Africa seeks to bolster development, reduce reliance on foreign aid by banning export of unprocessed minerals

Africa, the continent with the world’s largest reserves of diamonds, cobalt, uranium, platinum and 40% of its gold, has recently been seen to impose bans on the export of unprocessed minerals. As the demand for minerals needed to develop clean energy technologies has increased, experts argue that this move could boost the continent’s development.

Mineral processing is now at the heart of many African governments’ strategies to increase exports and reduce imports of finished products made from African raw materials to not only generate more revenue and create jobs but also to reduce the country’s reliance on foreign aid.

Yes to export bans

Several countries such as DR Congo, Zambia, Tanzania, Ghana, Burundi, Nigeria, Namibia, Kenya, Zimbabwe and Madagascar, recently slapped bans on the export of raw minerals to encourage local processing.

Uganda has followed in the footsteps of these countries by recently announcing a ban on the export of non-refined gold. Explaining this move, President Yoweri Museveni said that Africa’s centuries-old tradition of exporting unprocessed minerals to developed countries is partly responsible for the continent’s underdevelopment.

“We are donating jobs and wealth,” Museveni added.

He explained that despite initial reservations from prospective investors, they have so far established seven gold refineries in this East African country since the ban first came into force a few years ago.

“They (investors) are now flocking into the country,” Museveni said.

Too early for optimism?

However, despite the initial optimistic expectations, some African states have subsequently lifted the bans as the restrictions have not spurred the development of mineral processing capacity due, among factors, to limited infrastructure – energy, roads, ports and railways – and inadequate financial and technical capabilities.

For example, DR Congo, the world’s biggest cobalt producer and Africa’s largest source of copper waived the ban on the export of raw minerals in 2020. Tanzania also lifted the ban. However, the fact that Uganda is attracting investment in mineral refining – especially gold – is noteworthy. According to the World Bank, refined gold has over the last few years been Uganda’s top export product – replacing coffee which previously earned the highest revenues.

Experts optimistic on development prospects

But can bans on the export of raw minerals from Africa boost development and reduce reliance on foreign aid? There is no doubt that mineral processing can spur development in Africa according to the Africa Mining Vision.

With significant quantities of minerals needed for energy transition and environment-friendly industries, Africa stands in a unique position to process its minerals to stimulate industrialisation and development, the United Nations Economic Commission for Africa report said.

“It is obvious that processing our minerals and earning more money from them can reduce our dependence on foreign aid,” Julius Mukunda, the Executive Director at Uganda’s Civil Society Budget Advocacy Group, said. “We can never borrow ourselves out of the debt and poverty traps we are currently in. We are borrowing to pay debts. We can only get out of poverty through trade and trade in value-added products makes it even easier.”

The African Development Bank, in a recent paper, stressed the need for the continent to reverse its position as a supplier of raw minerals by developing its refining capacity to boost development. This, the bank added, could help to provide electricity to around 600 million Africans who do not have it – and yet access to power is a huge development boost and a critical component of the sustainable development goals and Africa’s 2063 agenda.

Paul Bagabo, an economist at the Natural Resource Governance Institute, a global organisation that promotes the sustainable management of natural resources, welcomed the trend but noted that “we still have challenges of low capacity and technology, and we need to do this in a strategic manner without scaring away investors.”

Prof. Augustus Nuwagaba, a specialist in economic transformation in Africa, said exports of refined mineral products would increase financial inflows into Africa and that countries would have more money for development and debt servicing.

“And that’s what developed countries did and that’s why countries that add value to minerals are richer than raw mineral exporters,” he added. “Countries are spending a big part of their national resource envelops on paying debts every year, so if a country can raise more money from its resources, it would borrow less and put its money into development projects and reduce foreign aid.”

News of mineral finds is usually greeted with high expectations for development in Africa. However, decades of mineral exploitation have not resulted in development as trade in unprocessed metals has denied African countries the opportunity to add value to these non-renewable resources by generating more wealth, creating jobs and potentially reducing reliance on foreign aid to power development.

But there is now a push for trade in processed minerals which if successful, could turn the future of many African countries around.