Mineral wealth must benefit all, not just narrow self-interests

There’s no political instability in resource-rich countries ensuring that their mineral wealth trickles down to all citizens, writes YONELA DIKO

Political instability in South Africa has become a ridiculously simplistic answer by pseudo-analysts and neo-liberal economists who have grown lazy and fat, unable to see that their false progressivism isolates them from reality. This simplistic buttress of all our economic challenges is dangerous because it can narrowly influence or impede decision making.

South African Institute of International Affairs director Elizabeth Sidiropoulos correctly characterises political instability as, for example, the enduring religious fundamentalism in North Africa and sub-Saharan Africa such as the conflict between Southern Christians and the Islamist group Boko Haram in Nigeria, arms proliferation in Sub-Saharan countries in the aftermath of the Libyan revolution, with the risk of these arms ending up in the hands of terrorists, and electoral instability in some African countries.

In South Africa, at least according to most analysts on television and talkshop circles, the equivalent of these African realities is the Mining Charter. By characterising the contentious Mining Charter as causing political instability, this crew is effectively equating it to the collapse of government by unconstitutional means. Really?

Let’s look at some of the key features of the mining charter:

  • 30% black ownership per mining right with a minimum of 50+1% of black people with exercisable voting rights
  • 50% of black representatives at executive director level.
  • A minimum of 60% black representatives at senior management level
  • 70% of all mining goods to be procured from BEE entities on a staggered basis.
  • Mining companies must invest 5% of payroll in skills development.

The Idea that there is something uncertain about this charter, that it is an equivalent of Boko Haram taking over oil fields in the North of Nigeria, that the country is at such an economic risk because of the charter and that we have to scrap it immediately before our country goes in flames, can only mean white interests must continue to think we are stuck on ignorance and stupidity.

We might be corruption fatigued but we will never be ignorant to the fact that threatened self-interests will go to the greatest of lengths to protect their exploitation and unearned enrichment.

Here is the truth. What economists fail to tell us is that the African giant is finally awakening and it is going to unsettle a lot of old contracts that were signed when the giant was still asleep.

In July this year, Tanzanian President John Magufuli signed into law new mining bills which require the government to own at least a 16 percent stake in mining projects. ‘We must benefit from our God-given minerals and that is why we must safeguard our natural resource wealth to ensure we do not end up with empty mining pits,” Magufuli told a rally in his home village in Chato district, north-western Tanzania.

More troubling for South Africa is that companies like AngloGold Ashanti, which also operates in Tanzania, have chosen to be silent and leave the battle against Mugufuli and the Tanzanian government to the London listed Acacia Mining Plc. This shows a sense of arrogance and false empowerment of AngloGold Ashanti when it comes to their interests in South Africa. The message from Africa as an awakening giant is as simple as Magufuli puts it: ‘We must benefit from our God-given minerals, and that is why we must safeguard our natural resource wealth to ensure we do not end up with empty mining pits’.

The issue of political uncertainty is a false narrative, especially because Magufuli has been running a very tight ship in Tanzania which has seen a clean and lean state, a clear governing philosophy and an inspirational leadership. Magufuli has been trending since he took office.

But economists in South Africa will bend over backwards to tell you about some political instability instead of expressing to their clients what they don’t want to hear. Africa, as with other resource-rich countries of the world, is starting to take control of its natural resources. What does it profit these analysts and economists to continue with misinformation and false narrative given to us as expert advice? Is it deliberate? Is it part of their scholarly orientation?

The real problem with our own chamber of mines and their advisers is, of course, simple; their fear is about property rights.

Property rights are the cornerstone of all democracies. No man should work to accumulate and own assets only to wake up one morning rounded up and chased out of his own home for illegitimate reasons. Property rights are guaranteed here in South Africa as they are in any maturing democracy.

For reasons which can only be explained by the criminal mentality of colonialism and Apartheid, we have companies who translate exploring, discovery and extraction of natural resources they did not create as complete and exclusive ownership of those natural resources. There can be no law that protects ownership of resources you did not make. Houses and cars and those sort of resources people build and make are legally entitled and guaranteed to them by law.

The partnerships proposed by governments of all resource-rich countries is an acknowledgement that despite these resources being God-given, someone had to invest a lot of money in extracting them and building markets for their sale.

The demand for broad beneficiation of our natural resources cannot be in itself a condition to discourage foreign direct investments, especially because most investors know that all resource-rich countries are now implementing the same measures, with oil-rich countries having started a half a century ago.

As long as countries invest in infrastructure, communication and transport links, skills labour and competitive wage costs of labour, they should be able to continue attracting foreign direct investment. As long as we continue improving on these key pillars, we will retain sober investments that are interested in making profits and not exploitation.

For 23 years now, we have been bombarded with this song of political instability and risks and it’s got to stop.

Diko is a media strategist and consultant

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