Overcoming Africa’s mining barriers

As the second largest continent in the world, Africa is blessed with some of the richest natural resources. Dan Kazungu, Kenya’s Cabinet Secretary, Ministry of Mining, joined CNBC Africa’s Kenneth Igbomor to discuss how Africa can overcome some of its mining challenges through intra-regional collaborations.

What are your expectations for the mining summit in Abuja?
It’s my first time in Abuja, and my first time in Nigeria. You know we have a very close working relationship with the minister for mining in Nigeria, Honourable Dr. Kayode Fayemi and so together in the spirit of partnership, complimenting each other, supporting each other I thought I could make a trip to Abuja to support to be part of the National Mining Summit but more particularly to lend our voice to the 25 year road map that Nigeria has put together in its bid to revamp and integrate mining and steel development to the economy of Nigeria, so it’s brothers supporting brothers and seeing how East Africa, South Africa, and West Africa can work together. We’re trying to see how all the parts of Sub-Saharan Africa can incorporate mining in the integration of our regions. It’s been a great three day stay here and we learnt a lot from the speakers in Abuja.

Looking at the collaborations I want to know, are we to expect anything in the near future?
We have agreed with ministers for mining from Sub-Saharan Africa to plan a forum for African Mining Ministers so we can always have an agenda for African mining and create jobs and opportunities for our people. It’s in it’s infancy stage. We’re still trying to put it together. Kenya will be the convener for the meeting of African Mining Ministers so we can see how we can confront issues that are not country specific together. We want to see how we can collaborate to resolve these issues for the betterment of our peoples.

What would you say is the biggest challenge for mining at a regional level?
I think first and foremost, we need countries within the region to understand that mining isn’t country specific. Mining as a sector can be very local, but it’s also regional and global. For example the rocks that start in Nigeria don’t recognise political boundaries they go across to the neighbouring countries, so we share the same rock strata, and the same thing happens in other regions as well. Mining starts by being local, then it becomes National and then it becomes regional. I think first of all it’s the awareness and the understanding that should be dealt with. We need to understand that you’re not just dealing with local issues but regional issues as well. The issue over illicit trading for example doesn’t happen in just one country, it’s regional or even continental, and it goes beyond that as well. This is the sort of thing that we need to appreciate. It is possible that through working with the regional integration bodies we will better understand that we need to compliment each other. In the are of geological surveys for example, there is sharing of information. These things can never be specific to a country. So I see a lot of opportunities for us to collaborate and support each other. Since we’re all in this great continent called Africa which by the way, last year, UN reports say that Africa lost over $60 billion to illicit trade. These are issues that no one country or region can confront and that’s why we need to collaborate and work together to resolve these issues.

It’s good to see such collaboration on a continental scale because there are a lot of losses attributed to illicit trade. But when you look at taxation, what sort of tax regime would you recommend for the continent to maximise revenue from illicit revenue?
First of all, that’s a very important question because one of the challenges that you just talked about is that for many years, many countries, didn’t focus on mining professionally as it were. In fact, one of the biggest hindrances we have is that many African countries don’t have the policy framework in place. They have very archaic colonial laws. You will be surprised to learn that Kenya only repealed its Mining Act from 1940 last year after 80 years. And I believe that Nigeria is the same. The country probably started mining at some point and then it seems that the country moved into oil and gas and now there’s a concerted effort to change this. Policies, legal framework, regulatory framework, fiscal regime, and credible data that local and foreign companies can use to get into mining if interested are important.

What strategies do you think we can put in place at the continental level to help address the skill gap in the sector?
If you look at some of the biggest mining projects in Africa today, mostly you find experts from other regions, Australia, and Europe, being involved in these projects, so Africa must start to training its own young men and women to be part of the mining sector that we’re growing. To use an example from Kenya, according to the new mining policy and law, the Mining Act of 2016, we established the National Mining Institute and we’re constructing a $6 million section within one of the local universities in Kenya. I think also there’s an opportunity there to compliment to support each other. If we build a big campus like that in Kenya, countries around the region should be able to utilise that. We should see the Rwandese, the Congolese, the Sudanese, and the Ethiopians coming to get mining experience there so that we build a centre of excellence per region. However, again, mining should not only be that high skilled type of opportunity for thos resources, but we should also consider the benefits of a technical training institute. We should also be able to do short courses at the diploma certificate level to do the technical work, like heavy machinery operation. You do not need a degree to do that. We need to be doing these things and collaborating more, and partnering with other external partners who can help us get the right technology transferred to our people to be able to drive our mining sector going forward.

That’s very good, but we, as a continent, don’t want to be trapped into exporting raw commodities. I would like you to speak about the importance of value addition in the Mining sector.
Spot on! Look, if we have to create value for our minerals then we can’t export them raw, but we have to be careful because value addition means different things to different people. Before you tell an investor to add value in a given locality, the question should be are we ready as a continent to give the right environment for that value addition exercise to happen. If you don’t have have power and you want to do smelting, is that possible? No. So, yes! Value addition is a great thing, but we should be ready to create the right environment for that value addition to happen, but obviously value addition means different things for different products. Gem stones for instance may not incur that many additional costs when it comes to value addition, but it’s important because that way we get more value, make more money, and create more wealth for our people. It’s the way to go. In Kenya we are building the first ever mineral value addition project in the coastal part of the country, and precious minerals will have value added there so that we can get a lot more out of the minerals and create jobs and wealth for our people. It is a great thing but we must also prepare ourselves as countries for further value addition.

What do you think the African bodies looking at mining should be saying or doing on this front?
I think a couple of things. Number one, I look at our economic configuration, and our economic outlook. What kind of laws do you have/ What kind of economic climate are we building to attract the right investment around value addition? That is important because in the absence of the right economic framework there’s a problem. We need to look at it regionally and also continentally, and then we could maybe work with the African Development Centre of the AU. Discussions around the forum for African Mining Ministers could also be a good place for us to look at how we can create the right economic climate for value addition to happen. Secondly, we can’t run away from this, we have to encourage African governments to ensure that we invest in power, clean energy, renewable energy and cheap energy. You cannot say that we want to build a steel plant when you don’t have the adequate power. We must also invest in Infrastructure in a big way. When we start to add value the good must be able to be transported to a ports facility.

In Nigeria here, we’re talking about Port harcourt, or Lagos. In Ghana you’re talking about Accra. There must be high speed trains. We must be competitive in the way that we transport our refined ores to our shores. If we are competitive, investors will be able to come and do value edition here. There’s also an issue around investment in man power, the value addition thing we’re attempting to do must be driven by our people. We must start preparing our young men and women in Africa for these types of jobs so that they get the opportunity to drive their own economic agenda. We’re not saying that expatriates are not welcome but we want more Africans to be part of this program going forward.