Global Courant
In college, one of the most discussed topics in argumentative essays was whether Nigeria’s wealth was a blessing or a curse. Supporters on both sides often made compelling arguments to support their position, but they always agreed that Nigeria is undeniably blessed. This fundamental premise formed the basis for all discussions. Several years later, I find myself having to revisit the question, but this time within the broader African context.
From oil reserves in Nigeria to lithium wells in the Congo, Africa is immensely blessed. The continent holds a huge share of the world’s natural resources, both renewable and non-renewable resources. According to the United Nations, Africa is home to about 30 percent of the world’s mineral reserves, 12 percent of the world’s oil and 8 percent of the world’s natural gas reserves. The largest reserves of minerals, including cobalt, diamonds, platinum, lithium and uranium in the world, are in Africa. The continent still owns 65 percent of the world’s cropland and ten percent of the planet’s internal renewable freshwater resource. The statistics are legion.
But despite Africa’s immense mineral wealth, the continent has yet to reap the financial rewards due to a lack of policies to promote value addition. It is said that Africa is losing $60 billion a year in illegal outflow and price manipulation in mineral extraction, with most of the proceeds going offshore.
However, in recent times, African countries have begun to address the issue of exploitation and are taking every opportunity to end it. Last Thursday, the Namibian government imposed an export ban on raw lithium and other critical minerals. The move is intended to capitalize on increasing global demand for metals used in clean energy technologies, ensuring potential economic benefits for Namibia.
The South African country has significant reserves of lithium, which is vital for renewable energy storage, as well as rare earth minerals such as dysprosium and terbium needed for permanent magnets in the batteries of electric cars and wind turbines. The lithium industry in Namibia could well be worthwhile $13.9 billion or 6.7% of the country’s gross domestic product (GDP) annually and could pump up to $4.6 billion annually in taxes and royalties into the state coffers.
Namibia is also one of the world’s largest producers of gem-quality uranium and diamonds, but the battery metals are gaining interest as the world shifts from polluting fuels to renewable energy.
It is not the first time that an African country has banned the export of raw critical minerals. Last December, Zimbabwe banned the raw lithium exports from its mines so it can cash in on value addition and avoid losing billions of dollars in mineral revenues to foreign companies. With continued high international demand, Zimbabwe is expected to become one of the world’s largest lithium exporters, with the government hoping to meet 20% of the world’s total demand for lithium when it fully utilizes its known lithium resources.
Likewise last year Nigeria had rejected Tesla Inc’s request to mine lithium unless the company doubles the value addition by placing a battery-making plant in the West African country.
This is an example of a rapidly growing trend, and it is indeed encouraging to see. By requiring minerals and resources to be processed within their borders, African countries can capture a larger share of the value chain, leading to increased revenues, technology transfer and skills development. This approach not only allows the host country to retain a greater share of the economic benefits, but also encourages the growth of downstream industries and promotes sustainable development.
However, it is essential that governments implement these measures with careful consideration and good governance to maximize benefits and mitigate potential risks. To return to my first point, Africa’s wealth is indeed a blessing.
