Changing the Distribution of Natural Resources Rents to Benefit the Least Developed Producer Economies: Can Value Chain Analysis Show the Way?
HSRC Seminar Series - INVITATION
Presenter: Vuyo Mjimba, Human Sciences Research Council (HSRC-AISA)
Date: 22 March 2018
Time: 12:30 - 13:30
Venues: Pretoria, Durban, Cape Town, PE and Sweetwaters
Manufacturing and services backward linkages into and out of natural resources value chains have been presented as a plausible industrialisation pathway in Africa. However, the dominance of multinational firms in the mining sector on the continent has been identified as a hindrance to the development of local backward linkages firms serving the industry.
Multinational mining firms routinely use long-established supply chains that operate from their home countries as sources of their mining inputs goods and services. They rarely explore and develop African capacity and capabilities to supply some of these inputs. Hypothetically and where capacity and capabilities permit, African-owned mining firms would use greater local backward linkages for their operations. Acknowledging the shortcomings of resource nationalisation, an alternative and ‘legitimate’ route of achieving greater Africa ownership of mining ventures is herewith proposed. It lies in a deliberate and gradual domination of the mineral exploration ventures in Africa by Africa-domicile firms that operate in the large-scale mining space. By taking control of the exploration industry, African countries would be able to negotiate their increased ownership stakes in other sub-chains of the mining value chains. Thus, greater Africa-based manufacturing backward and services linkages ventures could be achieved. Within this suggested gradual process of change, the governments of African countries endowed with natural resources should seek to systematically create competitive exploration markets and address the existing inefficiencies in order to exploit national, regional and continental competitive linkages.
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