African industrialisation should not be mutually exclusive

Guest column: Reinford Khumalo

A SINISTER narrative has persistently been promoted implicitly and deliberately by the developed countries and supported naively by most African leaders — the victims of exploitation and underdevelopment by the developed countries, that developing countries need to trade exclusively on primary resources in exchange for finished products and technology from the first world countries.

This practice ironically takes developing countries back to barter trade days, where African chiefs would trade gold ore, iron ore and other mineral resources for mirrors and guns — the finished products.

The rationale for the on-going approach is that African countries have not yet developed infrastructure to industrialise. They lack sufficient energy resources such as power and electricity to process their primary resources. They are only aptly capable of extracting primary resources because they have adequate unskilled labour to do so.

There is high HIV/Aids prevalence among the youth in developing countries. These and other reasons are the ones advanced in support of the idea to confine Africa to exporting primary products to boost her Gross National Product (GNP). The notion to support this argument is impliedly that the first world has achieved the tertiary level of industrialisation in all sectors from extractive industries to processing of primary resources into finished products and in information communication technologies (ICTs) development.

Such industrial development by developed countries must, therefore, to all intents and purposes be protected by the developed countries. The lagers behind — the developing countries, that have not yet reached such a stage of industrialisation must, therefore, be relegated to extracting primary resources only and trade in such resources.

The experience becomes a tacitly forced comparative advantage between the developed and the developing countries, as it were. This is designed to lessen competition in trading in finished products between the developed countries and the developing ones.

It further gives developed countries advantage over developing countries in the creation of employment for their countries through the processing of raw materials, resulting from the diversity of manufactured products as the multiplier effect takes place.

The key purpose of this article is to create awareness of why most African countries should reject this relegation to an inferior status of participating in a process of impoverishing themselves and enriching the West and the Far East through relying exclusively on trading in raw mineral resources with the first world in exchange for finished products.

First and foremost in redressing this inimical dealing with developed countries, African countries ought to develop strong policies on trade and stand firmly by them. Such policies should focus on the need for developing countries to strive to achieve the Millennium Development Goals (MDGs).

No nation should remain poor and without sufficient resources to sustain a healthy standard of living for all its citizens. That being the case, therefore, all sovereign nations should have the freedom to explore all strategies that enable them to attain such goals.

Interestingly, the first world countries, through the G20, assist developing countries achieve the MDGs. This is a humiliation on the part of developing countries as they have to be assisted to look after themselves. The latter could be the reason for the audacity of the first world through their institutions — the World Bank and the IMF — to dictate policies governing developing countries’ development.

Developing countries should see to their own development and should, therefore, find ways through the policies that they craft, how they could achieve the MDGs. One of the ways would be through the policies of beneficiation of raw materials by the developing countries. Time limits for the achievement of MDGs should be dispensed with. These limits are the reasons for a push to achieve them and excuses are, therefore, made to assist those that are unlikely to achieve the goals by a set date — thus further humiliating and entrenching paternalism on developing countries.

A case in point of a country that introduced a policy of beneficiation of 18% to 20% of its rough diamonds locally is Botswana through signing an agreement in 2012 with De Beers, the diamond mining giant operating in the country. At first, there was resistance from De Beers but the Botswana government in its policy insisted that “if there is no processing there is no access to rough diamonds.”

A total of 3 200 workers are employed in the diamond cutting business in the country and 94% of the workforce consists of locals. This is the single largest manufacturing industry in Botswana.

Sasol in South Africa is another very good example of beneficiation of coal into diverse byproducts among which are lithium dyes, fuel and many others. Thousands of jobs in addition to the extraction of coal and arising from the byproducts of coal are created by this giant corporation which has investments even abroad in the USA — a distinct example of the benefits of beneficiation.

The World Bank remains opposed to the beneficiation of primary resources by Botswana and other developing countries, citing a lack of practicality economically and commercially.

The reasons put forward are flimsy and lack merit, a clear indication that these big international institutions such as the World Bank and the IMF are there to protect the interests of first world countries. They do not operate in good faith to advance the causes of the developing world. They have a hidden agenda that contradicts the mission of their establishment. Millions of jobs would be created in African economies had the primary resources of these countries or part of them been processed in the countries.

Africa is the richest continent in primary resources. That most of the countries on this continent cannot balance their budgets unless they get donations from first world countries flies in the face of the fact that we have an abundance of mineral resources on the continent.

In the case of Botswana, the World Bank in opposing beneficiation in that country went to the extent of funding the travel of Professor Hausann, a lead expert opposed to the concept of beneficiation, in southern Africa and the Bank has also funded reports in Zambia attacking government policy on the beneficiation of copper. There is further subtle criticism of beneficiation by Professor Kaplinsksy, an advocate of upstream policies in the mining sector. He argues that beneficiation should be the prerogative of developed countries to which primary resources are exported.

Secondly, developing countries after strengthening their policies on beneficiation should focus on infrastructure development of their nations — the construction of good roads, railway lines, telecommunications and improvement of their skilled labour. The latter, largely relies on the attraction of it back into the continent because many skilled Africans have migrated to developed countries in search of greener pastures that have been eroded in Africa. Many have also been frustrated by lack of infrastructure in their home countries. Africa is well known for developing labour for other nations.

Thirdly, most African countries need to develop their political systems and improve their human rights records. Africa is fraught with fraudulent socio-political activities. It is infested with tribalism, nepotistic appointments at workplaces, corruption and long queues resulting from shortages of basic commodities such as fuel, in the case of Zimbabwe. These vices are a vicious cycle. Productivity and human relations go down tremendously as a result. There can be no improvement in the GDPs of the countries if such anomalies prevail.

Fourthly, African countries ought to focus on the orientation of their citizens on the development and beneficiation of their natural resources. There are hundreds of universities on the African continent, for example, but very few if any teach how to process the natural resources to final products apart of from teaching them how to extract the minerals — the Zimbabwean School of Mines is one example that teaches extraction.

Conclusion

There could be immeasurable benefits not only for some citizens, but the whole nation had there been beneficiation of our mineral resources. Good policies need to be in place to determine our destiny as developing countries.

African countries need to be wary of big international institutions such as the World Bank and the IMF. They have an agenda of promoting the West at the expense of developing countries.
Sending unprocessed diamonds in the form of our consignment of exports to China or elsewhere is detrimental to our development. This is an awareness call to all African countries.

Reinford Khumalo is a professor of business leadership and organisational behaviour. He writes in his personal capacity

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