RADS

1
A Resource-based African Development Strategy
RADSWMMFToronto
Dr Paul Jourdan AfDB, March, 2008
2
AfricaStart from what we are!

• Resource-based exporter of minerals/metals (oil
  gas, gold, coal, iron ore ferro-alloys,
  bauxite/aluminium, copper, diamonds, etc.)
• Resource-based exporter of agri agri-based
  commodities (cocoa, cotton, fruit juices,
  sugar, grains, wood paper/pulp, wool, meat,
  fish, etc.)
• Insignificant exporter of manufactured goods and
  
• Very weak HR base (skills) except for a few niche
  competencies.

3
Africas Natural Resources

• Agriculture
• Contributes 40 of African GDP provides
  livelihood for 60 of population, but largest
  user of scarce water
• Enormous unrealised potential (low yields only
  x under cultivation)
• But, agri-commodities exported without processing
  (beneficiation)
• Minerals
• Worlds top producer of numerous mineral
  commodities
• Has worlds greatest resources of many more
• Africa lacks systematic geo-survey could be gt
  resources
• But exported as ores, concs, metals Need gt
  beneficiation.
• Energy
• Significant fossil fuels (oil, gas and coal)
• Large biomass and bio-fuels potential (ethanol,
  bio-diesel)
• Massive hydro-electric potential (Inga 45GW,
  Congo River 200GW)
• Forestry
• 22 of African land is forested (650m hectares
  17 of world total)
• Deforestation Africas net change highest
  globally -0.78 p.a
• Huge silviculture potential, but exported as
  logs/chips need gt bene.
• Fishing
• Decline in catch rate (international poaching!
  over-harvesting)

4
Thus, Africas short to medium term potential
lies in our natural comparative advantage
Namely, resource resource-based industries
(provide a competitive platform for finished
products in the longer term, and immediate market
for resource inputs industries)
Raw Mat. - Int. Product - Semi-Manufacture -
Fabricated
However, with gtvalue-addition other factors
determine competitiveness!
5
Asian BoomNew scramble for resources?
High intensity, Africas new opportunity?
High intensity, sellers market Colonial system
Low intensity, buyers market stagnation
instability
6
How long will boom last?However, prices will
fall with increasing supply over the medium-long
term, but at a higher level (lower grades)
Steel Intensity (all metals proxy)
?
PRC
China India gt 2X popn of First World!
India
16k/capita
Data Source BHPB 2006
7
Resources Sustainability?Resource Industry
Linkages(beyond resource rents)
3. DOWNSTREAM Value-addition Beneficiation Export
of resource-based articles
1. INFRA-Linkages Puts in critical infra
(transport, energy) for other non-minerals
economic potential
Use wasting asset to underpin growth in
sustainable sectors
2. UPSTREAM Inputs Plant, machinery, equipment,
consumables, services, (export)
4. TECHNOLOGICAL Linkages Nursery for new tech
clusters, adaptable to other sectors
HRD, RD
Dont exploit scarce resources if you cannot make
linkages rather extract slower develop
linkages concurrently
8
Resources provide 2 industrial opportunities for
value-addition Beneficiation Inputse.g.
Mineral down- side-stream beneficiation chain
Resources inputs sector has a comparative
advantage in (a) relatively large local market
(b) development of tech inputs for local
conditions (applies equally to other resource
sectors)
9
The resource curse can be avoided! Deepening
the resource sector linkages development of the
resource inputs outputs industries is critical
Finland e.g. Forestry- grew capital goods
(machinery) exports and value-added exports (wood
manufactures, pulp/paper)
Finland managed to shift from a 1970 resources
(pc) trajectory to a 1998 manufactures (mf)
trajectory, through the development of its
resources inputs (machinery) and outputs
(value-addition) sectors (source Palma, G. 2004)
10
Africa is well-endowed with mineral resources
Mineral Production Known Resources
(04)(however, much of Africa is still
un-surveyed)
11
SS African Mineral Deposits
However, many of the gaps correspond to zones of
low geo-data
Kalahari sand cover
12
African Geology
13
Africa also has significant energy resources
fossil fuels (oil, gas, coal), HEP geothermal
Goethermal Potential Great African Rift Valley
Gulf of Guinea considered to be one of the
worlds most prospective oil gas terrains
And Africa has huge HEP (Congo R 200GW)
14
Yet most Africans dont have access to
electricity and rely on biomass for energy!
15
Although private exploration spend is increasing,
this isnt an alternative to systematic
geo-survey!
16
African FDI inflows
Dominated by investment in natural resources!
17
Inappropriate Mineral RegimesAfrica is not
capturing mineral rents!
High Prices WB regimes- rents exit (Zambia 06
2!) Need to urgently update!
High prices colonial mineral regimes Pro-
colonisers/TNCs
Low prices WB revisions Overly pro-TNC!
High prices Post-colonial regimes Strongly
national
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Extracting Greater Benefits?Conditions of
Licensing
Mining Licence
ROR Rate-of-Return
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Investment in Geo-knowledge

• Numerous studies (USGS, W.Australia) have
  definitively showed the extremely high return to
  the state from investment in geo-survey (110
  investment to return ratio to the fiscus)
• In general, the lower the geo-info base, the
  higher the risk, the lower the share of resource
  rents to the state The less a state knows about
  the value of its mineral assets, the worse the
  deal its likely to be able to negotiate with
  foreign investors.
• This will inevitably compromise the longer term
  sustainability of the investment An unequal
  extractive deal serves neither the investor nor
  the host state over the longer term
• Investment into African infrastructure should not
  only target physical infrastructure but also
  knowledge infrastructure (geo-survey)

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The foreign resource capital trade-off

• In order to rapidly acquire the requisite
  capital and skills, African states have generally
  opted to realise their resource endowments
  through attracting foreign resource companies
  (TNCs JRCs), rather than mainly relying on
  domestic capital. However, this trade-off comes
  with several possible threats
• TNCs often have global purchasing departments
  which are less likely to develop local suppliers
  (linkages), than would be the case with domestic
  resource companies
• TNCs tend to optimise their global processing
  (beneficiation) facilities which often denies the
  resource state their downstream opportunities
• TNCs generally tend to locate the tech
  development (RD) in OECD countries, with the
  requisite skills and incentives, thereby denying
  Africa the development of this critical
  side-stream capacity
• TNCs also tend to locate their high level HRD in
  OECD countries (often linked to their RD
  university partners), which could deny African
  states the development of this seminal capacity
• In the longer term there are clearly political
  downsides to a resource sector dominated by
  foreign capital
• Finally there is the TNC core competence
  conundrum.
• However, all of these threats can be overcome or
  ameliorated through appropriate actions, policies
  and interventions!

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Growing African JRCs

• The bulk of JRCs (Junior Resource Companies)
  operating in Africa are from Europe and its
  settler colonies (Canada, US, Oz) which poses
  problems of political sustainability
• Need to facilitate the growth of indigenous
  exploration companies (JRCs) to build local
  buy-in legitimacy
• Possible PRC-African JRC exploration
  partnerships?
• Soquem (mineral DFI) in Canada successfully
  facilitated the growth of French-speaking JRCs in
  Quebec from 1965, by identifying potential
  targets and taking up to 49 of the risk/equity-
  AfDB could establish an African Soquem to share
  risk and nurture local participation in mineral
  development?
• Possible first sight (3 months?) on all new
  geo-survey data?
• National DFIs should also target indigenous
  investment into the mining inputs (supplier)
  sector

Predominantly foreign mineral DFI is ultimately
politically unsustainable!
22
Africa also has significantAgri-potential
23
And water potential(except for North Africa)
24
Land utilisation in Africa (percentage of total
land area)
Source UNEP- compiled from FAOSTAT 2001
25
Agri-potential Possible repeat of Brazil's soya
success?
Brazil Soy Boom replicable? (similar soils
climate)
26
Yet Africa has abundant known fertiliser minerals!
Agri-mineral deposits (ex- gas/coal K)
Nitrogen sources (oil/gas coal) K resources
But, generally undeveloped for the African
market, mainly due to severe logistics
constraints.
27
Africa also has large biofuels production
potential.
28
But, desertification is spreading
Global warming, gtclimate variability over-usage
pose frightening threats to African agriculture
Alternative livelihoods are needed!
29
Thus the demand boom has disproportionately
increased mineral prices!(also lower mineral
supply elasticity)

• The prices of metals have increased
  spectacularly, whilst agri-commodities have
  languished
• Due to
• Market distortions (agri-subsidies)
• High mineral supply inelasticity (windfall rents)

30
But this huge commodities potential is critically
constrained by poor infrastructure

• Africa is the highest continent (few navigable
  rivers), gt infra cost and OM cost
• 93 of Africa in the tropics (ITCZ, high ppt)
  gtcost of infrastructure provision and OM
• Incoherent European balkanisation resulted in
  many African states being landlocked
• Africa has only 10 of land within 100km of coast
  (cf. 18 OECD 27 Latin America) and
• Only 21 of its people live within 100km of coast
  (cf. 69 OECD 42 Latin America)
• Resulting in Africa having the worlds highest
  relative logistics costs (poor infrastructure)
• Africas potential could be realised through
  integrated Development Corridors (not a
  neo-colonial scramble for resources)

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Insurance and freight import values for selected
groups of countries
Table 6 Freight and insurance as a percentage of
cost, insurance and freight import values for
selected groups of countries1
Africas logistics costs 250 global average!

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Resource-based African Development Strategy4
sub-strategies
Fabri- cation
Enhance resource-tech (HRD, RD) capacity
Resource Capital Goods Services (generic tech)
eg process control construction
equipment, atmospheric control, pumping,
materials handling, etc, etc.
Lateral Migration into Unrelated knowledge-based
Industries
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Resource-based African Development Strategy4
sub-strategies
Fabri- cation
Enhance resource-tech (HRD, RD) capacity
Resource Capital Goods Services (generic tech)
eg process control construction
equipment, atmospheric control, pumping,
materials handling, etc, etc.
Lateral Migration into Unrelated Hitech Industries
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Maghreb Coastal
Niger Dakar Port Harcourt
Red Sea - Nile
Djibouti
Conakry Buchanan
Sekondi Ougadougou
Mombasa
Douala
Gulf of Guinea Coastal
Integrated Resource-Based spatial development
initiatives
Libreville Lomie
Madagascar
Bas Congo
NEPAD SDP 1st Pass
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NEPADSpatial Development Programme(SDP)
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Sharing of Best in Practices in Southern Africa
SDIs/Dev.Corridors (RSDIP)
Based on UNREALISED economic potential
37
BASIC DC METHODOLOGY KEY ASPECTS

• Inherent economic potential Natural resources
  (agri mineral)
• Configuration of investments to ensure
  infrastructure viability through sustainable
  revenue streams
• Crowding-in of private sector investment
• Promotes PPPs where feasible
• Secure political commitment (HoS) and provide the
  requisite conducive environment
• Ensure rapid planning and delivery projects and
  programmes (momentum).
• Ensure densification open-access, linkages and
  value-addition

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SDP methodologySynchronousINVESTMENT
CONFIGURATION

• Addresses 4
• market failures
• Infra econ-of-scale
• Sync users (time)
• Political borders
• Information/data

ID Viable resource investment projects
revenue streams
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Development Corridor (DC) Time-Line
Conceptualisation Sectoral scans of Investment
potential Minerals, Energy, Agriculture,
Forestry, Tourism, etc. Assessment of
infrastructure needs
1) ID Requisite trunk Infrastructure Transport
road/rail/ports/pipelines Energy
electricity/gas/oil/biomass Water other
(telecoms), to realise the investment
potential. 2) Dimension resource (
resource- based) and other investment Projects
linkages (up- downstream) opportunities

• Strengthening the investment
• regime and institutions.
• Feeder Infrastructure
• (to facilitate densification)

Identification and facilitation of appropriate
investors and financiers (DFIs et al) to realise
the investment targets
Development of local regional (RECs)
capacity Financial, Governance Regulatory,
HRD/Skills, RD, SMME support, ongoing DC
capacity
Deepening of the resource sector Up-, down-
side-stream linkages Resources RD, tech
development. Sustainable resource-based GD
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Idealised DC Configuration
Agri-node cluster
Anchor cluster
Stranded investment
feeder
TRUNK Infrastructure PPP
DC logistics catchment
Problem feeder
Problem feeder
DENSIFICATION Feeders often need to be funded
thru fiscus/grant
Stranded investment
Anchor cluster
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APPLICATION OF THE SDI METHODOLOGY SOME
EXAMPLES
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Mature SDP Example The Maputo Development
Corridor
Port of Matola/Maputo Upgrades, PPP
Coal-based Power Station 2 transmission lines to
Matola completed
Joburg-Maputo Highway PPP- BOT completed
GAUTENG
MAPUTO
Joburg to Maputo Railway line Upgrade
Al smelter 500ktpa BHPB completed
Pande-Secunda Gas line. PPP Sasol completed
Liquid Fuels Petro-chemicals Sasol
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Mature SDP Example The Maputo Development
Corridor
Major investments to date gt5bn
Port of Matola/Maputo Upgrades, PPP
Coal-based Power Station 2 transmission lines to
Matola completed
Joburg-Maputo Highway PPP- BOT completed

• New MDC Potential Projects
• Greater Limpopo Trans-frontier Park (underway)
  Mozal III (Al 1bn)
• Corridor Sands (Ti Fe gt0.3bn)
• MMC Maputo Metallurgical Complex (Fe Steel
  gt1bn)
• MMC (Ti Fe 0.3mn)
• Fertiliser complex (Phos Nitrogen)
• Chlor-alkali complex (Cl, TiO2, NaOH)
• Numerous mega-project inputs industries
• Tourism Investments (Cluster gt0.3bn)

GAUTENG
MAPUTO
Joburg to Maputo Railway line Upgrade
Al smelter 500ktpa BHPB completed
Pande-Secunda Gas line. PPP Sasol completed
Liquid Fuels Petro-chemicals Sasol
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MDC phase II (concept) Maputo Metallurgical
Complex (ore gas based)
High Cu Magnetite dumps gt 300 MT

• Natural Gas uses
• Reductant (iron/steel)
• Nitrogen (fertilisers)
• Heat (Al anodes, elec.-IPP,
• Fe pellets, etc.)

Magnetite (gtCu) dump upgrading plant
Possible Ti/Fe From Chibuto

• (Ti/V) Magnetite
• Sep. conc. plant
• magnetite
• ilmenite

Slurry pipeline
Elec transmission
Rail
Gas Connector
Pande Gas Pipeline
Fe pelletising plant
Fe exports
Other Potential Ilmenite smelter
Ti/Fe Fertiliser plant N/P Chlor-alkali plant
Na/Cl
Railway Major Road Duvha Power Lines Pande
Gas Pipeline
MMC Iron (DRI) Steel Plant
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Under implementation- The Zambezi Valley
Development
Moatize coking and steam coal (CVRD)
Alternative bulk (coal) rail route
Possible BOF Muambe Fe ore coking coal
Rehab of peasant cotton (ex-prazos)
Moatize Thermal Power Station
Elec trans-mission
Sena Rail Rehab
Beira Port Rehab
Potential Al Smelter
46
SDP DESK-TOP ANALYSISAn indicative
assessment to determine the prospects for a NEPAD
Spatial Development ProgrammeOn Nepad
websiteWWW.NEPAD.ORG(Mr Godwin Punungwe)
47
NEPAD SD PROGRAMME
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Maghreb Coastal
NEPAD indicative Spatial Development Program
First Pass!
Niger Dakar Port Harcourt
Red Sea - Nile
Djibouti
Conakry Buchanan
Sekondi Ougadougou
Mombasa
Douala
Gulf of Guinea Coastal
Libreville Lomie
Madagascar
Bas Congo
NEPAD SDP 1st Pass
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POTENTIAL SDPs IN THE 4 REGIONS
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Maghreb Coastal SDP Countries Morocco, Algeria,
Tunisia, Libya, Egypt Anchors Oil/gas PC
industry, iron steel (gas), tourism (coastal
heritage), phos fertilisers, agric, fishing
aquaculture, gen. industry (HCs) Infra HC grid,
elec grid, coastal highway, cabotage
51
Niger SDP Countries Senegal/Gambia, Mali,
Niger, Nigeria Anchors Resource Fe (Faleme)
iron/steel, Au (Loulou), U (Niger), Oil/gas
(Delta), GTL (Escravos), Al (Alscon), Ti (Dakar),
Phos (Tiaba), agriculture (cotton), etc. Infra
riverine transport , rail to Dakar (??), Ore
terminal (Dakar), power (elec grid), roads
upgrade
52
Conakry-Buchanan Countries Guinea-Liberia (Cote
dIvoire) Anchors Fe (Nimba) iron/steel (gas
line?), Al (Conakry, Friguia), Au (Siguiri), Ni
(Man) FeNi (gas?), agriculture Infra gas line,
rail (ore), elec grid, port upgrade
53
Gulf of Guinea Coastal SDP Countries Nigeria,
Benin, Togo, Ghana, Cote dIvoire,
Liberia Anchors Oil/gas (Delta pipeline), GTL,
Al (Delta), Iron/steel (Sekondi/Takoradi,
Buchanan), Mn (Nsuta) FeMn (Sekondi- gas?)
tourism (coast, heritage), gen. industry (gas),
agriculture (palm oil/carbon), fishing
mariculture Infra gas line,, elec grid, ports,
cabotage, coastal highway
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2 Indicative SDPs Douala-Ndjamena
Libreville-Lomie Countries Cameroon, Chad,
Gabon, (CAR) Anchors Oil Gas, elec/Al,
Fe/Steel, Fe-alloys (Mn) agric (coffee, et al),
fertilisers (NPK), general industry
(agri-processing), tourism, Infra rail upgrades
ext., gas pipelines, elec grid, port upgrade,
road network, power plants
55
Bas Congo Countries Congo Braz, DRC,
Angola Anchors Electricity (Inga), oil/gas PC
industry, Mg (P. Noire), Al (Matadi), phos
fertilisers, base metals, construction
(lmst/cement), agric (cane et al), fishing
aquaculture, gen. industry (HCs),
tourism Infrastructure HC grid, elec grid, ports
(Banana et al), Congo R. bridge, cabotage, road
net.
DRC request to fast-track this SDI (SA-DRC
Bilateral, Aug 2007) Angola Congo-Braz need to
join
56
Mombasa SDP Countries DRC, Sudan, Uganda,
Kenya, Anchors Fe iron/steel (Kodo), agric
(coffee et al), soda ash, phos fertiliser
(NPK), gen. industry (agri-proc), tourism,
aquaculture (L.Vic) Infra rail upgrade ext.,
gas pipeline, elec grid, port upgrade, road net.
Kodo Fe Sudan gas?
NCTTCA request to NEPAD SDP RSDIP to assist in
transforming into a SDI/DC (Aug 2007)
57
Current RSDIP Development Corridor (SDI)
Extend to Kisangani?
Central SDI Dar to Kigali (Kisangani?)
RSDIP Countries Tanzania, DRC,Rwanda,
Burundi Anchors Nickel (Kabanga), Gold (Mwanza
Au Belt), Ta/Nb (DRC), agriculture
agri-industries, fishing/aquaculture,
tourism Infra rail upgrade ext., port upgrade,
road net., elec gen grid
58
TAZARA SDP Countries Tanzania, Zambia (DRC,
Malawi) Anchors Cu/Co (Copper-belt), Fe/steel
(Liganga), Coal (Ruhuhu-Ketawaka),Ta/Nb (Mbeya)
Fe/C (Njombe) Forestry PP (Mbeya), argic
agri-proc (Iringa, Mbeya Mkushi highlands),
tourism (Selous, Ruaha, Luangwa), mineral
agri-processing inputs Infra rail, road
network, energy grid, rail pipelines rehab,
59
GMRA High min potential
?
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Resource-based Development?Overcoming the
Resources CurseResources Governance
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The Resources CurseImproving Governance in the
Natural Resource SectorNew developments

• African Peer Review Mechanism (APRM)
• EITI- Extractive Industries Transparency
  Initiative
• Equator Banks Principles
• Governance of Conflict Minerals
• SHE standards/monitoring
• Windfall Rent Management
• Regional authorities power pools river
  catchment bodies, DCs, customs/currency unions,
  etc.

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APRM

• The African Peer Review Mechanism (APRM) is a
  mutually agreed instrument voluntarily acceded to
  by the member states of the African Union (AU) as
  a self-monitoring mechanism.
• The mandate of the APRM is to encourage
  conformity in regard to political, economic and
  corporate governance values, codes and standards,
  among African countries and the objectives in
  socio-economic development within Nepad.
• 25 countries have acceded (APRM MOU)
• Algeria, Angola, Cameroon, Republic of Congo,
  Egypt, Ethiopia, Gabon, Benin, Burkina Faso,
  Mali, Mauritius, Senegal, Tanzania, Lesotho,
  Sierra Leone, Malawi, Ghana, Kenya, Mozambique,
  Nigeria, Rwanda, South Africa, Sudan, Uganda and
  Zambia.
• The APRM is not meant to exclude or punish
  countries. There is no conditionality attached to
  the mechanism.
• Integrate EITI principles (below) into APRM?

63

• EITI creates transparency over the flow of money
  from oil, gas and mining companies to the
  governments of the countries in which they
  operate (Launched at WSSD Joburg in 2002)
• The objective is to increase accountability over
  the use of natural resource wealth to ensure it
  is a blessing and not a curse.
• Country led Brings together governments,
  companies, NGOs, investors, international
  institutions
• gt 25 countries implementing
• However, perceived as rehab facility- Needs
  support from low-risk extractive states like SA,
  Botswana, Oz, Norway, Canada, etc.
• Needs to also cover upstream (contracts/licenses)
  
• COST- construction/infra EITI launched 07 (UK)

64

• The "Equator Principles A financial industry
  benchmark for determining, assessing and managing
  social environmental risk in project financing
• The Equator Principles Financial Institutions
  (EPFIs) have adopted the Principles in order to
  ensure that the projects they finance are
  developed in a manner that is socially
  responsible and reflect sound environmental
  management practices.
• Over 50 Banks have joined (mainly 1st World).
• These Principles are intended to serve as a
  common baseline and framework for the
  implementation by each EPFI of its own internal
  social and environmental policies
• Disadvantages Mainly 1st World driven (WB/IFC
  NGOs) and 1st World concerns (dont look at the
  developmental impact)

65
Governance of Conflict Minerals

• Minerals used to finance civil wars crime need
  governance systems, particularly precious
  semi-precious minerals targeting the fashion
  market.
• Diamonds
• The Kimberley Process Certification Scheme (KPCS)
  is a PPP process designed to certify the origin
  of diamonds from sources which are free of
  conflict. The certification scheme aims at
  preventing "conflict diamonds" (also known as
  "blood diamonds") from entering the mainstream
  rough diamond market.
• Other Minerals Regulate gold (fashion market),
  coltan, etc. in a similar way?

66
SHE Safety, Health Environment

• Need a continuous method of independent SHE
  monitoring of all extractive plants (as per EITI
  system)
• Need commonly accepted African SHE standards, to
  be objectively monitored on a regular basis (e.g.
  Cyanide Code). Such standards need to be
  reconciled with international (e.g. ISO)
  standards
• Need to ensure that the post-mining rehab costs
  are amortised through annual transfers during
  life of mine and periodically reassessed (5
  yearly?) Any surpluses to accrue to central fund
  for rehab of ownerless mine sites.
• Kyoto CDM useful, but needs to be based on
  carbon footprint (consumption) and to valorise
  conservation (forests) as well as forestation.

67
Managing Windfall Rents

• Windfall mineral rents need to be equitably
  appropriated (rate of return tax regime, as per
  oil gas sector).
• However, large forex inflows could distort the
  economy (Dutch Disease). Need a method of inflows
  management
• Stabilisation or Future Funds for investment
  in long-term African infrastructure (c.f.
  Pan-African Infra Fund PAIDF)?

68
e.g. Norwegian Global Fund

• Oil gas taxes are invested in a global
  portfolio and earnings are used by government for
  current expenditure.

For African countries, the windfall earnings
could be invested in an offshore African
investment fund (PAIDF?) committed to long-term
infrastructure investment, to ameliorate currency
appreciation (Dutch Disease) improve national
competitiveness.
69
National Capacity for Minerals Governance
Each requires capacitation/support! Tall order?
But achievable collectively
70
National Govt, MPs, pvt. sector, civil soc.
Multi-layered Minerals Governance?
DC HoS Bilateral X-border infra governance?
REC Institutions power pools, water bodies, FTA,
CU, CMA, chambers, etc
African AU/ARPM, NEPAD, AfDB, UNECA, PAIDF,
geo-data etc
International UN, WTO, WB, EITI, ICMM, Kimberly,
Kyoto, Equator, SHE, etc.
71
RADS Recap
Exploitation capital goods e.g. plant,
equipment, after-market, etc.
Processing capital goods
Intermediates capital goods
.
BEYOND COMMODITIES? Use Asian resource demand to
kick-start an African Resource-based Development
Strategy RADS
Exploitation services e.g. financial,
technical, consumables, logistics, energy,
skills, etc.
Processing services
Intermediates services
Resource-inputs key to diversification (e.g.
Nordics)
72
Resource Beneficiation (value-addition)
Resource Exploitation
Densification Infrastructure
Resource Infrastructure
Skill intensity (HRD)
Unskilled resource labour
Rents from Resource diversification industries
catalysed industries
Resource rents
Resource Inputs production Lateral migration
(diversification)
Import of Resource Inputs
Schematic RADS Phasing (relative economic
importance)
Resource RD. high level skills and tech
development
Phase 1
Phase 2
Phase 3
Phase 4
Import of Resource Tecnologies
I II III IV V VI VII
Complex regulation, ME, arbitration, governance
Contract/license resource infra (PPP)
governance
Resource Consumables HRD phase
Resource RD, capital goods services phase
Lateral migration diversification phase
Resource Exploitation infrastructure phase
73

• Way Forward
• Use resource boom to leverage high rent
  resources (e.g. minerals) to establish
  infrastructure for higher impact agriculture,
  tourism, manufacturing, etc.
• Invest in African resource-knowledge
  infrastructure (e.g. geosurvey) facilitate the
  development African resources companies (AfDB
  JRC DFI?)
• Ensure equitable state share of resource and
  windfall rents and management (UNECA ISG project,
  WB projects)
• Establish DC capability NEPAD, AfDB/WB, REC?
• Finalise AfDB, WB, REC?, ADCP DC pilot
  partnership
• Launch 1 or 2 pilot, high impact, DCs as
  learning programmes (RECs?, AfDB, NEPAD, ADCP)
• Link requisite infrastructure financing to user
  (resources) investment (use or pay)- PPPs
• Ensure densification (donor agencies- ADCP?)
  and realisation of collateral opportunities to
  avoid enclave development

74

• Way Forward (governance)
• Use concrete DC projects to develop bottom-up
  x-border trade regulatory harmonisation
  (easier if already in place- RECs)
• Use DCs to build X-border governance
  institutional capacity (REC?) for areas with high
  economic potential (power pools, water catchment
  authorities, transport authorities, etc.)
  AfDB/WB et al support
• Support from WB/AfDB on negotiating large DC
  investments building ongoing (REC/state?)
  negotiating, monitoring, auditing, regulating
  capacity
• Deepen and widen continental and international
  resource exploitation protocols (Equator Banking
  Principles, APRM, SHE, EITI, COST, Kimberley
  Process, Africa-PRC Compact?, etc.)

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e.g. an Africa-PRC Compact for Growth
Development?

• Configure a mutual benefit compact of intent
  between the AU/AfDB and PRC that balances
  access to resources and markets with
• Infrastructure not only for resource extraction,
  but also for integrated development (Nepad SDP
  concept)
• HRD in all the FDI areas
• Resource beneficiation before export
• Resource inputs (supplier) industries
• JVs to develop local capital
• Investment in geo-survey (joint Afro-Sino JRC
  DFI?)
• Location of consumer products industries for
  products destined for African markets (where
  viable) (AGOA, EPAs, MGOA?)
• Adherence to codes of conduct (EITI, Equator
  Banks, SHE codes)
• Establish a joint Africa-PRC investment
  facilitation monitoring commission?
• ACHIEVABLE??

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Thanks to

• AU Commission
• NEPAD
• UNECA
• AfDB
• RECs
• RSDIP Mintek

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Thank You
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