Rethink and reinvent the African ethos (I)

BY EBEN MABUNDA

The Democratic Republic of Congo (DRC) is widely regarded as the world’s wealthiest nation, strikingly endowed with an overabundance of mineral resources and untapped raw mineral deposits estimated to be worth more than US$34 trillion. Sadly, the nation is ranked as the poorest nation globally according to focus-economics.com, gross domestic products forecasts for 2025. Despite attaining independence from Belgium in 1960, violent conflicts, corruption, and misgovernance have crippled the economic development of the world’s rich-poor state.

As gloomy a narrative as that may sound, this is emblematic of Africa’s conflict of identity, a plague that has dogged this rich-poor continent for decades. May 25 remains Africa Night (not Day) till Africa sees herself through the lens of her vast human and natural resources. Africa’s mining fraternity boasts 10% of the world’s oil output, 90% of the world’s platinum supply, 67% of the world’s manganese, 35% of the world’s uranium, 75% of the world’s coltan, 90% of the world’s cobalt supply and 50% of the world’s gold supply to mention a few. However, the bulk of the minerals are shipped to Europe, Asia, and the US unprocessed, processed there, and sold at a premium with Africa receiving less than circa 20% of the value. Furthermore, the prices of these minerals are determined on global markets such as the London Metals Exchange where Africa has no influence.

It is time for African nations to invest in mineral value addition and collectively start working at an African Metals market. Awakened to this reality, Aliko Dangote plans to spend US$15 billion on an oil refinery and fertiliser plant project through Dangote Industries, in a move that could revolutionise Nigeria’s economy.

Ivory Coast and Ghana account for almost 70% of the world’s cocoa supplies and yet capture just 3% of the global chocolate industry revenue which is valued at US$100 billion annually. The same could be said about dozens of commodities produced from Africa, in a lack of beneficiation and collective bargaining power. The tide is showing signs of turning as these two nations in 2020 moved their hand in determining the prices of cocoa – led by Ghanaian president Nana Akufo-Addo. It is a drive that is being resisted by European countries and yet it hits the right notes for Africa. The operationalisation of the African Continental Free Trade Agreement (AfCFTA) this January presents the continent with the potential of being the world’s biggest free-trade zone by area with a market of 1,2 billion people and a GDP of US$3 trillion.

Africa’s intra-continental trade accounts for 15% of the total GDP compared to 58% in Asia and slightly over 70% in Europe. Intra-African trade under the AfCFTA is expected to grow by over 50% from the current 15%, unlocking exports worth US$84 billion while eliminating cross-border tariffs on 90% of goods – a big win for Africa.

The AfCFTA presents an opportunity for Africa to leverage a potential collective bargaining power in determining the prices of the commodities it produces. At the same time, the concept of a single currency cannot be removed from the cards as Africa is marred by countless poor and ill-performing currencies, a case in point being the Zimbabwean situation. Eight Francophone states that form the West African Economic and Monetary Union agreed to drop the use of the CFA franc adopting the use of a new currency, the Eco. The Rand Monetary Union links South Africa, Namibia, Lesotho, and Eswatini — the world’s oldest monetary union, which has anchored the economies of the four southern African states. In the medium to long-term Africa could start working toward a single currency, following in the footsteps of the EU.

Correction

“At a state function in Beitbridge this April, the Sallini Construction country representative Steve Muza announced the firm’s involvement in a deal between Zim and South Africa for the erection of infrastructure which among other developments will export water to South Africa’s northern regions, as far as Polokwane.”

This statement is a correction to the article Zim-SA water export deal: double-sided coin published in this column, which erroneously stated that Daniel Garwe, the minister for Housing and Social Amenities had announced the deal.

Mabunda is an analyst and TV anchor at Equity Axis