How the Private Sector can contribute towards harnessing the full potential of

Natural Resource Endowments and Contribute to Inclusive Economic Growth

in Africa

HIGH LEVEL EXPERT MEETING

UNITED NATIONS

24TH FEBRUARY 2015

“Giving back to Zambia”

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Maureen Jangulo Dlamini – CEO, Zambia Chamber of Mines

• Introduction

• Background:

• African Union Agenda 2063

• African Mining Vision ( AMV)

• Post-2015 Development Agenda

• Action Plan for Accelerated Industrial Development of Africa ( AIDA)

• Inclusive Economic Growth

• Mining making a positive contribution to Sustainable Development

• Conclusion 2

INTRODUCTION• Mining remains one of the largest drivers of Sub-Saharan African economies.

• The typical share of mining in low and middle income mineral-driven countries isapproximately;

i. 60-90% of Foreign Direct Investment (FDI)

ii. 30-60% of exports

iii. 3-20% of government revenue

iv. 3-10% of Gross Domestic Product (GDP)

v. 1% of direct employment

• Zambia falls well within these parameters with mining contributing an excess of25% to Government revenue.

• In Zambia, private investment into mining has exceeded US$12 billion sinceprivatization of the industry in 2000 and has made mining the country’s secondlargest employer after the Government.

• This is a clear indication of the immense potential of the private sector ininclusive economic growth.

Source: Chamber of Mines3

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AFRICAN UNION AGENDA 2063 – THE AFRICA WE WANT

A strategic framework for Africa’s inclusive growth, sustainable development and structural transformation that operationalises the AU Vision: “ an integrated, prosperous and peaceful Africa, driven by its own citizens and representing a dynamic force in the global arena”

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THE AFRICAN MINING VISION

AFRICAN MINING VISION – 2009

• The AMV presents a holistic picture of how revenue collection from the miningindustry is as important as revenue management.

• The AMV illustrates the need to leverage off mining activities to develop theeconomies of resource reliant African economies through business linkages. This tiesin with local content initiatives that are essential for building capacities of localenterprises that depend on private investing companies for business.

• Africa’s intra-trade has not reached its optimum– how do we harness this “gold

mine”? The AMV puts development outcomes at the epicentre of management anddistribution of mineral revenues. Given that a number of mineral-driven Africaneconomies are targeting diversification, mining can be used to support sustainableagriculture, tourism, forestry and other primary industries that can provide raw input tosecondary industries in other emerging African economies.

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POST-2015 DEVELOPMENT AGENDA

IMPLEMENTING THE POST–2015 DEVELOPMENT AGENDA

• Industrialisation

• Government policies that sustain industries

• Africa exporting raw materials - value addition

• Building mutual trust – transparency and accountability

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Programme Cluster Operational Priorities

Cluster 1 Industrial Policy and Institutional Direction

Cluster 2 Upgrading productive and Trade Capacities in Africa

Cluster 3 Promoting Infrastructure and Energy Development for industrial processes

Cluster 4 Industrial and Technical Skills for Africa’s Development

Cluster 5 Industrial Innovation and Technology systems and Research Development

Cluster 6 Financing and Resource Mobilisation

Cluster 7 Sustainable Development for Responsible Industrialization

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• Need to advance equitable economic opportunities for all citizens - Resource

Curse

• According to the World Bank, inclusive growth allows people to contribute to and benefit

from economic growth which is unquestionably necessary for substantial poverty

reduction.

• But for this growth to be sustainable in the long run, it should be broad-based across

sectors, and inclusive of the large part of the country’s labor force.

• This definition of inclusive growth implies a direct link between the macro and micro

determinants of growth.

• This is Africa’s biggest challenge

• Growth rates of between 5% to 7%

• Effects have not trickled down to the ordinary citizens

• Zambia – RSNDP - 2013-2016

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CLUSTER 1 - INDUSTRIAL POLICY AND INSTITUTIONAL DIRECTION

• Enabling Government policies. Improved dialogue to guide stable fiscal policy direction

• Improved data management – Greater transparency and accountability. Multi sectorial approach

• EITI, ICMM - Self assessment

• Strengthen institutional bodies to improve governance standards and reduce corruption

• Regional co-ordination and collaboration of industrial policy framework at regional level - MIASA

• Capacity building in revenue collection and transparency in contract negotiations

CLUSTER 2 - UPGRADING PRODUCTIVE AND TRADE CAPACITIES IN AFRICA

• Developing new and strengthening existing trade policies in trade zones (SADC, COMESA) to

stimulate growth of local exporting industries.

• Creating centres of excellence in Regional blocs – Chambers of Mines – MIASA – Peer pressure

• Empowerment programmes for youth and women – access to credit

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CLUSTER 3 - PROMOTING INFRASTRUCTURE AND ENERGY DEVELOPMENT FOR INDUSTRIAL

PROCESSES

• Use of data from freight and transportation to supplement industry data - making weigh bridge data

usable by Value Chain monitoring frameworks to monitor movement of minerals.

• Mining companies to invest in power generation/transmission/distribution facilities to improve

efficiencies in consumption for domestic, commercial and industrial users.

• PPP for infrastructural development – road, rail, telecom

CLUSTER 4 - INDUSTRIAL AND TECHNICAL SKILLS FOR AFRICA’S DEVELOPMENT

• 40% of African population at least with secondary degree diploma – skilled tradesmen/women

• Deliberate policies to support development and growth of SMME’s – Local Content Dev programmes – linkages with other sectors of the economy. Skills and technology transfers

• Multi sectoral approach to economic development – sub contracting processes – Business Development Programmes

• Collaborative efforts with all stakeholders to identify skills gaps and funding needs in institutions of higher learning. Focus – Math and science if we are serious about industrialising – R&D

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CLUSTER 5 - INDUSTRIAL INNOVATION AND TECHNOLOGY SYSTEMS AND

RESEARCH DEVELOPMENT

• Improved data management

• Electronic reporting from mines to increase efficiency

• Capacity building in revenue collection and policy institutions. This can guide innovations into

maximizing the contribution of mining operations in ways other than taxation.

• Training and development programmes

CAPACITY 6 - FINANCING AND RESOURCE MOBILIZATION

• Enhancement of technical capacity of revenue authorities – information management and audit

functions of mining companies

• Public Finance Management – mines to collaborate more with local authorities

• Expansion of tax base and compliance – artisanal mining support

• Deliberate government policy on citizens empowerment

• Innovative financing for large projects/Tackling high cost operations

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CLUSTER 7 - SUSTAINABLE DEVELOPMENT FOR RESPONSIBLE INDUSTRIALIZATION

• Respect for environment – responsibility for environment – not just a cost of doing business

• Respect for communities – ensuring economic benefits are shared with the local community

• Respect for shared legacy – ownership and not handouts

• Respect for the people – culture, education, agriculture

PRIVATE SECTOR CONTRIBUTION TO INCLUSIVE ECONOMICGROWTH – AIDA MODEL

Oozing with great sense achievement and

happiness a one of the Members gave a testimonyabout what she had learnt from the Mapesho village bankand how the savings have helped her to buy a ‘she’ goat.

In conclusion, Gehane, Kansanshi M&E Officer, saidthat, “it is encouraging to see women empowerthemselves without external support, Kansanshi Mineis proud of you” He later implored the Mapeshovillage bank members to ensure they double theirefforts as everyone looks forward to starting nextyear’s savings cycle.

Women involved in community banking and adult

literacy. At the Kansanshi Foundation Institute the CSR

department hosted different women from various

communities from Solwezi and trained them in baking.

To ensure continuity and replication of acquired skills, KMP donatedbaking ovens. In order to have a snow ball effect of the project, the trainedwomen were implored to go out there and train their colleagues. KMPwent further and also bought ingredients to ensure the women trainedtheir fellow women who did not attend the training.

Katandano, Kabulobe, Kamitonte, Kyafukuma, Kamatete and Mulenga

received the baking ingredients.

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CONCLUSION

• Inclusive growth is about raising the pace of growth and enlarging the size of the

economy, while leveling the playing field for investment and increasing productive

employment opportunities.

• To harness the full potential of natural resource endowments, policies for inclusive

growth must be incorporated into long-term business models of both Government and

private sector organizations.

• Initiatives of mining companies will work better if they are operated in line with

governments national and local development objectives

• Need to empower local authorities with administrative and financial capacity

• Managing expectations, setting standards, agreed time scales etc.