Mcebisi Jonas | African governments must not become pawns in the bigger global power struggles

VOICES

When the World Bank declares that the world is on fire, this is not hyperbole.

The war between Israel and Hamas feels like a tipping point, and the brutality of it, I fear, will have an unprecedented and irreversible impact on the human condition.

The war was preceded by a cascade of global conflicts, most notably in Ukraine and many of them in Africa – in the Sahel, Sudan, the eastern Democratic Republic of Congo (DRC), Somalia and Ethiopia.

It is apparent that warmongers are pushing the planet off its axis in pursuit of power and wealth, with no regard for human life and suffering. Some of the major conflicts are billed as fights for sovereign rights but innocents are being slaughtered while the military establishment booms.

THE YEAR OF ELECTIONS

This year, more voters than ever in history will head to the polls. At least 64 countries, representing about 49% of the world’s people, are to hold national elections.

Many of the outcomes, including the possible rematch between Joe Biden and Donald Trump in the US, and the seventh democratic national elections here in South Africa, will have consequences for years to come.

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The unease we all feel is, therefore, not misplaced. It speaks to a global crisis in the rules-based order.

The UN is more necessary than ever, but it appears increasingly impotent.

We are seeing peacekeeping missions kicked out or rendered irrelevant, and we see the failure of an outdated UN Security Council to overcome the vetoes of its permanent members. The reality is that the post-World War 2 global security architecture has broken down and needs fixing urgently.

Perceptions matter

Africa is usually singled out as a place of irreducible conflict, but the worst hotspots are in Ukraine, Gaza and the Middle East, Myanmar and the South China Sea. Africa cannot be defined just by the conflict zones.

In a provocative article published in the Financial Times in December, Ruchir Sharma, the chairperson of Rockefeller International, warned that Africa is failing, and that it is a problem for the entire world.

The question that springs to mind is: How can a continent that makes up just 3% of global trade and 2% of global production be a problem for everyone else?

Over the last five years, not a single African economy has seen a gain in per capita income, and half have seen a decline, including three of the continent’s big five countries — Nigeria, South Africa and Algeria.

Sharma says corrupt African strongmen, unlike their Asian counterparts of yesteryear, are intent only on self-enrichment. Investors look for countries where they can trust the economic authorities, but officials are not appointed to key regulatory agencies based on competence. This is certainly valid – that weak governance and institutions underlie Africa’s low levels of investment and growth.

Everyone needs Africa to work

Sharma neglects to mention that the main reason so many African countries have seen decline over the last five years is the devastating impact of Covid and the accompanying shocks due to the increase in the cost of living; high interest rates and food shortages due to the Russian invasion of Ukraine; as well as the effects of climate change in the form of drought, floods and other extreme events.

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African countries were heavily affected by events in the rest of the world but lacked the means to spend their way out of recession or the fiscal tools to navigate through the ensuing inflation crisis.

But Sharma shares one truth that should underpin everything: if the world wants a prosperous future, everybody needs Africa to work.

Africa’s economic weaknesses are deep and structural. Between 1991 and 2019, manufacturing’s share of formal employment across the continent declined from 7.6% to 6.6%. 

According to Bloomberg, African GDP per capita peaked in 2014 and has fallen more than 10% since then, while global GDP has risen nearly 15% over the same time.

What can be done to change the situation? And what role can mining play in Africa’s resurgence?

Redefining and remodelling Africa

When we talk about resurgence and recovery, we are not talking about a return to what was there before. It means charting a new course – to restructure the continent’s economies and its relationship with the world. We need to think, talk and act structural transformation.

I believe there are three broad areas of practical actions that will put the continent on a path of structural transformation and sustainable growth.

First, the continent needs to navigate through the increasingly volatile geopolitics.

The US and China are competing for critical minerals, technological dominance and influence on the continent. The Middle Eastern powers are engaged in a scramble for African assets, with the United Arab Emirates and Turkey leading the way.

Military coups are no longer isolated events; Russia’s corporate Wagner mercenaries have moved into the breach left by a decaying French neocolonial empire, inflaming conflict and insinuating themselves into the political elites. Jihadis have metastasised and turned the Sahel into the global epicentre of violent extremism.

We in Africa are not children of a lesser God.

So, our relationship with the rest of the world – whether political, social or commercial – needs to achieve parity.

Africa’s investment case

This brings me to the second area of practical action to place the continent on a new growth path – our investment value proposition.

We need to push back against this tendency to generalise and dump the whole of Africa in one basket. People also compare Africa unfavourably to Asian economic success stories that have pulled themselves up from poverty, such as South Korea, Taiwan and Singapore. But the Philippines, Myanmar, Pakistan and Afghanistan are also in Asia.

This perception no doubt underlies Africa’s capital deficit. Africa has 18% of the world’s population and 30% of its minerals, but only 2% of global capital stock.

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More capital is leaving Africa now than coming in, especially with China having effectively turned off the tap. The positive news is that the current global high inflation – low investment cycle seems to have bottomed out, which should see greater flows of foreign direct investment to the developing world.

Debt burden

But many African economies are still shackled by sovereign debt of almost $2 trillion (R38 trillion), which constrains their ability to leverage foreign direct investment. Africa’s debt repayments surged to $62 billion last year, up 35% from 2022, and are set to rise further.

Countries are spending more money on servicing the debt than on the basic needs of people, such as education and health.

President William Ruto of Kenya has called for a “comprehensive and systemic response” to the debt crisis outside default frameworks. President Ruto and African Development Bank (AfDB) President Akinwumi Adesina have proposed a pause on servicing debt payments for a decade to allow African economies to get up to speed.

Africa needs capital for infrastructure, for reliable power, for education and to meet the challenges of climate change. Nearly half a billion people need to be brought out of extreme poverty.

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African governments must play their part. We must acknowledge that the past decade has seen a generalised governance regression across the continent. We must design and implement home-grown reform strategies, rather than waiting for one-size-fits-all packages to be imposed on us. African governments should learn from each other. Kenya, South Africa and Uganda, for example, have done well in keeping inflation within central bank target bands.

Others have done well in improving tax administration and digitising government. It is in our interests as the private sector, and the mining sector in particular, to have strong governments with strong tax regimes.

Governments, however, cannot navigate these issues on their own. Business cannot stand on the sidelines but should use their knowledge of capital markets and debt to help governments in strategy and implementation.

Corruption

The yoke of corruption is one of our greatest burdens. There is a prevailing perception that you cannot do business in Africa without greasing someone’s palm. Unfortunately, this perception is not without grounds. 

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We must build capable institutions to uphold governance and the rule of law, as well as create political stability. Mining is a long-term investment, requiring between 12 and 17 years to achieve return on investment. A country’s policies cannot change with every new election, as there must be a predictable environment for investment.

Public-Private Partnerships

The third and final area of action we must collectively push is new models for state and private sector collaboration.

It is the private sector that has a deep understanding of market and supply chain dynamics and needs to be central to the continent’s industrialisation ambitions. This will require new forms of collaboration between mining and manufacturing capital to create processing for higher value goods, which, in turn, creates parallel industries and connects Africa to global supply chains. The Chinese model of piloting new policy in demarcated zones (special economic zones) is something we should consider strongly. And, like in China, the special economic zones must have enabling policy instruments and infrastructure. There is also the question of skills.

A recent World Bank report states that Africa’s growth over the past 30 years has not become skills-intensive, as in the rest of the world. 

Digitisation will be a game-changer, and I am pleased to see several African countries promulgating acts for start-ups, including skilled worker visas.

The global energy transition is another area of opportunity, especially for beneficiation and global value chain participation. Africa has significant endowments of critical and rare earth mineral endowments, including 70% of the world’s cobalt resources. The African Minerals Development Centre, established to drive the AU’s African mining vision, has developed a green minerals strategy for the continent. This could open new innovative and practical partnerships for green value chain beneficiation.

Partnerships between the public sector and private sector are not theoretical. The Lobito Atlantic Corridor – linking Angola, the DRC and Zambia – and projects in Tanzania, Kenya and elsewhere are examples of productive investment spurring economic development along the corridor, as well as connecting Africa’s farmers who bring produce to market. The Dangote refinery in Nigeria will elevate that country’s petro-chemical industry and provide low-cost fertiliser to grow the country’s enormous agricultural potential.

Guinea will this year launch the world’s largest mining project. The $20 billion Simandou iron ore, rail and port development is led by Rio Tinto, the Guinean government and five companies from China. Rio refers to this as the largest greenfield integrated mine and infrastructure investment in Africa – with more than 600km of new multi-use rail being co-developed with the government.

There are many such examples

Here in South Africa, the private sector has intervened in areas where key state functions have failed. The logistic bottlenecks cost the mining industry R150 billion in potential revenue over the past two years, and yet there is still resistance to structured private sector involvement. Similarly with energy supply, where state monopoly continues to impede reform and economic growth. But ad-hoc private sector interventions, while well intentioned, will not on their own resolve the crises until viable models for collaboration are implemented.

Changing course

We must get the frameworks right for such partnerships. There must be reciprocal costs and benefits, and we must avoid situations where partnerships are anti-competitive by design and intent. Transparency and accountability must be bottom-line principles to reduce the risk of state capture. Multilateral institutions, such as AfDB, could play an important role here, and we should also expect industry to self-regulate.

When it comes to mining, projects should not exist in a bubble. New and existing mines should be part of an ecosystem with the surrounding communities, local authorities and other businesses.

To conclude, despite the overall trend of deindustrialisation over the past 30 years, and the more recent trend of governance regression and conflict escalation, there is reason for optimism. The World Bank projects the rate of increase of growth in Africa to outperform global and even emerging market averages – rising from the relatively low baseline of 2.5% in 2023 to 3.7% in 2024 and 4.1% in 2025. This is a rapid incline – the steepest from across the various regions of the globe.

But nobody will look out for Africa if Africa does not look out for itself. 

We must act boldly as equals in the global order as Africa’s time is indeed coming. Is the mining industry ready to be part of that change?

- Jonas is board chairperson of MTN. This is an edited version of a speech delivered at the Ministerial Symposium during the African Mining Indaba this week