africa

Africa at a Fork in the Road: Taking Off or Disappointment Once Again?
been the limited capabilities of local manufacturers. For example, the largest copper
mining firms in Zambia find that local manufacturers lack the capacity to provide
the mining inputs they need, and the largest gold mining firms in Ghana report
similarly. More thorough implementation of local-content policies, and supportive
investments in local suppliers, will help domestic firms link in to large and lucrative
commodity markets to generate more economic activity and jobs across other
sectors. Regarding beneficiation, firms report that their specialty lies in extraction
rather than processing, highlighting the need for expanded knowledge networks
and greater support to firms that branch into higher-value activities.
Successful cases can be found across Africa of moving from commodity-based
growth to a more sustainable and inclusive development trajectory. For example,
Botswana has succeeded in adding value to mineral deposits, namely diamonds,
and upgrading production to include cutting and polishing. Central to its success
was the building of a strong and competent bureaucracy, and attracting FDI to
higher-level processing activities within the diamond industry. Successful institutional
reform focused on natural resource governance and management (Africa Progress
Panel, 2013: 81). Even so, about half of Botswana’s GDP still comes from mining
revenues, indicating that further diversification efforts are needed.
The Ethiopian government has introduced a number of incentives and programs
to raise the value-added content of leather and hide exports. These have included
imposing export taxes of 150 percent on low value-added hides, and directly engaging
foreign firms to provide skills and technological training to local firms through
partnerships. As a result, 95 percent of Ethiopia’s leather exports are of processed
leather.
South Africa presents a success story of building distinctive upstream linkages,
creating a network of firms supplying machinery for mining. Its mining equipment
exports rose by 20 percent between 2010 and 2011 (ECA and AUC, 2013). The
success of linking mining with manufacturing in South Africa has led to large income
and employment multipliers. While mining directly yields R267 billion in revenue and
524,000 jobs, when capturing indirect impacts, mining accounts for R536.1 billion
in revenue and 1.35 million jobs. 2
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