AMDC and TJN-A host dialogue on Africa's response to the commodity crisis

Addis Ababa, 21March 2017 (ECA) – The African Mineral Development Centre (AMDC), in collaboration with the Tax Justice Network – Africa (TJNA), convened an all-day session of experts, member States and other stakeholders to discuss the impact of the fall in commodity prices on Africa and policy responses that countries can consider adopting. These focused on actions under the auspices of the Africa Mining Vision (AMV) that countries can consider which will add value to minerals and use mining to drive greater socioeconomic development, in order to lessen vulnerability to raw commodity price fluctuations. The colloquium was attended by representatives of seven African countries, three non-African countries and a large variety of think tanks and civil society organizations.

It was emphasized that failure to diversify has left African economies as commodity-dependent as in the past. Indeed, as noted by Kojo Busia, Coordinator of AMDC, “the era of low commodity prices invites sober reflection”. Biniam Behre of the Permanent Mission of the State of Eritrea added that “African countries were not making the most of their minerals during boom years”. The AMV highlights the importance of policies to promote inclusive, productive industrialization based on mineral endowments, and African states have been adopting these through Country Mining Visions (CMVs) with the assistance of AMDC.

The experts and member State representatives noted that Africa has a huge potential to industrialize based on mineral endowments, but that this potential has not been met. Greater linkages with manufacturing, agriculture, and regional cooperation through value chains is necessary to capitalize on this but as of yet has not been a policy priority. Mechanisms to invest mineral rents accrued during boom periods in productive activities and infrastructure on the continent should be pursued. H.E. Albert Yankey, Ambassador of the Republic of Ghana, proposed that these issues be central to the annual deliberations of the African Ministers of Finance and Economic Planning.

In addition to linkage development, participants agreed that policy must address the prevalent illicit financial flows (IFFs) in the extractives sectors, and adopt new fiscal mechanisms to deal with these. Indeed, cementing a coherent approach to mineral taxation in tax and licensing systems will be crucial to ensure firms are paying their fair share. Charles Akong of AMDC proposed that “fiscal harmonization is critical to prevent a race-to-the-bottom among African countries regarding tax policies”. 

At the end of the colloquium, participants urged African countries to adopt a regional approach to mineral-based development. Indeed, harmonizing fiscal approaches across countries, while still recognizing country-specific features and caveats, will help close IFF gaps. Building regional mineral value chains will help connect varying national mineral endowments with a larger pooled sub-regional or pan-African market. Organizations such as AMDC are best poised to promote best-practices across the continent, such as Tanzania’s successes in mineral auditing. The time to act is now, so that Africa may slowly lessen its vulnerability to the inevitable boom-and-bust mineral cycle. 

Issued by:

Communications Section
Economic Commission for Africa
PO Box 3001
Addis Ababa
Tel: +251 11 551 5826