[miningmx.com] — Paul Jourdan, who together with economist Pandy Pillay lead the ANC commission of inquiry into whether nationalisation is a policy option for the South African mining industry, writes about the future of the African minerals complex in political commentator Moeletsi Mbeki’s new book, Advocates for Change: How to overcome Africa’s challenges.
Here is an extract:
Demand for continent’s resources must be exploited. The Asian boom and concomitant strong demand for Africa’s natural resources could provide a window of opportunity for a regional resource-based development strategy.
Such a strategy must optimise the developmental impact of resources by ensuring that the resource economic linkages are made (backward and forward).
Investment into technical human resource development and R&D is seminal to the optimisation of the economic linkages.
The African resource regimes (particularly mineral regimes) need to be overhauled to allow for the competitive concessioning of the region’s resource endowments (land, minerals, water, fisheries and state rights), to maximise price discovery and developmental objectives.
Similarly, the developmental effects of existing (“first-come-first-served’ concessions) need to be maximised through appropriate legislation and/or contract renegotiation.
In this regard, investment in systematic geo-survey is fundamental to the identification of mineral assets.
A resource rent tax of 30% to 50% on all excess profits above a reasonable (expected) return should be imposed on all resource exploitation concessions or licences, and should form the basis of offshore regional development funds to finance long-term regional, physical and human infrastructure.
As virtually none of the African Union member states currently apply this tax, there would be almost no fiscal loss, especially if the resource rent tax was applied after corporate tax deductions.
Such a regional development fund could be a major instrument in facilitating equitable regional economic integration and ameliorating industrial polarisation.
It would obviously imply a transfer of wealth/rent from resource-rich zones to resource-poor zones, but this wealth/rent is currently untaxed and is generally transferred or remitted to the minority world nations.
Economies of scale and competition would be greatly enhanced by common regional (and ultimately, continental) markets (customs unions).
The success of an African resource-based development strategy would be dramatically compromised without it.
A customs union revenue sharing formula could also contribute to the putative regional development funds and thereby facilitate greater equity in the benefits of integration by prioritising investment into depressed areas and new industrial nodes.
Consideration could be given to merging the national Development Finance Institutions (DFIs) into single regional DFIs (for example, the Industrial Development Corporation and the Development Bank of Southern Africa) to develop and facilitate viable investments across the regions.
A first step in regional economic integration could be multi-state co-operation in the establishment of regional development corridors to realise latent economic potential through seamless infrastructure provision, which would provide tangible benefits to all the participating parties.
However, only the future will tell whether the balance of local and international forces will permit the realisation of an African resource-based development strategy, which has the potential to unleash sustainable growth and development across the continent.
The extract was first published in City Press
