JOHANNESBURG (miningweekly.com) - Africa, the richest continent when it comes to natural resources, is for the most part still heavily underdeveloped, owing to its inability to take advantage of its wealth.

Coal of Africa Limited chairperson Richard Linnell said at a Frontier Advisory African seminar in Johannesburg that this inability was primarily linked to the lack of progressive political policy and leadership across the continent, underpinned by past struggles for the countries' resources from the West.

"Africa's only has its resources to kick off from and it needs responsible and facilitating regulatory bodies to assist sustainable growth, yet most countries are plagued with corruption and controlling governments, rather than facilitating governments."

Africa's largest economy, South Africa, has also been struggling with regulatory issues, which has lead to the country only attracting 2% of the total investment into new mining projects on the continent.

South Africa has already developed into quite a diversified economy, whereas most other African countries were still very dependent on resources as their primary economy.

Linnell emphasised that the continent needed a strong drive to diversify its economy that could only come about through proper planning by progressive leaders. He highlighted Ghana and Zambia as two countries moving in the right direction.

Also speaking at the event, former Wesizwe Platinum CEO and now an adviser Mike Solomon, said that he believed that the mining industry would be the only viable sector to drive the economic reconstruction of the African continent, if countries were able to manage the industry correctly.

Solomon said that the "resources curse or Dutch disease" was nothing more than limited institutional capacity and irresponsibility of African governments in managing their resources, comparing the development of Africa to other resources-rich countries such as Australia and Canada.

Currently, there are no Africa owned mining companies on the continent outside South Africa.

Over the past decade, Africa has seen significant investment and interest from the East. Asian giant China's seemingly insatiable hunger for African resources has seen the two continents form a new coupling, away from the traditional western markets, however, fears have now arisen that this may well be another wave of colonisation.

China has recently eclipsed Japan as the second-largest economy, showing high numbers of growth fuelled by a rapid urbanisation rate and the need for infrastructure. It is expected that China would have to accommodate more than one-billion people in its cities by 2025, and would spend around $4,6-trillion on infrastructure build over the next 20 years.

However, it is anticipated that gross domestic product  growth in China will see a tapering down from 10% in 2010 to 9% in 2011.

"The significant demand from China has underpinned the growth and development of Africa and will probably continue to do so for the next 20 to 30 years, even with the slight slowing of the country's growth," said Kagiso Trust Investment resources head Peter Ford.

The Chinese have been shopping around the continent for cheaper mineral assets to secure the supply of resources and has consequently been footing two-thirds of the $100-billion a year needed for the development of African infrastructure.

However, Ford highlighted that the infrastructure was often not appropriate or needed infrastructure in underdeveloped economies. "The Chinese often build big airports or government buildings and do not invest in infrastructure needed in developing economies such as power and electricity."

Meanwhile, Murray & Roberts' Millard Arnold said that concerns around the Chinese-African coupling could be warranted if simple mathematics were taken into account. "Currently, China is host to around 20% of the world's population, but is sitting with only 7% arable land and 3% of the world's freshwater resources. If one takes all this into account, some of the African fears are quite reasonable."

Nevertheless, Solomon said that all foreign direct investment should be welcomed. "I do not think that the negativism and fears against Chinese and other eastern investment are justified. Currently, the growth of the continent is driven by demand from the east and other emerging economies.

"However, some concerns can be eliminated by involving certain multinational institutions and bodies in, for instance, the planning of infrastructure."

Indian consul general Vikram Doraiswami added that strong investment into Africa's human resources was needed to create a long-term success story.

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