. Ibrahim Assane
Mayaki , noted that the main challenge was how to industrialize Africa and increase its productive
capacity and underscored that this will happen through industrialization and sound industrial policy.
He added that a developmental approach in that regard is essential and gave the example of the
construction of a gas pipeline between Abuja and Algiers, which would boost regional integration,
pointing out that this reflects how Africa is putting its house in order. The conditions for success
which he quoted included institutional quality, as resources should be managed in such a way that
they benefit the majority of the population. He stressed that sound resource governance requires
6
accountability to the public and geographical mapping is significant because it will give the
population an opportunity to be informed. In that regard, he underlined the importance of building
coalitions with the media and members of parliaments.
Under-Secretary-General and Special Envoy for the Great Lakes Region, Mr. Said
Djinnit emphasized the interlinkages between natural resources and conflict on the African continent
and noted that illegal exploitation of national resources deprives countries of revenues, which should
have been used for developmental purposes. He referred to estimates that $1 billion have been lost by
the DRC annually to criminal syndicates and armed groups through illegal exploitation of natural
resources, whose criminal activities led to gross human rights violations and recruitment of youth by
over 30 illegal armed groups operating in the eastern DRC, with disastrous effects for the Great Lakes
Region. He underscored that the effective management of natural resources is therefore central to the
Peace, Security and Cooperation Framework for the Democratic Republic of the Congo and the Great
lakes Region.
Ms. Fatima Denton, Director of the Special Initiative Division at the Economic
Commission for Africa, noted that African Leaders have set a broad agenda on financing for
development, with a strategic vision to deliver on a financial architecture that would lead to inclusive
growth and structural transformation. She indicated that the African mineral and extractive sector
currently holds an impressive but untapped potential, which could be used to support the continent’s
development and mobilize domestic resources to kick start growth in underperforming sectors such as
agriculture, public health and energy. She noted that Africa’s growth of 2.4 percent of the global
production share would provide long time assets that would give future generations financial security
and economic resilience, and would reduce poverty, unemployment and the marginalization of
African peoples. She recommended that the mining sector should adopt regulations and the highest
environmental health standards that would lead to environmental sustainability as envisioned in
sustainable development goals.
the Keynote speaker, Sir Paul Collier, Professor of Economics and Public Policy at the
Blavatnik School of Government, University of Oxford, reminded the audience that we have just
lived through the biggest commodity boom that the world has ever had and now it is over. And that
the fall in oil prices has closed that chapter. He recalled the previous commodity cycle in the mid
1970s and mid 1980s, which the Africans were dissatisfied with and saw it as a missed opportunity.
Professor Collier advised African policy makers to see what went better and what did not in the
second cycle. He noted that transparency and taxation have improved. He underscored the importance
of other issues, such as public open access to geological information. Development corridors are
powerful instruments, shared infrastructure is vital, and it must be open access and for all uses. Hence,
7
lawyers are badly needed because the challenge lies within the legal structures. Natural resource
revenue is unsustainable, volatile, and can lead to physical depletion and obsolescence. Stewardship
of these revenues is absolutely important. To deal with this African countries need domestic
investment, and Africa must invest in investing. The final area which Sir Collier underlined that needs
further improvement is communication. A main component to a good communication strategy is
managing expectations, and when there are discoveries the wealth element is exaggerated for the
common citizen, even though often this wealth per capita is unsubstantial. Secondly, the
communication strategy should manage ownership issues. Disputes over ownership are literally lethal,
as we can now see in the case of South Sudan. The right time to settle ownership issues is is pre-
discovery of resources, as was done in Botswana. The final strategy is stewardship, to build a mandate
of saving and investing rather than consuming. Ordinary citizens think more in the long term than
governments. We must use the resources to build a better world for our children. Lastly, Sir Collier
concluded by remarking that after finishing the super cycle of commodities, it is important for Africa
to take stock and build partnerships.
8
Session Two: African Social and Economic transformation through inclusive and sustainable
industrial development
Ambassador Charles T. Ntwaagae, Permanent Representative of Botswana to the United
Nations, moderated the morning thematic session on the topic, ‘African Social and Economic
transformation through inclusive and sustainable industrial development’. Mr. Paul Maseli, UNIDO
Director , presented the issue paper, produced by UNIDO, on how the private sector can contribute
towards harnessing the full potential of natural resource endowments and contributes to inclusive
economic growth in Africa.
Mr. Maseli firstly pointed out that Africa’s progress is notable in light of the fact that in 2013
five of the top ten fast growing economies were in Africa. Additionally, there have been notable
improvements in economic and political governance as well as increased spending. However, this
economic growth has not resulted in shared prosperity. The level of poverty remains high, as the
continent’s share of the global GDP was 1.6% in 2013. In fact, the level of industrialization declined
between 1990 and 2013, according to Mr. Maseli. He attributed the lack of growth to the export of
commodities, because when governments export raw-commodities they also export jobs and tie their
economies to factors that they cannot control, which impacts the sustainability and inclusiveness of
growth. Additionally, Mr. Maseli reminded the audience that no country in the world has ever
developed without industrialization and stressed that Africa faces opportunities and challenges in this
respect, opportunities include the potential for Foreign Direct Investment (FDI) which is going to
African resource-rich and resource-poor countries. Furthermore, the rising labour costs in Asia
present an opportunity which may shift jobs to Africa instead. The challenges nevertheless are
considerable including: infrastructure deficit, weak institutions, investment climate, and effects of
climate change. Lastly, Mr. Maseli elaborated on the ‘how’ of industrialization and highlighted a few
factors that play a central role: the strong role of the state as well as sectors with a lot of potential such
as agriculture and the food and beverages sector. Mr. Maseli underlined in closing that there is no
one-size-fits-all solution. Different industrialization paths are possible and each country will need to
select its policies and strategies based on its specific socio-economic circumstances. In order to do so,
it will need to focus on all sectors, such as trade, logistics, infrastructure and technology, but if Africa
does not take advantage now, the opportunity may be lost.
Mr. John W. McArthur, Senior Fellow at the Global Economy and Development
Programme, Brookings Institution addressed the importance of the extractive industry from a
different angle, namely how it should support the agricultural sector, because the low productivity of
the agricultural sector is one of Africa’s biggest problems. The extractive industry only amounts to a
very small amount of the workforce, and only for half of the African countries (approximately 22)
9
does the extractive sector make up for 10% or more of the economy. Mr. McArthur explained that
there are two basic problems with the agricultural sector in Africa. The first is access to infrastructure
(transport and energy) and the second is access to fertilizers, because Africa has the most costly and
most distant access to fertilizers. Some mineral deposits could be leveraged for fertilizer in Africa, but
the issue is that it is still very difficult and costly to transport these minerals. Regarding the
sustainable development goals, this means that three points have specific priority according to Mr.
McArthur:
1. How to maximize the infrastructure returns on agriculture?
2. How to deal with royalties and the financial sector?
3. And the issue of sustainable development accounting principles.
Ms. Maureen Jangulo Dlamini, Chief Executive Officer of the Zambia Chamber of Mines
viewed the session’s question from the perspective of the private sector. She noted that mining is one
of the largest drivers of growth in of Sub-Saharan economies, including Zambia, as mining
contributes an excess of 25% to government revenue. This means the private mining sector holds
great potential for economic growth, but countries like Zambia need to focus more on revenue
management rather than revenue collection. This is key when we are talking about inclusive economic
growth, which allows people to contribute to and benefit from economic growth. This is a big
challenge for Africa as the growth rates are good, but the effects have not trickled down to ordinary
citizens. In order to ensure that the private sector contributes to inclusive economic growth, Ms.
Dlamini presented the Action Plan for Accelerated Industrial Development for Africa (AIDA) Model,
which dedicates several clusters amongst others to promoting infrastructure, innovation, industrial and
technical skills. Lastly, Ms. Dlamini drew particular attention to the cluster which focusses on respect
for the environment, communities and people more broadly, as the mining sector needs to bring the
communities in which they work along in the development process.
Dr. Elias Ayuk, Director of the United Nations University Institute for Natural Resources in
Africa (UNU-INRA) placed the requirements for Africa’s industrialization in the context of the post-
2015 development agenda. His first observation was that the Sustainable Development Goals, which
are currently being deliberated upon by member states, are more technology centric than the
Millennium Development Goals were. Both SDG 8 and SDG 9 have key elements that underline the
importance of technology transfer, which provides for great opportunities for Africa. In order for this
technology transfer to occur, economic diversification should be made the backbone of the
industrialization process with special attention to commodity-based industrialization. Accordingly,
this requires investment in R&D. He underlined that the the implementation should: enhance cross-
sectoral linkages and partnerships; have the right infrastructure and policy space to access frontier
technology; and draw from the experience of successful countries to develop policies and
10
programmes. Dr. Ayuk concluded with the framework of six I’s which he developed. In this
framework, ideas plus incentives, with innovation, infrastructure and institutions can be implemented
well to achieve improved growth and sustained wellbeing.
Discussion
The interactive question and answer session which followed, delved into a few more issues in
detail, such as the link between energy and industrialization, the role of urbanization vis-à-vis the
extractive industry and the role of protection against unfair competition to promote industrialization.
The speakers responded to each question and comment. On energy and industrialization, the speakers
agreed that the technology is available but that Africa is not investing enough. Ms. Dlamini also
underlined that we should look for more alternative sources of energy and promote partnerships to
help funding the high upfront costs of energy projects. Mr. Maseli made an appeal for more action and
less theoretical analysis as a lot of learning comes by doing. On urbanization, Mr. McArthur stated
that most have an urban bias whereas Africa is mostly rural which means that it either needs a more
productive agricultural sector or more well-paying jobs for the growing African population.
In particular, Mr. Eloho Otobo raised the issue of appropriate technology to facilitate effective
natural resource value addition. He added that it was critical that natural resource governance was
made central to any mechanism to efficiently transform the continent through industrialization.
Moreover, Mr. Otobo highlighted the importance of inventions, innovation and imitations as a conduit
through which Africa could add value to its commodities, but stressed that this would not happen
without adequate investments in science and technology.
In response, Dr. Mayaki stated that investment in science and technology is indeed very important
for industrialization in Africa. He cautioned however that it was important to adapt home grown
technology to Africa’s own needs. Towards this end, Dr. Mayaki stressed the importance of South-
South Cooperation as a facilitator of technology transfer. Dr. Mayaki stated that though technology
was important, we should not wait for technology advancements to move forward with our
industrialization process.
The Permanent Representative of Tanzania, H.E. Mr. Tuvako Nathaniel Manongi, noted that,
among others, the main challenge facing Africa’s industrialization was access to adequate
infrastructure, and in particular energy sources to power the industrial revolution. On Agriculture, he
raised the important issue of access to fertilizers and raised the question about what legal frameworks
where currently in place to facilitate and maximize the potential of natural resource value addition.
11
In response, Dr. Ayuk stated that access to energy was indeed crucial for industrialization. He
stated that it was important to revisit the gap in infrastructure in the African continent. Dr. Ayuk noted
that one possible solution to providing energy was through the renewal of waste products to produce
energy. Regarding access to technology, he informed the meeting that the technology was already out
there. All Africa had to do was leap frog using already available technologies. Dr. Ayuk added that
the role of Small and Medium Enterprises (SMEs) was critical in this regard.
Ms. Maureen Dlamini, also responding to the need for energy to facilitate the industrialization
process, stated that efforts should be made to look at alternate sources of energy in Africa. She
stressed that alternate funding mechanisms were also crucial to funding industrialization projects and
that it was important to be creative in getting financial institutions to fund industrialization projects in
the African continent.
The Representative of The People’s Republic of China took the opportunity to raise China’s
support for Africa, including within the framework of the Forum on China Africa Cooperation
(FOCAC), and during the current negotiations on the Post-2015 Development Agenda and stated that
China supported the priorities of Africa, as encapsulated in the Common African Position (CAP) for
the Post-2015 Development Agenda. He further stated that an enabling environment was critical to
allow for Africa’s economic growth and called for the international community to honor its pledges
and commitments made towards Africa, particularly on FDI, ODA and trade related issues. He also
called for the strengthening of partnerships with Africa through South-South and triangular
cooperation. Moreover, he called for the international community to afford Africa the adequate policy
space for development and stressed that African ownership of its development priorities should be
respected, and in this regard, he commended the African continent for adopting Agenda 2063, through
which its partners should support Africa.
The Representative of the People’s Republic of China stated that China-Africa relations
recognized that industrialization was the way to transform the African economy, and would continue
to support Africa through win-win cooperation, culminating in increased trade with the African
continent to the tune of some $180 billion, an increase of 4.5 per cent since 2013. Finally, he further
stated that China, through its foreign policy would continue to show its solidarity with the African
continent as it endeavored to transform its economies through industrialization and natural resource
value addition (beneficiation).
The Representative of UN-HABITAT stated that Africa was the least urbanized region in the
world, but was now urbanizing at the fasted rate in the world. She added that rapid urbanization
implied that the urban settlements will progressively absorb the population growth in Africa. She
12
noted that the African continent would therefore witness an increase in population concentration in
urban areas, as opposed to the wide dispersion pattern that was prevalent in the past. Consequently,
she noted that it was very important for development policy to carefully weigh changes in population
distribution and their policy implications for both urban and rural development. She also emphasised
that much emphasis should focus more on strengthening the institutional capabilities needed to meet
the challenges of rapid urban growth in Africa.
In response, Mr. McArtur stated that Africa was indeed urbanizing at the fastest rate in the world.
He stated that the greatest challenge for Africa was how to raise the productive capacity of the African
citizenry, whether in rural or urban areas. Mr. McArtur stated that Agriculture was very important to
the livelihoods of the many who live in rural areas, hence the importance of having access to
fertilizers to ensure that rural farmers got more produce from their farms, and therefore were deterred
from moving to urban areas in search of jobs. He also raised the issue of improved technology for
fertilizers and seeds to increase productivity of farms. Mr. McArtur stated that every effort should be
made to ensure that every incentive was given to increasing agricultural productivity, the mainstay of
peoples’ livelihoods in Africa, before focussing on industrialization. He noted that there was a
sequence to development, and that sequence entailed Agricultural transformation followed by
industrial transformation.
Dr. Eric Kashambuzi called for reconsidering the traditional notion of comparative advantage in
which African countries depend on natural resources exports. He highlighted the importance of
protecting infant industries in Africa to ensure that they succeed. He observed that undue competition
from multinationals should be carefully monitored to help preserve the viability of infant industries in
Africa. Dr. Kashambuzi noted that developed nations did not face the same type of competition that
African industries were now facing, and therefore cautioned that all necessary measures should be put
in place to protect these industries, while also gradually helping them to become more globally
competitive.
In response, Dr. Ayuk stated that while it was important to protect infant industries, all efforts
should also be made to ensure that there was good leadership in place to guide the industrialization
process. He cautioned that too much protective measures could become a burden as the infant
industries could become inefficient and fail to compete globally. Dr. Ayuk reiterated that it was no
longer to Africa’s comparative advantage to export raw commodity materials. It was now time to start
processing and adding value to our raw materials. He gave the example of Cocoa from Ghana which
is processed in Switzerland to Chocolate and re-imported back to Africa.
13
Dr. Mayaki picked up on the issue of why Africa was not industrializing at a faster pace as
alluded to by Dr. Ayuk. Dr. Mayaki stated that it was time to shift from analysis to implementation.
He raised the issue of the AIDA which had gone through a rigorous analytical process, and now had a
plan of action which was still lagging behind in implementation. Dr. Mayaki stated that some African
countries where however getting it right, for example, Ethiopia and Mauritius, which had shown over
time their political will to move on from Memorandum of Understandings (MOUs) to Memorandum
of Doings (MODOs).
The Representative of Kazakhstan stated that his Government supported the Common African
Position on the Post-2015 Development Agenda, and would support Africa’s priorities during the
current negotiations on the Post-2015 Development Agenda. He informed the meeting that the Second
West Africa Oil and Gas Security 2015 Summit would be held on 10-11 June 2015 in Lagos, Nigeria
to further discuss exciting investment opportunities on natural resources in Africa.
Dr. Delois Blakely (Queen Mother) thanked OSAA for organizing the meeting and stated that it
was important that while we discussed issues of natural resource extraction, we should remember that
Africa was not for sale. She stressed the need to reflect on the rights we had as a continent, and
alluded to the over 55 million Africans in the Diaspora, who should also be mobilized to help support
Africa in its industrialization process.
14
Session Three: Implementing the African Mining Vision in the context of Africa’s development
aspirations: between challenges and opportunities
The third session was devoted to the implementation of the African Mining Vision (AMV) was
moderated by Her Excellency, Ms. Marjon Kamara, Permanent Representative of Liberia to the
United Nations.
Mr. Busia, Senior Mineral Sector Governance Advisor at the Economic Commission for
Africa presented the issues paper on “Main achievements in the implementation of the Africa Mining
Vision and what critical lessons can be applied to other extractive sectors in Africa?” Mr. Busia
stated that creating awareness around the Africa Mining Vision is one of the more challenging but
important components. The AMV’s goal is to create a “transparent, equitable and optimal exploitation
of mineral resources to underpin broad-based sustainable growth and socio-economic development”.
This requires a number of policy shifts at the African governments level, such as for example
“adopting innovative fiscal sector and taxation regimes” and “supporting regional integration and
cooperation”. He noted that UNECA, AUC, AfDB and UNDP are the implementing partners for the
AMV through the African Minerals Development Centre (AMDC) and that the focus of the AMDC is
quite broad, and includes: tracking and coordinating the implementation of AMV; identifying gaps
and areas of need and providing expertise to address those gaps; policy research and strategies; think
tank capacity and implementing continues advocacy. He explained that the Country Mining Visions
(CMV) promoted through the AMDC are both a process and a product, and really emphasize the need
for a long term perspective. The process takes place through stakeholders’ engagement and defines a
road map for all sectorial ministries while the product is the social contract it provides for promoting
economic transformation, inclusive growth and mineral resources based industrialisation.
Mr. Busia discussed the experiences in a number of countries with the implementation of the AMV,
including Mozambique, Lesotho, and Tanzania while many countries are due to receive support for
their upcoming CMV processes and reform activities. Mr. Busia concluded by highlighting some of
the main challenges for AMV domestication and CMV:
1. Poor knowledge of and familiarity with AMV among African governments;
2. Lack of strong political will and commitment;
3. Concrete risk of diversion of energies/attention of African governments and citizens from
pursuing AMV – there are different competing frameworks in place;
4. Efficient administration and sound national governance framework and practices;
5. How to combine a broad range of stakeholders with legitimacy and capability to take
decisions, enforce them and support them over a period of time (beyond political cycles);
6. Which frameworks and analytical tools can be used to identify the economic and social
impacts of extractives industries.
15
Ms. Sheila Khama, Director of the African Natural Resources Centre of the African
Development Bank, discussed in her response to Mr. Busia’s presentation that Africa is not the only
continent which has large natural resource wealth and therefore competes heavily for Foreign Direct
Investment (FDI). The other element that she stressed is that it is currently only an aspiration that
governments distribute the wealth from the extractive sector as this requires a lot of capacity, and on
top of that the extractive sector is the most corrupt. The driver for corruption is surprisingly not at the
concession but at the implementation stage, when layers of people are involved in for example
procurement. So, the bottom of the population is not getting any better, and hence Ms. Khama
focussed on the partnerships which are needed to implement the AMV. The mining sector is diverse,
depending on the forty different mineral types that exist. This requires significant knowledge and
tools from institutions inside and outside of Africa. In order to avoid duplication and play a
complementary role, the African Development Bank tries to focus on practical tools, which delivers
extensive knowledge in a more pragmatic fashion.
Ms. Khama underlined how important it is for governments to engage civil society, domestic as
well as civil society from abroad. She explained that civil society is seen as the most trusted segment
of society by most of the population and hence governments need them to reach people. This is
something that the African Development Bank is already trying to establish, and focuses on public
participation because people have confidence in civil society. In addition, the bank contributes to
AMV through long term resource planning and governance and regulatory effectiveness. Ms. Khama
concluded with a couple of questions addressing the tension between governments and investors,
which is a relationship that should be addressed and the question of what we should capacitate
African governments in to arrive at some priorities. Not all the skills need to be acquired by the civil
service, as many others can be outsourced.
Mr. Mugyenyi, Focal Point for the African Mining Vi sion and Senior Industry Adviser to
the Commissioner for Trade and Industry, African Union Commission outlined the linkages
between Agenda 2063, the Common African Position (CAP) on the post-2015 development agenda
and the African Mining Vision (AMV). The mineral sector will play a transformative role which will
bring both agendas together while being informed by the AMV. The Structural Transformation which
Africa wants to achieve means that countries move from factor-driven economies to technology,
efficiency and eventually innovation driven economies. Upstream beneficiation means that domestic
producers and companies need to link to the regional/global mineral chain. The downstream
beneficiation is what takes place somewhere else in the world. Sidestream linkages are the sectors that
support industrialisation, such as communication, financial services and others. What we are missing
in Africa are the requirements for upstream beneficiation (industry operations, technical transition etc)
16
and downstream beneficiation (skilled jobs, taxes, innovation etc). The challenges of implementing
the AMV from the African Union Commission perspective can be boiled down to 4 points:
1. The role of the state – what is the role of the state? African states need to reorient themselves,
as some of their mining policies are over 50 years old and many of these policies, across
sectors (agriculture, trade etc) are not speaking to each other. The legal and regulatory
framework needs to be fit for purpose and robust.
2. The role of institutions – what do institutions do to implement AMV? Are the institutions
integrated and working together holistically? Therefore the African Union has been tasked to
take stock of all the centres of excellence that exist to work on the AMV.
3. The role of the private sector. Africa needs to be competitive and the link between domestic
and international policies needs to be strengthened. Even at the local level, companies need to
be competitive to feed into the mineral sector. How are we addressing the small and artisanal
mining companies? There is a new reformed women and mining association to understand
how women are contributing to the mining sector.
4. The role of the implementing partners. This one is more critical than the other three points.
We are all working in silos, through the Regional Coordination Mechanism and the different
UN agencies who should work as one UN at the national level. Our implementation at the
national and regional levels is not results oriented.
Mr. Malango, CEO of the Namibian Chamber of Mines focussed his presentation on the
value addition process in Namibia and underscored that the mining industry is a driver for other
linkages, with other sectors. Many countries focus on policy interventions that aim to deliver value
addition, but some of these are not so effective. The Namibian Chamber of Mines established a Joint
Value addition Committee to evaluate what should happen to our minerals when they leave the mine.
On the challenges and opportunities that have been identified through this process, Mr. Malango
stressed that there is no common understanding of stages of value addition, as well as there are
different interpretations of who should do what. The definition that Mr. Malango proposes is
“Processing of minerals from mined ore to end consumer products”. Value addition takes place in two
main stages – between mining and refinery – and then beyond for manufacturing and beneficiation. At
the latter stage (for beneficiation and manufacturing) comparative advantages are not needed. Another
challenge is created by a lack of economies of scale. Some commodities are very unique, for example
gold mines never run a refinery as the economies of scale are not feasible. Years ago gold would be
refined in Switzerland and now South African mining companies have invested in refinery facilities in
South Africa so that jobs are at least kept in Africa. A similar story applies to uranium as a country
like Namibia only mines uranium but is not engaged in any of the enrichment or other value addition
processes. The lessons for the African Mining Vision are hence to:
a) Standardize the definition of value addition;
17
b) Adopt standard principles to unique minerals such as gold;
c) Identify constrains and address them;
d) Create intra-regional markets for mineral based finished goods;
e) Namibian road map of value addition should be emulated and Africa needs country specific
value addition strategies.
Professor Ndikumana at the University of Massachusetts-Amherst discussed the role of the
private sector to contribute to inclusive economic growth in Africa. Mr. Ndikumana walked the
audience through a number of important issues, focussing on “How can the private sector (domestic
and FDI) contribute towards harnessing the full potential of natural resource endowments and
contribute to inclusive economic growth in Africa”. First of all he urged policy makers to take a broad
perspective, a comprehensive strategy for engaging the private sector to maximise the value addition
of mineral resources. The mineral resource sector is basically de-linked with the financial sector as
mineral companies barely are listed in the stock market. Professor Ndikumana posed the question
whether we can invest our wealth domestically through the financial system which would increase the
overall contribution of the mineral sector to the economy. Secondly, he stated that we need to take a
long term perspective when we are trying to understand how much the economy gains from mineral
resources. The mineral sector is not harnessed enough, which would increase the share of mineral
resources to GDP, but also indirect contributions should count. He also noted that we need to think
about revenue redistribution – many conflicts arise from minerals and mining communities rarely see
benefit from mineral resources because this wealth is never redistributed. So, this redistribution
formula should be negotiated between the central government, local government and the community.
The public needs to see the benefits from the resources. We also need to think regional – for example
through regional mining marketing and processing hubs. There is a bias towards large formal mining,
whereas small scale mining is very important and a lot of value and employment is created there. The
problem is that the jobs tend to be temporary and how do you regulate and gain revenue from small
scale mining? Nevertheless, small can be beautiful and we need to invest more in research to
understand the true value of small scale mining. The main policy levers which Professor Ndikumana
presented for incentivising the private sector to contribute to natural resource development as part of
inclusive growth included:
- Long planning horizons;
- We need to use the taxation system to attract investment, both foreign and domestic investors.
Tax incentives tend to be biased to FDI instead of domestic investors, which should be
rectified;
- Privatisation has played a role in mobilising investment, but we need to think about how we
privatise diligently so we create a more level playing field where domestic investors can also
contribute;
18
- We need to mainstream employment, which can be driven by well-crafted policies. Labour
should not be brought in from abroad by mining companies where Africans can do the same
jobs;
- Curbing tax evasion, especially by mining companies, and mining sector-related illicit
financial flows.
In his conclusion Professor Ndikumana claimed that for Africa to be successful we need a paradigm
shift and we need to go beyond comparative advantage as a static concept and think about
comparative advantage in a dynamic fashion which means that African economies can build capacity
to become competitive. This also applies to how we can maximise national and regional policies to
incentivise the right type of investments. Lastly, Professor Ndikumana underlined that policy space
and ownership in a global context is still created in spaces in which Africa is not represented, which
should change. It is only at the level of global governance that we can address corruption.
Discussion
The interactive question and answer session addressed the role of Corporate Social
Responsibility (CSR) of mining companies as Sir Collier questioned what companies could best do as
part of CSR as some are now building capacity in local government (for the construction of schools
for example) whereas others are partnering with supply companies to bring these local firms up to
global standards. He stated that it was important to help African Governments build local capacities to
facilitate the industrialization process. Sir Paul Collier also alluded to Malaysia, as a case study,
which had succeeded in diversifying its economy from a natural resource based economy to a
technology hub, as evidenced in Penang Science Cluster. He cautioned against putting all eggs in one
basket by way of only focusing on mineral beneficiation.
In response, Mr. Malango stated that indeed local supply chains were critical in the
industrialization process as this would allow for transfer of technology and skills to local communities
and create the necessary sideward linkages with other sectors of the economy, including by providing
jobs for the local communities. He added that African governments had started to look more seriously
into corporate social responsibility; however CSR were still mostly unregulated. Mr. Malango added
that more efforts were needed however to more effectively engage with the private sector. He stated
that in his country, the progress in legislating CSR and supply chains was slow, but the process was
moving in the right direction.
Mr. Malango also informed the meeting that Namibia was now in the process of rolling out a
Mining Charter that would help protect the mining industry, while also ensuring that the extractive
mineral industry did not only benefit and empower the rich, but was instead streamlined through
19
various backward and forward linkages with other sectors of the economy to allow for beneficiation
and help reduce poverty through job creation. He added that one pillar of the Charter would include a
section on empowering communities by ensuring that mining companies paid a bare minimum to
social safety nets and environmental protection. To conclude, Mr. Malango stated that Namibia was
also building a Mining Procurement Database to keep track of its supply inventory in the mineral
sector. He added that this would help open up the mining industry to the local communities as they
would purchase mining inputs from local firms.
On the issue of CSR, Mr. Frank Mugyenyi stated that the issue of taxation of multinationals
was critical to help offset some of the negative impacts of the mining industries in the environments in
which they operate. He commended Namibia for their proactive mining policies, in particular their
efforts to design a Mining Charter and a Mining Procurement Database. Mr. Frank Mugyenyi stated
that such practices could be replicated continental-wide as good practices.
Ms. Fatima Denton alluded to the remarks made by Ms. Khama on the role of CSOs in the
industrialization process. In particular, she sought for more clarity on the issue that Governments that
were unable to engage effectively with CSOs lacked good stewardship and governance practices in
managing the industrialization process. Ms. Denton noted that collaborating with CSOs led to a
positive ripple effect as it fostered accountability, transparency and implementation. She asked,
however on how to expand the horizon and engagement with CSOs so that they could be better
partners in the implementation process, together with the private sector. Adding to her comments, the
Permanent Representative of Liberia, Ambassador Kamara asked how to ensure that Governments
trusted the CSO’s first, as this normally was the stumbling block in fostering effective partnerships
with Governments..
In response, Professor Leonce Ndikumana stated that there was a need for a strong inclusive
industrialization strategy that clearly articulated the role of the Government, the role of the private
sector, the role of CSOs, and the role of Public –Private Partnerships. He added that the role of the
CSOs would help ensure accountability by Governments in the implementation process and help
eliminate corrupt practices. Professor Leonce Ndikumana stated that the strategy should also outline
how the revenues from the extractive sector could be used to finance the building of infrastructure to
facilitate the industrialization process. Finally Professor Leonce Ndikumana stressed the importance
of building capacity in the extractive sector with the necessary skills to manage the local industries.
In response to the point made by Mr. Frank Mugyenyi that the Regional Coordination
Mechanism (RCM) was not working effectively, and that the AU and its partners continued to work in
silos, Mr. Abdelaziz stated that the UNs support for the African Union largely depended on the
20
priorities of the African Union and their programmes to implement their priorities. He added that the
UN was very sensitive to the issue of ownership and hence the best way to get the UN’s support was
through United Nations General Assembly resolutions. Mr. Abdelaziz stated that the UN supported as
the NEPAD initiative through General Assembly resolution57/7 and 57/300, which led to the creation
of OSAA as the focal point and Secretariat for coordination and advocacy of the NEPAD programme
at the UN Headquarters. He noted, however that the RCM process was signed in 2006 by the then
heads of the AU and the UN, without going through any formal process to institutionalize the
partnership. As a result, he noted that there was no financial backing to support the implementation of
the AU programmes, as encapsulated in the Ten Year Capacity Building Programme, with the RCM
being its Secretariat. Mr. Abdelaziz advised the African Union to partner with the United Nations,
through the African Group of Ambassador here in New York, particularly with the recent adoption of
Agenda 2063. He concluded that OSAA would then work with the African Group as it sought to
adopt the relevant General Assembly resolutions for UN support for the implementation and
monitoring of the African Union Agenda 2063.
In response, Mr. Frank Mugyenyi stated that in the AU’s previous engagements with the UN-
ECA, in particular, with Mr. Antonio Pedro, issues of effective collaboration between the AU and the
UN had emerged. He noted, however, that progress had since been made with the AU’s interactions
with the ECA Office in Addis Ababa, through his engagements with Mr. Kojo Busia. He called for
the UN to work as one at the sub-regional and continental levels, and to effectively coordinate its
support to the AU through the RECs.
Dr. Mayaki commented that extractive industries in Africa were originally embedded within
extractive institutions in colonial times for export out of the continent. As a result, he noted that the
mining and extractive industries still lacked the full integration into the local economies of the African
countries. He stressed that this required strong leadership to link the mining sector to other sectors of
the economy, including in agriculture and education. Dr. Mayaki also raised the issue that some of the
public policies put in place in the mining sector were not rational and only served special interests. He
advised that public policies should be well thought out and should serve the interest of the countries,
particularly to reduce poverty through inclusive development policies, and not solely to enrich the
elite of the societies. Dr. Mayaki stated that the question we should be asking is how to ensure that the
public policies enacted were useful to the public good, that is, to the welfare of the people. This
pointed to political will, good leadership and stewardship and the political power structure and
relationships between the Governments and their citizenry.
21
Session 4: Closing:
In his closing remarks, Mr. Abdelaziz thanked all relevant parties, the ambassadors of Botswana
and Liberia who moderated the two interactive sessions, the co-organisers, the panellists who shared
their views as well as the audience who asked questions and made comments. The USG stated that
this session will be followed with others while OSAA will continue to cooperate with the African
Union, the African Development Bank, the Economic Commission for Africa, the private sector, civil
society and other parties to support Agenda 2063. Materials will be made available on the OSAA
website and the co-organisers will produce a summary report with key recommendations.
Commissioner Acyl also concluded that the sessions were successful. Her closing remarks
underlined that industrial development is a must for Africa, not a luxury. No country in the world
industrialised because of aid and hence Africa needs its own resources to transform its economies.
Mineral wealth, if properly used and managed can contribute to broad-based development. Transport,
energy and water infrastructure are also critical to develop the mineral potential and leapfrog new
technology to protect the environment at the same time. The promotion and use of local content and
beneficiation should be done through innovative measures. One of the pre-conditions of managing
mineral resources is that when they are badly managed they can lead to conflict, as Mr. Djinnit aptly
presented. Science and technology are the bedrock for developing a constructive industry to arrive at
economies of scales. Geological mapping is also a requirement for this development to know about
the extent of our resources. Agenda 2063 is the basis for implementation. As the way forward the
Commissioner called for more effort so the mineral sector provides more sidestream linkages to
energy and infrastructure sectors and she said that more needs to be done to popularise the AMV, in
which OSAA could play a role. Lastly, she concluded that a percentage of ODA should go to
productive capacities, because most of it is directed somewhere else and if African countries do not
insist on this, it will be very difficult for Africa to transform our economy and create jobs.
in his closing remarks, Mr. Maseli, underlineed that Africa should address the issue of productive
capacity; the ability of different African countries to manage their systems (management,
communication, follow-up etc). Looking towards the future, Mr. Maseli recognised that the post-2015
agenda reflects several issues which are of great importance to Africa, but if one looks at the UN
system today, only few deal with economic development issues. Hence, Mr. Maseli advised African
Ambassadors to pay attention to this and strengthen the UN system to deal more with economic
development issues.
22
III – Preliminary Recommendations
First: Salient points of the discussions:
� Improved transparency and accountability were identified as core prerequisites to enable
extractive industries to contribute to sustainable development. Promoting accountability at all
levels and among all actors engaged in natural resources exploitation, besides managing
ownership issues, are critical factors for enhancing the management of the extractive
industries.
� The crucial role of manufacturing and enhancing the productive capacities of African
economies as drivers for job creation, sustainable livelihoods, food security and equitable
growth, which are key requirements for eradicating extreme poverty in Africa by 2025 as well
as meeting the associated inclusive sustainable development goals in the long-run. The full
participation of women and youth should be an integral part of these efforts. National policy
dialogues on the extractive industry should include women and youth in their consultations as
well as in the decision making processes.
� The need to implement the recommendations of the Seventh Joint AU Conference of
Ministers of Economy and Finance and ECA Conference of African Ministers of Finance,
Planning and Economic Development, held in Abuja, Nigeria in March 2014 which stressed
the need for adopting credible industrial policies as well as the establishment of appropriate
mechanisms for resource mobilization and effective industrial policy organizations to enhance
the structural transformation of the continent. In this regard, the findings of the 2013 and 2014
Economic Report on Africa by the ECA and the AUC should be dully taken into
consideration.
� Long-term financing and capacity building for the implementation of the African Mining
Vision (AMV) and the Plan of Action for the Accelerated Industrial Development of Africa
(AIDA) is essential. The establishment of the Africa Minerals Development Centre, as a
Specialized Agency of the African Union as agreed by the 23rd AU Summit will certainly
assist in highlighting the importance of the AMV and AIDA.
� Enhanced cooperation and coordination between the African Union Commission, the NEPAD
Agency, Regional Economic Communities, and United Nations system, in particular
specialized agencies such as UNIDO, is of crucial importance to ensure synergy and
harmonization of national, regional and global programmes in the implementation of the
African Mining Vision within the framework of Agenda 2063 and the post-2015 development
agenda.
23
� Commodity-based industrialisation can be a strong basis for intensified intra-Africa regional
trade and support international efforts in climate change, as called for by Agenda 2063.
Sustainable industrialization and the use of modern and clean technology are prerequisites.
Technology transfer and capacity building remain key to economic growth and sustained
industrialisation in Africa.
� The nexus between peace, security and development was stressed. Efficient management of
natural resources will lead to economic and social inclusion, thus will lead to supporting the
objective of the African Union to silencing the guns by 2020;
� The profound negative socio-economic impact of illicit financial flows needs to be addressed.
African countries and their development partners, with the support of the AU and the
international community should continue to take measures towards curbing illicit financial
flows from Africa, including measures to address tax evasion. The Mbeki Report adopted by
the 24th AU Summit contains recommendations that could provide the basis for addressing
this issue.
� Private investment, both domestic and foreign direct Investment, can contribute immensely to
inclusive economic growth in Africa. Multinational companies should be encouraged to
increase their investment in local processing; link Africa into global value chains, and align
their business activities with national sustainable development laws and priorities, including
the AMV goals and objectives. Companies could also boost mining revenue/taxation receipts
while plugging financial leakages in the extractive industry in Africa. Corporate social
responsibility should be promoted as part of the broader commitment by all stakeholders to
local communities’ development and empowerment.
� The need to protect the African ecosystem, reduce environmental effects, land degradation,
deforestation and desertification, which are often associated with extractive industries was
stressed. This will require investments, including from mining corporations, as well as
technology transfer and human capital development to enhance Africa’s industrial
productivity and competitiveness;
� Investment, domestic and foreign, including by sovereign wealth funds, in education, training,
technology and innovation, and infrastructure development are critical enablers to address
many of the main bottlenecks that constrain Africa’s access to global value chains and ensure
a sustained and inclusive economic growth that is translated into meaningful reduction in
poverty levels. These investments, public and private, are crucial for expanding Africa’s
manufacturing base, building productive capacity, and improving the share of the continent in
international trade and world manufacturing value added.
24
� The role of Africa’s development partners in providing technology transfer, capacity building
and finance as well as improved market access is essential to support enhancing the
productive capacity of the African economies and promote structural economic
transformation, including through industrialization and value addition.
� A paradigm shift in managing natural resources endowments is needed, including with regard
to going beyond the traditional notion that the comparative advantage of Africa lies in its
exported natural resources. African countries should reduce their reliance on natural resources
exports and adopt new and innovative approaches for beneficiation, through industrialization
and value addition.
� The importance of enhancing cooperation, coordination and partnership between the United
Nations system and the African Union, and encouraging the Office of the Special Adviser on
Africa (OSAA), The African Union Commission (AU), the United Nations Economic
Commission for Africa (UNECA), the United National Industrial Development Organization
(UNIDO), and the African Development Bank, to support the implementation of the
following concrete recommendations of the EGM.
Second: Preliminary Recommendations
Based on the above, the EGM has put forward the following concrete recommendations for
consideration by African countries; the African Union, NEPAD and regional economic
communities (RECs); development partners; and the United Nations system:
A) African Governments should:
1) Conduct geological mapping of natural resources and develop national strategies for the implementation of the Africa Mining Vision, including the development and implementation of country mining vision that incentivizes value addition and industrialization.
2) Increase their investment in support of education and training as well as to support small scale mining and small and medium enterprises.
3) Develop policies and legislations that promote transparency and accountability in the exploitation of extractive industries and address illicit financial flows.
4) Promote public-private partnerships and corporate social responsibility.
5) Create an enabling environment to attract domestic and international investment, including sovereign wealth funds, to build productive capacities and promote value addition and industrialization.
6) Mobilize support and advocate for building resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation.
25
7) Implement appropriate policies and measures, including in the area of tax reform to curb illicit financial flows, including by addressing tax avoidance.
B) Within their specific mandates, the African Union, NEPAD and regional economic communities (RECs) should:
8) Provide support, including technical support, for African Governments in the formulation of national strategies to enhance the productive capacity of the African economies.
9) Promote intra-African trade to achieve economies of scale and the establishment of regional marketing and processing hubs. African regional and sub-regional organizations should continue to advance Africa’s integration agenda to reach the goal of the Continental Free Trade Area.
10) Prioritize value addition and industrialization, infrastructure development and access to energy in the first 10-year Action Plan of the AU Agenda 2063.
11) Mobilize resources for the Implementation of the NEPAD sectoral frameworks and projects as well as the Dakar Agenda for Action (DAA) to finance infrastructure development projects given the importance of infrastructure development for enhancing the structural transformation of the African economies.
C) Africa’s development partners should:
12) Support the development of downstream and upstream linkages from the extractive industries sectors.
13) Facilitate technology transfer to ensure sustainable exploitation of Africa’s natural resources and mitigate environmental effects.
14) Provide finance and capacity building to support the implementation of the Africa Mining Vision, including through building institutional capacities at the national, regional and sub-regional levels.
15) Provide increased aid for trade and improved market access for African exports, particularly manufactured goods.
16) Improve access to credit, on concessionary terms, to enhance the efforts of African countries to support small-scale mining, small and medium enterprises, infrastructure development, access to energy, value addition and industrialization.
17) Scale-up official development assistance (ODA) to support education, training and capacity building and allocate a specific percentage of ODA to support building the productive capacities of the African economies.
18) Support the efforts of African countries to curb illicit financial flows, including by addressing tax avoidance by multinational companies (MNCs).
26
19) Advance the reform of the global economic governance by ensuring the full participation of African countries in the global economic decision making and norm setting.
D) The entities of United Nations system, within their respective mandates, should:
20) Support building the capacities of the African countries in the area of sustainable industrial development.
21) Strengthening the African capacities at the national, regional and sub-regional level in the areas of industrialization and value addition, including in the work of the inter-departmental Task Force on African Affairs and the Regional Coordination Mechanism
22) Follow up on the fulfilment of commitments by development partners to support value addition and sustainable inclusive industrial development, include those related to ODA and aid for trade.