Mining plays a fundamental role in the economic trajectories of Botswana, South Africa, Zambia and Zimbabwe. The contribution of mining to these countries’ gross domestic product (GDP) is substantial. In 2014, mining contributed 33% of GDP in Botswana, 16.2% of GDP in South Africa and 17.5% of GDP in Zimbabwe. While in 2013 mining accounted for 25.7% of GDP in Zambia.

This is according to a report titled ‘Mining-related national systems of innovation in Southern Africa: National trajectories and regional integration’, which was published in June, by researchers at University of Johannesburg-affiliated research and capacity development group the Centre for Competition Regulation and Economic Development (CCRED).

The report says, however, that in Botswana, the relative contribution of mining to GDP has declined since 1990 and will continue to do so, owing to the depletion of diamond deposits in the country. Conversely, it notes that, in South Africa, Zambia and Zimbabwe, the contribution of mining to GDP has increased since the 2000s.

“In Zambia, this is as a result of the investment boom in the Copperbelt and the so called ‘New Copperbelt’ (North-West province). In Zimbabwe, the rising importance of mining is a reflection of the decline of agriculture and manufacturing in GDP and exports,” CCRED explains.

The researchers remark that Zimbabwe’s mining sector has become less diversified, as, in the past, it was dominated by gold but propped up by small-scale production of more than 40  minerals, whereas it is currently led by large-scale platinum production and to a lesser extent diamonds.

The four economies have been characterised also by the growing importance of services and the declining contribution of manufacturing. Employment has shifted to low productivity service sectors (government and community services and wholesale and retail), while high productivity sectors, such as finance, business services, and telecommunications, which are high-skills intensive, are not absorbing large shares of the labour force.

The report further highlights that the highest value-added services related to mining and manufacturing (engineering, logistics and the like) have seen relatively low levels of localisation in Botswana, Zambia and Zimbabwe. Simultaneously, these countries’ manufacturing sectors continue to underperform. In Zambia and Zimbabwe, the manufacturing sector contribution to GDP has declined, compared with 1990 and 2000 levels.

CCRED states that in Zambia, manufacturing declined from 36.1% in 1990 to 10.7% in 2000, declining further to 8.2% during 2013. In Zimbabwe, it declined from 22.8% in 1990 to 15.6% in 2000, dropping to 11.9% in 2014. While in Botswana, the manufacturing sector’s persisting “low and stagnant” contribution, at 5.7%, showed an increase in its contribution to GDP of 1% between 1990 and 2000, and 0.1% between 2000 and 2014.

“These dynamics highlight how important it is to promote formal manufacturing activities to create employment and value addition. “For this reason, all these countries are engaging with linkage development strategies aimed at building upstream and downstream industries to mining,” the report points out.