Lack of domestic finance hobbles growth in African mining
While African countries account for a significant amount of the world’s mineral deposits, they do not have the financial infrastructure to make the most of these abundant resources, said Nigeria Emir of Kano and Black Rhino Group chairperson Lamido Sanusi, addressing delegates at the 2016 Investing in African Mining Indaba, in Cape Town.
“African economies have not been able to utilise this advantage, [which is why] evolving and sustaining a robust financial structure to support the infrastructure cannot be overemphasised,” he told thousands of delegates at the opening plenary.
Sanusi said 30 new mining projects requiring a total of $18-billion dollars in capital investment would be developed in Africa between 2015 and 2018, yet only $1-billion of this would be obtained through an African source.
He noted that domestic capital markets needed to deepen and that trade and industrial policies that promote investment in key sectors should be established.
Sanusi added that current global economic trends meant that reliance on public-sector financing for infrastructure was unsustainable and that an attractive alternative means of funding would require more government commitment to policy transparency, appropriate financial system regulation, political stability and good governance.
Governments would, therefore, need to standardise their systems, automate financial processes and commit to transparency, instead of bureaucratic administrative controls, said Sanusi.
He further noted that, while some governments may not be able to significantly boost overall spending in the short term, they should home in on the quality of their spending, reduce waste and attract resources to high-value areas.
He also suggested that procurement reforms focus more on downstream activities, with a focus on administrative and regulatory reforms and better maintenance infrastructure.
Meanwhile, Sanusi stated that, in the long term, Africa’s infrastructure gap would need to be plugged.
He highlighted that, in 2014, the International Monetary Fund estimated that the sub-Saharan African region needed $93-billion a year to fill the infrastructure gap. The region faced a far greater challenge than in North Africa, where gross domestic product per capita was two and a half times greater than in Southern Africa.
Sanusi was Nigeria’s central bank governor until he was ousted from his job by Nigeria president Goodluck Jonathan after he urged the president’s office to investigate the disappearance of $20-billion in oil revenue.
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