Group Chief Economist, African Export Import Bank (Afreximbank), Dr Yemi Kale, said Africa loses significant economic value by exporting raw minerals instead of processing them locally.
In a new report by the bank on the importance of beneficiation, he said strengthening beneficiation would boost exports, attract investment, create jobs and drive industrialisation.
“A lack of domestic mineral beneficiation means that African countries receive less economic benefit from their natural resources than their peers elsewhere in the world. By exporting raw products as is, African producers forego much of the financial and economic benefit they would have gotten, which accrues to processing firms abroad.
“Processing Africa’s resources at home would boost Africa’s export earnings, facilitate local investment, create skilled jobs, kick-start much-needed industrialisation and encourage continental economic integration. Indeed, without improving local beneficiation and creating value chains, it is very unlikely that African governments will succeed in meeting their developmental goals.”
The report, however, noted that a very small number of resource-rich countries have successfully raised their income levels based on exporting primary products.
“A variety of factors have held back domestic beneficiation over the past decades. While conditions vary across the continent, similar obstacles have discouraged mineral beneficiation in many countries. African firms have suffered from a lack of adequate financing, technical expertise, transport infrastructure, and cheap and reliable electricity. None of these obstacles is insurmountable.
“Africa has a rare opportunity to move up the value chain in the production of critical minerals. Many African countries are rich in the minerals crucial for the energy transition and for which demand will rise sharply over the coming years. Policymakers have a once-in-a-generation chance to shape these nascent mining sectors to be more productive and more inclusive than established industries,” the report noted.
