Resource-based African Development Strategy - Partnership to Cut ...

A Resource-basedAfrican DevelopmentStrategyRADSRADSDr Paul JourdanAfDB, March, 2008Resource-based African Development Strategy

RADS OutlineRADSIntroduction- Africa’s natural resourcesGlobal demand/consumptionMineral resourcesEnergy resourcesResource rentsResource linkagesAgricultural & Water resourcesConstraints to agri-developmentRADS-4 sub-strategiesstrategiesResource-based DCs (SDP)Potential SDPs in 4 regionsThe Curse of Resources-GovernanceRADS recap-new global actors-PRCWay forwardResource-based African Development Strategy

“Africa will never be able to tradecompetitively – it needs to be moreintegrated, with larger economic spaces.Goods and services must move moreeasily; infrastructure must facilitate, notfrustrate trade; institutions must besupportive and effective. Withoutintegration, the continent will remaindisjointed with many small, shallowmarkets that are uncompetitive on theirown and unattractive ti to investors”RADSReport of the High Level Panel“Investing in Africa’s Future: The ADB in the 21 st Century”Resource-based African Development Strategy

RADS 4.Africa:Start from what we are!1. Resource-based exporter ofminerals/metals (oil & gas, gold, coal, ironore & ferro-alloys, bauxite/aluminium,copper, diamonds, etc.);2. Resource-basedexporter of agri & agri-based commodities (cocoa, cotton, fruit &juices, sugar, grains, wood & paper/pulp,wool, meat, fish, etc.);3. Insignificant exporter of manufacturedgoods; and4. Very weak HR base (skills) except for a fewniche competencies.Resource-based African Development Strategy

RADSAfrica’s Natural Resources• Agriculture– Contributes 40% of African GDP % provides livelihood for 60% ofpopulation, but largest user of scarce water– Enormous unrealised potential (low yields & only x% undercultivation)– But, agri-commodities exported without processing(beneficiation)i i • Minerals– World’s top producer of numerous mineral commodities;– Has world’s greatest resources of many more;– Africa lacks systematic geo-survey: could be > resources;– But exported as ores, concs, metals: Need > beneficiation.• Energy– Significant fossil fuels (oil, gas and coal)– Large biomass and bio-fuels potential (ethanol, bio-diesel)– Massive hydro-electric potential (Inga 45GW, Congo River200GW)• Forestry– 22% of African land is forested (650m hectares= 17% of worldtotal);– Deforestation: Africa’s net change highest globally = -0.78% p.a;– Huge silviculture potential, but exported as logs/chips: need >bene.• Fishing– Decline in catch rate (international poaching! over-harvesting);– 68% of marine protected areas under threat;Resource-based – Aquaculture/mariculture African Development Strategy still nascent (large potential)Tourism

Thus, Africa’s short to medium term potentiallies in our natural comparative advantage:Namely, resource & resource-based industries (provide acompetitive platform for finished products in the longer term,and immediate market for resource inputs industries)capitalSkills/HRD•Agricultural•Mineral•Forestry•Tourismm•Fishing/Aquaculture•Energy (coal/gas & HEP)technologyR&DmarketingFinishedHigh-ValueProductsRaw Mat. - Int. Product - Semi-Manufacture- Fabricatedenergy logistics services etc…RADSHowever, with >value-addition other factors determine competitiveness!Resource-based African Development Strategy

t?$1 million GDPAsian Boom:New “scramble for resources”?Global Steel Consumption t/$1 million GDP(proxy for all metals)30High intensity,25High intensity,20sellersmarket:Colonial15systemSteeel Consumption t10Africa’s newopportunity?Majority World takes offFailure of global growthDeflated GDP to 2004 $ terms(Minority World hegemony)RADS5Source: IISI0Post WWII Minority World GrowthResource-based African Development StrategyLow intensity,buyers market:stagnation &instability1940 1950 1960 1970 1980 1990 2000 2010Year

How long will boom last?However, prices will fall with increasing supply over themedium-long term, but at a higher level (lower grades)SteelIntensity(all metals proxy) ?PRCRADSIndia~$16k/capitaResource-based African Development StrategyChina + India > 2Xpop’n pof First World!Data Source: BHPB 2006

Energy intensity follows a similar path,but appears to peak at ~ $20 - $25k/cap?RADSResource-based African Development Strategy

Resources Sustainability?Resource Industry Linkages(beyond resource rents)1. INFRASTRUCTURE:3. DOWNSTREAMPuts in critical infraUse wasting assetValue-additionaddition(transport, energy) forBeneficiationother non-mineralsto underpin growth inExport of resource-economic potentialsustainable sectorsbased articles2. UPSTREAM 4. TECHNOLOGICALInputs:Linkages:Plant, machinery,equipment, consumables,HRD, R&D“Nursery” for new techclusters, adaptable toservices, (export)other sectorsRADS The direct potential linkage is the provision of infrastructure thatcould be used to realise other resources potential (e.g. agriculture)Resource-based African Development Strategy

Oil & Gas Value ChainResources provide 2 industrial opportunities forvalue-addition: addition: Beneficiation & Inputse.g. Mineral down- & up-stream beneficiation.i Resources inputs sector has a comparativeadvantage in: (a) relatively large local market &(b) development of tech solutions for locallconditions(applies equally to other resource sectors)expl. capital goodsextract. capital goodsprocessing cap. goodsRefining Cap. GoodsFabrication Cap.goods• geophysical• drilling• crushers/mills •Smelters•Rolling• drilling• cutting• hydromet plant• survey• hauling• materials handling •Furnaces•Moulding• etc.• hoisting, etc.• furnaces, etc. • refineries•Machining• etc.•assemblingExplorationExtractionProcessingSmelting &RefiningFabricationexploration services• GIS• analytical• data processing• financing• etcextraction services• mine planning•consumables/spares• sub-contracting• financing• analytical, etcprocessing services• comminution• grinding media• chem/reagects• process control• analytical, etcRefining services•Reductants•Chemicals•Assaying•Gas & elec supplyValue adding services•Design•Marketing•Distribution•ServicesRADSResource-based African Development Strategy

Resources provide 2 industrialopportunities for value-addition:Beneficiation & Inputse.g. Mineral down-& side-stream beneficiation chainexpl. capital goodsmining capital goodsprocessing cap. goods• geophysical• drilling• crushers/mills• drilling• cutting• hydromet plant• survey• hauling• materials handling• etc.• hoisting, etc.• furnaces, etc.Refining Cap. Goods•Smelters•Furnaces•Electro winning cells•CastersFabrication Cap.goods pg•Rolling•Moulding•Machining•assemblingExplorationMiningMineralProcessingSmelting &RefiningFabricationexploration services• GIS• analytical• data processing• financing• etcmining services• mine planning•consumables/spares• sub-contracting• financing• analytical, etcprocessing services• comminution• grinding media• chem/reagects• process control• analytical, etcRefining services•Reductants•Chemicals•Assaying•Gas & elec supplyValue adding services•Design•Marketing•Distribution•ServicesRADSResources inputs sector has a comparativeadvantage in (a) relatively l large local l market & (b)development of tech inputs for local conditions(applies equally to other resource sectors)Resource-based African Development Strategy

The resource curse can be avoided!“Deepening” the resource sector linkages: development ofthe resource inputs & outputs industries is criticalFinland: 1970 on primarycommodities (pc- mining & forestry)inverted U-curve, Finland: but e.g. shifts Forestrygrewcapital curve goods (mf-resources (machinery) inputs exports &andoutputs/beneficiation).value-added exportsto 1998manufacturing(wood manufactures,Chile: 1970 on manufacturingpulp/paper)p/pape U-curve (ISI), but shifts to 1998primary commodities (mining &agriculture) curve, after opening upits economy (coup) in the 70’s.RADSFinland managed to shift from a 1970 resources (pc) trajectory to a 1998manufactures (mf) trajectory, through the development of its resources inputs(machinery) and outputs (value-addition) sectors (source Palma, G. 2004)Resource-based African Development Strategy

RADSAfrica’sNaturalResourcesRADSResource-based African Development Strategy

Africa is well-endowed endowed with mineral resourcesMineral Production & Known Resources (‘04)(however, much of Africa is still un-surveyed)MineralProductionRankReservesRankPGMs* 54% 1 60+% 1Phosphate 27% 1 66% 1Gold 20% 1 42% 1Chromium 40% 1 44% 1Manganese 28% 2 82% 1Vanadium 51% 1 95% 1Cobalt 18% 1 55+% 1Diamonds 78% 1 88% 1RADSAluminium 4% 7 45% 1Also Ti (20%), U (20%), Fe (17%), Cu (13%), etc.Resource-based African Development Strategy*PGMs: Platinum Group Minerals

However, many of thegaps correspond tozones of low geo-dataSS African Mineral DepositsKalahari sandcoverRADSResource-based African Development Strategy

African GeologyAreas covered withrecent overburden(unknownunderlying geology)RADSResource-based African Development Strategy

Africa also has significant energy resources:fossil fuels (oil, gas, coal), HEP & geothermalGoethermalPotential:Great AfricanRift ValleyGulf of Guineaconsidered to be one ofthe world’s mostprospective oil & gasterrainsRADSAnd Africa has huge HEP (Congo R: 200GW)Resource-based African Development Strategy

e.g. INGA (DRC): 45 GW of HEP at onelocation (>total SA consumption)!Grand Ingadam tributaryRADSResource-based African Development Strategy

e.g. INGA (DRC): 45 GW of HEP at onelocation (>total SA consumption)!Grand Ingadam tributaryRADSResource-based African Development Strategy

Yet most Africans don’t have access toelectricity and rely on biomass for energy!RADSResource-based African Development Strategy

Although private exploration spend isincreasing, this isn’t an alternative tosystematic geo-survey!World exploration spending (non-ferrous), 2006(Africa 16%)RADS11%16%8% 4%Latin America24%CanadaRest of World*Africa19% Australia18% USAPacific/SE AsiaResource-based African Development Strategy

African FDI inflowsRADSDominated by investmentin natural resources!Resource-based African Development (WIR Strategy 2007)

Africa’s Undiscovered ResourcesAfrica requires massive investment t into basicgeological mapping in order to assess & valorise itsmineral assets. FDI for blue-sky exploration will onlycome in on an unacceptably high risk-reward reward basis!RADSSource: USGS; USGS Mineral Resources Program. TheGlobal Mineral Resource Assessment ProjectResource-based African Development Strategy

Inappropriate Mineral RegimesAfrica is not capturing mineral rents!Global Steel Consumption t/$1 million GDPRADSt?$1 million GDPSteeel Consumption t30High Prices: WBregimes- rentsexit (Zambia ’06:252%!) Need toHigh prices:urgently update!colonial 20mineralregimes: Pro-colonisers/TNC15sDeflated GDP to 2004 $ terms105Source: IISI0Post WWII Minority World GrowthResource-based African Development StrategyHigh prices:Post-colonialregimes:Strongly YearnationalFailure of global growth(Minority World hegemony)Majority World takes offLow prices:WB revisions:Overly pro-TNC!1940 1950 1960 1970 1980 1990 2000 2010

Extracting Greater Benefits?Conditions of LicensingLow(high risk terrains)Exploration licenceApplicationConditionalityHigh(low risk terrains)ExplorationTerrainExploration LicenseAutomaticityRoR*-based taxMining Chartertype conditionsDelineationTerrainAuction, based on:• Infra development• Up/downstream invest• equity (“mining charter”)• rent share• licence termRADSMining Licence*ROR: Resource-based Rate-of-Return African Development Strategy

Investment in Geo-knowledgeRADS• Numerous studies (USGS, W.Australia) havedefinitively showed the extremely high return to thestate from investment in geo-survey (~1:10investment to return ratio to the fiscus)• In general, the lower the geo-info base, the higherthe risk, the lower the share of resource rents tothe state: The less a state knows about the value ofits mineral assets, the worse the deal it’s likely to beable to negotiate with foreign investors.• This will inevitably compromise the longer termsustainability of the investment: An unequalextractive deal serves neither the investor nor thehost state over the longer term• Investment into African infrastructure shouldnot only target t physical infrastructure t but alsoknowledge infrastructure (geo-survey)Resource-based African Development Strategy

The foreign resource capital “trade-off”In order to rapidly acquire the requisite capital and skills,African states have generally opted to realise their resourceendowments through attracting foreign resource companies(TNCs & JRCs), rather than mainly relying on domestic capital.However, this “trade-off” comes with several possible “threats”:1.TNCs often have global purchasing departments which are lesslikely to develop local suppliers (linkages), than would be thecase with domestic resource companies;2.TNCs tend to optimise their global processing g( (beneficiation)facilities which often denies the resource state theirdownstream opportunities;3.TNCs generally tend to locate the tech development (R&D) inOECD countries, with the requisite skills and incentives, therebydenying Africa the development of this critical side-stream streamcapacity;4.TNCs also tend to locate their high level HRD in OECD countries(often linked to their R&D university it partners), which h could denyAfrican states the development of this seminal capacity;5.In the longer term there are clearly political downsides to aresource sector dominated by foreign capital;6.Finally RADSthere is the TNC “core competence” conundrum.7.However, all of these threats can be overcome or amelioratedthrough Resource-based appropriate African actions, Development policies Strategyand interventions!

RADSFacilitation of up- and down-stream linkages1. Access to competitively priced feedstocks: Downstream: restrictore & concentrate exports? Upstream: Capital goods- steel andspecial steels (poss. for regional iron/steel production facilities);2. Access to concessionary capital: DFIs: local, regional &continental (AfDB). Venture capital funds (PPPs with TNCs?);3. Competitive currency (forex rate): Ameliorate the Dutch Diseaseby keeping windfall rents offshore and committing to long termphysical & social infrastructure (drip-feed back into economy)?4. Access to requisite skills: HRD- dedicated institutions, JV’sbetween local and foreign Universities. Short-term skills import,but with mentorships. TNC HR “indigenisation” programmes,Strategy to repatriate the huge African skills “diaspora”?5. Access to supply contracts: t Partnership with TNCs onadjudication of all tenders (ensure that equitable access for localsuppliers). Judicious use of tariffs for infant industries. Ensureforeign supplier localisation (JVs with local capital?) & techtransfer. Local content milestones?6. Access to technology: Establish resources up- and down-streamresearch facilities with TNCs (R&D PPPs) and use of resourcerents for R&D;7. Infrastructure: Establish world-class infrastructure (transport,energy, water, telecoms, etc.) for upstream and downstreamindustrial clusters (specialised “industrial development zones”).Resource-based African Development Strategy

Growing African JRCs• The bulk of JRCs (Junior Resource Companies) operatingin Africa are from Europe and its settler colonies (Canada,US, Oz) which poses problems of political sustainability;• Need to facilitate the growth of indigenous explorationcompanies (JRCs) to build local buy-in & legitimacy;• Possible PRC-African JRC exploration partnerships?• Soquem (mineral DFI) in Canada successfully facilitatedthe growth of French-speaking JRCs in Quebec from1965, by identifying potential targets and taking up to 49%of the risk/equity- AfDB could establish an African Soquemto share risk and nurture local l participation i in mineraldevelopment?• Possible first sight (3 months?) on all new geo-surveydata?• National DFIs should also target indigenous investmentinto the mining inputs (supplier) sector;RADS Predominantly foreign mineral DFI isultimately politically unsustainable!Resource-based African Development Strategy

Africa also has significantAgri-potentialRADSResource-based African Development Strategy

And water potential…(except for North Africa)Withdrawals by sectorRegion Agriculture Communities Industries Total As % of% of internaltotal resourcesx 10 6 m³/yr x 10 6 m³/yr x 10 6 x 10 6 m³/yr % %m³/yrNorthern 65 000 5 500 5 800 76 300 50.9 152.6(85%) (7%) 18%) (100 %)Sudano-Sahelian22 600 1 200 300 24 100 16.1 14.2(94%) (5%) (1%) (100%)Gulf of Guinea 3 800 1 600 700 6 100 4.1 0.6(62%) (26%) (12%) (100%)Central 600 600 200 1 400 09 0.9 01 0.1(43%) (43%) (14%) (100%)Eastern 5 400 900 200 6 500 4.3 2.5(83%) (14%) (3%) (100%)RADSSouthern 14 100 3 000 1 800 18 900 12.6 6.9(75%) (16%) (9%) (100%)Total Resource-based African 127 900Development 13 000Strategy9 020 149 920 100 0 3.8(85%) (9%) (6%) (100%) Source: FAO

Major River Major BasinsRADSResource-based African Development Strategy

However, much of Africa’s waterresources are difficult to access!Water ScarcityRADSRealisation of water potential will require largeinvestments in water infrastructureResource-based African Development Strategy

Although waterresources arelarge, by 2025availability/cap.will be understress in mostAfrican states!RADSResource-based African Development Strategy

RADSResource-based African Development Strategy

Current and potential arable land use in AfricaRADSResource-based African Development Strategy

Land utilisation in Africa(percentage of total land area)Less than 50% inthe well-wateredtropics!RADSSource: Resource-based UNEP- compiled African Development from FAOSTAT Strategy 2001

Agri-potential: Possible repeat ofBrazil's soya success?Brazil Soy Boom replicable?(similar soils & climate)RADSResource-based African Development Strategy

However, the African “GreenRevolution” failed to happen?RADSResource-based African Development Strategy

African agricultural growth is still basedon area expansion (deforestation)…Rather than intensification!SS AfricaAsia?RADSResource-based African Development Strategy

And, African food output/capitahas been falling…FAO Index of Net Food Output per Capita, 1961-200016015014013012011010090RADS80Resource-based African World Development E SE Strategy Asia South Asia Sub-Sahara

Causing Africa to become a netagri-importer!importer!RADSResource-based African Development Strategy

Although some agri-exportshave grown:RADSCommodity African % World % GrowthExports 2005 Exports 1995-2005(kt) 2005maize 2308 3% -1%sorghum 80 1% -77%sugar 6 6% -3%cacao 2073 71% 52%coffee 642 12% -6%tea 430 26% 35%cotton 306 23% 45%Resource-based African Development Strategy

But, nutrients are being rapidly depleted…Average annual nutrienttdepletion (NPK) 1993-95Fertilizer applicationrates (1997)kg NPK per hectareRADSResource-based African Development Strategy0 10 20 50 100no dataSource: FAOSTAT 1999.Compiled by Stan Wood, IFPRI

Due to the lowest fertiliseruse in the world!Regional Fertiliser Use (kg/ha)RADSAfrica

Yet Africa has abundant knownfertiliser minerals!Agri-mineraldeposits (ex-gas/coal & K)Nitrogen sources(oil/gas & coal) &K resourcesRADSBut, generally undeveloped for the African market,mainly due to severe logistics constraints.Resource-based African Development Strategy

Resulting in the the lowestGlobal Value of Agricultural Crops/Ha1989-9191 US$/Ha0 150 250 350 450 600 1000No dataRADSSource: FAOSTAT 1999.Resource-based African Development Strategy

Africa also has important forestryproduction, and large potential.But much of its logging is unsustainable…RegionIndustrial roundProduct productionProduct consumptionwood production (million m 3 EQ) (million m 3 EQ)(million m 3 )1996 2010 Annual 1996 2010 Annual 1996 2010 Annualgrowth growth growthAfrica 68 84 1.5% 61 74 1.4% 35 37 0.6%Asia 280 421 3.0% 334 479 2.6% 510 653 2.1%Oceania 41 54 19% 1.9% 23 39 38% 3.8% 18 28 33% 3.3%Europe 370 502 2.2% 368 509 2.4% 347 469 2.4%NorthAmericaSouthAmericaWorldtotal600 658 0.7% 585 639 0.7% 499 589 0.8%130 153 1.2% 120 131 0.7% 80 97 1.4%1490 1872 1.7% 1490 1872 1.7% 1490 1872 1.7%RADSNotes: Product production and consumption have been converted to their roundwood equivalents (m 3 EQ) to be compatible with roundwoodproduction and potential figures. Growth rates shown are growth over the period 1996 - 2010. (source: FAO)Resource-based African Development Strategy

Africa also has large biofuelsproduction potential.RADSResource-based African Development Strategy

But, desertification isspreading…RADSGlobal warming, >climatevariability & over-usage posefrightening threats to Africanagriculture: Alternativelivelihoods are needed!Resource-based African Development Strategy

Africa: Human ImpactRADSResource-based African Development Strategy

Agriculture should be the principaldriver of African developmentWhy is agriculture struggling?RADS–Prices/subsidies/Doha…–Access to finance (collateral/title)–Access to inputs ((Infrastructure)–Access to markets (Infrastructure)–Information (extension services)Infrastructure is a necessary, butnot exclusive, enabling factor!Resource-based African Development Strategy

Subsidies to Agriculturedepress agri-commodity ypricesRADSResource-based African Development Strategy

Thus the demand boom hasdisproportionately p increased mineral prices!(also lower mineral supply elasticity)The prices of metals haveincreased spectacularly, whilstagri-commodities havelanguished…Due to:• Market distortions (agri-subsidies)• High mineral supply inelasticity (windfall rents)RADSResource-based African Development Strategy

RADSBut this huge commodities potential is criticallyconstrained by poor infrastructure•Africa is the highest continent (few navigablerivers), > infra cost and O&M cost;•93% of Africa in the tropics (ITCZ, high ppt):>cost of infrastructure provision and O&M;•Incoherent European balkanisation resulted inmany African states t being landlocked;d•Africa has only 10% of land within 100km ofcoast (cf. 18% OECD & 27% Latin America) and•Only 21% of its people live within 100km of coast(cf. 69% OECD & 42% Latin America);‣ Resulting in Africa having the world’s highestrelative logistics costs (poor infrastructure)Africa’s potential could be realised throughintegrated Development Corridors (not a neocolonial“scramble for resources”)Resource-based African Development Strategy

Insurance and freight import valuesfor selected groups of countriesRADSFreight &insuranceas a%ofcost 19851990 1995 1997World ldt total t 4.6 5.55 4.44 4.1Developed market economy countries 3.8 4.2 3.5 3.4Developing countries total: of which: 7.7 11.2 7.4 6.5Africa 11.3 10.6 11.3 10America 6.7 12.8 6.4 5.6Asia 7.77 11.2 7.4 6.5Table 6Freight and insurance as a percentage of cost, insurance and freight import values for selected groups of countries [1]Landlocked Africa: 14.8 15.8 10.7 ..East Africa 17.9 20.2 16.7 14.6Southern Africa 12.5 11.5 9.9 ..West Africa 30 30.2 24.6 ..Least developed countries 13.8 14.6 12.5Source:UNCTADAfrica’s logistics costs ~250% global average!Resource-based African Development Strategy

Resource-based African Development Strategy:4 sub-strategiesstrategiesMinerals,Agric,ForestryResourceProcessingRefiningIntermediateproductsFabricationResource Capital Goods &Services (generic tech)Enhance resource-tech(HRD, R&D) capacityLateral Migration intoUnrelated knowledge-based IndustriesRADSResource-based African Development Strategyeg: process controlconstruction equipment,atmospheric control,pumping, materialshandling, etc, etc….

Resource-based African Development Strategy:Minerals,Agric,ForestryResourceProcessing4 sub-strategiesstrategiesIntermediateproductsFabricationStrategy t 1: Beneficiation Refiningi (RBI)Resource Capital Goods &Services (generic tech)Strategy 2: Resource InputsLateral Migration intoUnrelated knowledge-based IndustriesRADSEnhance resource-tech(HRD, R&D) capacityeg: process controlconstruction equipment,atmospheric control,pumping, materialshandling, etc, etc….Strategy 3: Lateral MigrationResource-based African Development Strategy

Maghreb CoastalStrategy t 4:Red Sea - NilePort HarcourtNiger: Dakar –ConakryBuchananSekondiOugadougouGulf of GuineaCoastalResource-Based DevelopmentCorridors (Nepad SDPs)DjiboutiDoualaLibreville LomieBas CongoMombasaIntegrated Resource-BasedMadagascarspatial development initiativesRADSCurrent SDIsRSDIPResource-based African Development StrategyNEPAD SDP: 1 st Pass

NEPADSpatial DevelopmentProgramme(SDP)RADSResource-based African Development Strategy

Sharing of Best in Practices in SouthernAfrica SDIs/Dev.Corridors (RSDIP)Based on UNREALISEDeconomic potentialRADSResource-based African Development Strategy

BASIC DC METHODOLOGY: KEY ASPECTSRADS• Inherent economic potential: Naturalresources (agri & mineral);• Configuration of investments to ensureinfrastructure viability through sustainablerevenue streams;• Crowding-in i of private sector investment;t• Promotes PPPs where feasible;• Secure political commitment (HoS) andprovide the requisite conduciveenvironment;• Ensure rapid planning and deliveryprojects and programmes (momentum).• Ensure densification: open-access,linkages and value-additionResource-based African Development Strategy

SDP methodology:SynchronousINVESTMENT CONFIGURATIONinfrastructure needsIDViableresourceinvestmentprojectsAddresses 4market failures:1)Infra econ-of-scale2)Sync users (time)3)Political borders4)Information/dataDimensionrequisiteiiinfrastruct-ureRADSResource-based African Development Strategyrevenue streams

RADSTHE DC APPROACH:What value does it add?• Addresses the urgent need for effectiveinvestment & capacity prioritisation basedon sound economic rationale;• Links and synchronises private sectoreconomic investment project opportunitieswith key infrastructure t projects;• Promotes the realisation of widerdevelopment potential (densification)catalysed by infrastructure provision andanchor investments;• Provides spatial focus for strategies topromote regional economic integration &development.• However, it is only one component of anintegrated growth & development strategy!(focus on “low-hanginghanging-fruit” to catalysed l )Resource-based African Development Strategy

Underlying DC DriversRADSDue to the global market distortion of FirstWorld agri-subsidies (Doha), mineral-basedopportunities are generally the only ones withrequisite rents to pay for the provision ofcostly infrastructure (transport & energy).For this reason the indicative DCs (SDP)“anchor” projects tend to be minerals/energybased which establish infrastructure tounderpin the viability of projects in other,sustainable, sectors: “densification”).However, the DC methodology goes beyondthe “colonial” paradigm (resources to coast)to integrated growth & development usingresources Resource-based African to Development catalyze Strategythe process

APPLICATION OFTHE SDI METHODOLOGY:SOME EXAMPLESRADSResource-based African Development Strategy

Mature SDP Example:The Maputo Development CorridorCoal-based Power Station2 transmission lines to MatolacompletedJoburg-Maputo HighwayPPP- BOT completedPort of Matola/MaputoUpgrades, PPPGAAUTENGMAPUTOJoburg to MaputoRailway line: UpgradeRADSLiquid Fuels & Petrochemicals:Resource-based Sasol African Development PPP Strategy SasolPande-Secunda Gas line.completedAl smelter 500ktpaBHPB completed

Mature SDP Example:The Maputo Development CorridorMajor investments to date:Port >$5bnof Matola/MaputoUpgrades, PPPCoal-based Power Station2 transmission lines to MatolacompletedAUTENGGAJoburg-Maputo HighwayPPP- BOT completedNew MDC Potential Projects:• Greater Limpopo Trans-frontier Park (underway)Mozal III (Al: $1bn)• Corridor Sands (Ti & Fe: >$0.3bn)• MMC: Maputo Metallurgical Complex (Fe & Steel:>$1bn)• MMC (Ti & Fe: $0.3mn)Joburg to Maputo• Fertiliser complex (Phos & Nitrogen)Railway line: Upgrade• Chlor-alkali complex (Cl, TiO 2 , NaOH)• Numerous mega-project inputs industriesLiquid Fuels & Petrochemicals:Resource-based SasolInvestments African Development PPP (Cluster: Strategy Sasol completedPande-Secunda Gas line.• Tourism >$0.3bn)RADSMAPUTOAl smelter 500ktpaBHPB completed

MDC phase II:Maputo Metallurgical Complex(Ti/V) MagnetiteSep. & conc. plant• magnetite• ilmeniteHigh Cu Magnetitedumps > 300 MTMagnetite (>Cu)dump upgradingplantRailPossible Ti/FeFrom ChibutoSlurry pipelineElec transmissionGas ConnectorPande Gas PipelineFe pelletising plantRADSOther Potential:Ilmenite smelter Ti/FeFertiliser plant N/PChlor-alkali plant Na/ClResource-based African Development StrategyMMC:Iron (DRI) &Steel PlantRailwayMajor RoadDuvhaPower LinesPande GasPipeline

Under implementation-The Zambezi Valley DevelopmentPossible BOFMuambe Fe ore& coking coalMoatize coking andsteam coal (CVRD):CaboraBassaHEPMpandeUncuaHEPMt Muambe FeMt Mulanje bauxiteAlternativebulk (coal)rail routeMoatize ThermalPower StationRehab ofpeasantcotton (exprazos)RADSElec transmissionSena RailRehabPotential AlResource-based African Development Smelter StrategySena SugarBeira PortRehab

Schematic DevelopmentCorridor ApproachConceptualWorkshopsAppraisalApp doc &InvestorCONCEPTUALISATION(scan)Conf prep “fiesta”DC investprom agencyID 3-4 ind. clusters Cluster inv. projectsDE-BOTTLENECKING ID DebotsPROJECTSDebotsAlready underwayCluster orgsProject scoping & dimensioningKEY ANCHOR PROJECTSNew anchor infra PPP’sPPP’s, BOT, ROTRADSCLUSTER INITIATIVESHitch-hike existing investmentsDebots = debottlenecking projects (infrastructure)Resource-based African Development StrategyOther infraIndustrialNumerousinvestments

DC Time-Line1) ID Requisite “trunk” Infrastructure:Conceptualisation:Transport: road/rail/ports/pipelinesSectoral scans of Investment Energy: electricity/gas/oil/biomasspotential: Agriculture,Water; other (telecoms), to realiseMinerals, Energy,the investment potential.Forestry, Tourism, etc.2) Dimension i resource (& resourcebased)and other investment ProjectsAssessment of infrastructureneeds& linkages (up- & downstream)opportunities•Strengthening the investmentregime and institutions.•Feeder Infrastructure(to facilitate densification)Identification and facilitationof appropriate investors andfinanciers (DFIs et al) torealise the investment targetsDevelopment of local & regionalDeepening of the resource sector:(RECs) capacity: Financial,Up-, down- & side-stream linkagesRADS Governance & Regulatory,Resources R&D, & tech development.HRD/Skills, R&D, SMMESustainable resource-based G&Dsupport, Resource-based ongoing DC African capacity Development Strategy

Idealised DC ConfigurationAnchor &“cluster”Agri-node &“cluster”StrandedinvestmentDC logistics“catchment”RADSProblemfeeder“DENSIFICATION”Feeders oftenneed to be fundedthru’ fiscus/grantStrandedinvestmentResource-based African Development StrategyAnchor &“cluster”Problemfeeder

DC Virtuous circleViable resource-based anchorInvestmentsRequisiteInfrastructureRADSCatalysedinvestmentsResource-based African Development Strategy

AU CommissionPossible DC OrganogrammeDC ID, validation,buy-n (HoS,RECs)DC Proj ManagersSector potentialscans by RISDIFacilityNEPADSecretariatRECsHoSMulti-lateral1HoSMulti-lateral2SDPCapacityHoSMulti-lateral3SectoralCommissionersHoSMulti-lateralnInternational“Partners”AfDB(DFIs)SDP capacitysupportDC 1PM1PM 1SectoralScansDC 2PM2PM 1SectoralScansDC 3PM3PM 1SectoralScansDC nPMPM 1SectoralScansDC SupportNetworkingCentre, DCbest-practiceProjectpackaging &developmentby AfDB, et alP1P2P3P1PnP2P3P1Pn P2P3Pn P1P2P3PnPublic Projectconfiguration,regulation,transparency,impactDensification Densification Densification P1 Densification P2 Densification P3P1 Densification PnP2 Densification P3 P1Densification Pn P2P3 Densification P1PnDensification P2 P3 PnRADSProjectDensification:inputs &infrastructureSocial Resource-based Impacts, African Market Development Access, Regional Strategy integrationCoordination of Int’lPartners:linkages, skills,SME facilitation,Coordination ofNGO/stateintervention,Int’l trade advocacy

SDP DESK-TOP ANALYSIS:“An indicative assessment todetermine the prospects for aNEPAD Spatial DevelopmentProgramme”On Nepad websiteRADSWWW.NEPAD.ORG(Mr Godwin Punungwe)Resource-based African Development Strategy

NEPAD SD PROGRAMMEPortfolio of Possible SDPsRegion No. SDP CountriesNorth Africa 1 Maghreb Coastal Morroco, Algeria, Tunisia, Libya, Egypt2 Red Sea-Nile Egypt, SudanWest Africa 3 Niger (Dakar-PortHarcourt)Senegal, Gambia, Mali, Niger, Nigeria4 Conakry-Buchanan Guinea, Liberia, i Cote D’ivoirei5 Sekondi/Takoradi-OuagadougouGhana, Burkina Faso6 Gulf of Guinea Nigeria, Benin, Togo, Ghana, Cote D’Ivoire,LiberiaCentral Africa 7 Douala-N’djamena Cameroon, Chad8 Libreville-Lomie Gabon, Republic of Congo, Cameroon9 Bas-Congo DRC, Republic of Congo, AngolaEast Africa 10 Mombasa Kenya, Uganda, DRC, SudanRADS11 Djibouti Djibouti, Ethiopia, (Kenya)SouthernAf iResource-based 12 Madagascar African Development Strategy Madagascar

SELECTION CRITERIA & RANKINGCorridorSolidMineralPotentialAgriculturalPotentialProjects Logistics PowerClusteringPotentialRegionalIntegrationDataAvailability ScoreBas Congo SDI (current) 30 5 20 15 20 30 20 10 150Maghreb Coastal 15 5 15 15 20 30 30 10 140Niger (Dakar - Pt Harcourt) 15 15 23 15 13 20 30 5 136Conakry-Buchanan 30 10 23 13 13 10 20 5 124Gulf of Guinea- coastal 0 5 25 15 18 20 30 5 118Mombasa 15 10 20 8 13 10 30 5 111Madagascar 30 10 23 13 15 10 0 10 111But selection but more likely be throughbuy-in by DC footprint states!Libreville-Lome 15 5 18 15 13 20 10 5 101Douala- N'djamena 30 5 18 8 13 10 10 5 99Red Sea-Nile 0 5 5 15 13 10 10 10 68RADSDjibouti 0 10 3 15 8 0 20 5 61Resource-based African Development StrategySekondi-Takoradi 0 10 3 15 13 0 0 10 51

Maghreb CoastalNiger: Dakar –Port HarcourtNEPAD indicative SpatialDevelopment ProgramFirst Pass!Red Sea - NileDjiboutiConakryBuchananSekondiOugadougouGulf of GuineaCoastalDoualaLibreville LomieMombasaBas CongoMadagascarRADSCurrent SDIsRSDIPResource-based African Development StrategyNEPAD SDP: 1 st Pass

POTENTIAL SDPs INTHE 4 REGIONSRADSResource-based African Development Strategy

RADSMaghreb Coastal SDPCountries: Morocco, Algeria, Tunisia, Libya, EgyptAnchors: Oil/gas & PC industry, iron & steel (gas),tourism (coastal & heritage), phos & fertilisers, agric,fishing & aquaculture, gen. industry (HCs)Infra: HC grid, elec grid, coastal highway, cabotageResource-based African Development Strategy

Niger SDP:Countries: Senegal/Gambia, Mali, Niger, NigeriaAnchors: Resource: Fe (Faleme) & iron/steel, Au(Loulou), U (Niger), Oil/gas (Delta), GTL (Escravos),Al (Alscon), Ti (Dakar), Phos (Tiaba), agriculture(cotton), etc.RADSInfra: riverine transport , rail to Dakar (??), Oreterminal Resource-based (~Dakar), African power Development (elec grid), Strategyroads upgrade

Conakry-BuchananCountries: Guinea-Liberia (Cote d’Ivoire)Anchors: Fe (Nimba) & iron/steel (gas line?), Al(Conakry, Friguia), Au (Siguiri), Ni (Man) & FeNi(gas?), agricultureInfra: gas line, rail (ore), elec grid, port upgradeRADSResource-based African Development Strategy

Gulf of Guinea Coastal SDPCountries: Nigeria, Benin, Togo, Ghana, Cote d’Ivoire,LiberiaiAnchors: Oil/gas (Delta & pipeline), GTL, Al (Delta),Iron/steel (Sekondi/Takoradi, Buchanan), Mn (Nsuta)& FeMn (Sekondi- gas?); tourism (coast, heritage),gen. industry (gas), agriculture (palm oil/carbon),fishing & maricultureInfra: gas line,, elec grid, ports, cabotage, coastalhighwayRADSResource-based African Development Strategy

Gulf of Guinea: Geology & Oil ProvincesGulf of GuineaOil ProvincePart of the much largerWest African HCProvince!Source: USGS, 2006RADSResource-based African Development Strategy

Gulf of Guinea: Geology & Oil ProvincesRADSSource: USGS,2006Resource-based African Development Strategy

Gulf of Guinea DC: Hydro carbon linkages• Downstream:• Oil Refining: Liquid fuels, bitumen, Chemical feedstocks (polymersplastics,synfibres, etc.)• Gas processing: GTL, fertilisers (urea), methanol, etc.• Reductant- metallurgy (iron, steel, ferro-alloys, etc.)• Heat: agri-processing, min-processing, general industry,power/elec, etc.• Upstream (HC inputs):• Capital goods (plant & equipment)• Services (exploration, engineering, HRD, R&D, finance)• Consumables (pipes, drilling rods, valves, etc.)WAGPExtend?WAGPRADSFe/Steel?Petro ChemResource-based Ni, African FeNi? Development complex? StrategyFeMn,Fe/steel?HCServiceindustriesGeneric HC ?usage:polymer

African oil resourcesFuture arena of super-powercontestation?10yConflict points over lastRADSResource-based African Development Strategy

2 Indicative SDPs: Douala-N’djamena& Libreville-LomieLomieCountries: Cameroon, Chad, Gabon, (CAR)Anchors: Oil & Gas, elec/Al, Fe/Steel, Fe-alloys(Mn) agric (coffee, et al), fertilisers (NPK), generalindustry (agri-processing) processing), tourism,Infra: rail upgrades& ext., gas pipelines, elec grid,port upgrade, road network, power plantsRADSResource-based African Development Strategy

Bas CongoCountries: Congo Braz, DRC, AngolaAnchors: Electricity (Inga), oil/gas & PC industry, Mg (P. Noire),Al (Matadi), phos & fertilisers, base metals, construction(lmst/cement), agric (cane et al), fishing & aquaculture, gen.industry (HCs), tourismInfrastructure: HC grid, elec grid, ports (Banana et al), Congo R.bridge, cabotage, road net.RADSDRC request to fast-track trackthis SDI (SA-DRCBilateral, l Aug 2007)Angola & Congo-Brazneed to joinResource-based African Development Strategy

Kodo Fe &Sudan gas?Mombasa SDPCountries: DRC, Sudan, Uganda, Kenya,Anchors: Fe & iron/steel (Kodo), agric(coffee et al), soda ash, phos & fertiliser(NPK), gen. industry (agri-proc), tourism,aquaculture (L.Vic)Infra: rail upgrade & ext., gas pipeline,elec grid, port upgrade, road net.NCTTCA request to NEPADSDP & RSDIP to assist intransforming into a SDI/DCRADS (Aug 2007)Resource-based African Development Strategy

Current RSDIP Development Corridor (SDI)Extend toKisangani?Central SDI: Dar to Kigali (Kisangani?) RSDIPCountries: Tanzania, DRC,Rwanda, BurundiAnchors: Nickel (Kabanga), Gold (Mwanza Au Belt), Ta/Nb (DRC),RADSagriculture & agri-industries, industries, fishing/aquaculture, tourismInfra: rail Resource-based upgrade & African ext., Development port upgrade, Strategyroad net., elec gen & grid

TAZARA SDPCountries: Tanzania, Zambia (DRC, Malawi)Anchors: Cu/Co (Copper-belt), Fe/steel (Liganga), Coal (Ruhuhu-Ketawaka),Ta/Nb (Mbeya) Fe/C (Njombe); Forestry P&P (Mbeya),argic & RADSagri-proc (Iringa, Mbeya & Mkushi highlands), tourism(Selous, Ruaha, Luangwa), mineral & agri-processing & inputsInfra: rail, Resource-based road network, African Development energy grid, Strategyrail & pipelines rehab,

East-West SDPs: Critical for African integration!GMRAHigh minpotential?WB TradeStudy(Buys et al)RADSResource-based African Development StrategyUSGSGMRAHigh MineralPotentialZones

RADSNoteThis was NOT assessed in theindicative SDP scoping studyResource-based African Development StrategyInter-AfricanSDP?Great LakesSDP?Countries: Zambia,Mozambique Malawi,Tanzania, DRC, Burundi,Rwanda, Uganda,S.SudanAnchors: Genericdevelopment potential,particularly inter-Africantrade.Tourism (Gt Lakes)Infra: waterways,road,rail, port upgrades.

Madagascar SDPCountries: MadagascarAnchors: FeNi, Cr (FeCr?) & stainless steel?, Ti/Zr(Ti slag & Fe, pigment?), Al (alumina?), Forestry(P&P?), agric (vanilla et al), gemstones(jewellery?), tourism,Infra: RADSrail upgrade & ext., elec grid, port upgrades,road net (S.coastal).Resource-based African Development Strategy

RADSNEPAD SD PROGRAMME• Key findings of the Study– Confirmed scope for application of the SDPmethodology as a means to fast-trackingt regional economic development continentally;– Methodology provides a focus for infrastructureinvestment;– Programme does highlight opportunities forregional economic integration ti and intra-Africaitrade and investment;– Emphasises role of minerals as a major rationalefor viable large-scale infrastructure investment;and– Has identified a portfolio of DevelopmentCorridors with best prospects for success.Resource-based African Development Strategy

Resource-basedDevelopment?Overcoming theResources Curse:Resources GovernanceRADSResource-based African Development Strategy

RADSThe “Resources Curse”Improving Governance in the NaturalResource SectorNew developments• African Peer Review Mechanism(APRM)• EITI- Extractive IndustriesTransparency Initiative• Equator Banks Principles• Governance of “Conflict Minerals”• SHE standards/monitoring• Windfall Rent Management• Regional authorities: power pools;river catchment bodies, DCs,customs/currency unions, etc.Resource-based African Development Strategy

APRMRADS• The African Peer Review Mechanism (APRM) is amutually agreed instrument t voluntarily acceded d toby the member states of the African Union (AU) asa self-monitoring mechanism.• The mandate of the APRM is to encourageconformity in regard to political, economic andcorporate governance values, codes andstandards, among African countries and theobjectives in socio-economic development withinNepad.• 25 countries have acceded (APRM MOU):– Algeria, Angola, Cameroon, Republic of Congo, Egypt,Ethiopia, Gabon, Benin, Burkina Faso, Mali, Mauritius,Senegal, Tanzania, Lesotho, Sierra Leone, Malawi, Ghana,Kenya, Mozambique, Nigeria, Rwanda, South Africa,Sudan, Uganda and Zambia.• The APRM is not meant to exclude or punishcountries. There is no conditionality attached toResource-based African Development Strategythe mechanism

RADS• EITI creates transparency over the flow of moneyfrom oil, gas and mining companies to thegovernments of the countries in which they operate(Launched at WSSD Joburg in 2002)• The objective is to increase accountability over theuse of natural resource wealth to ensure it is ablessing and not a curse.• Country led: Brings together th governments,companies, NGOs, investors, international institutions• > 25 countries implementing• However, perceived as “rehab” facility- Needssupport from low-risk extractive states like SA,Botswana, Oz, Norway, Canada, etc.• Needs to also cover upstream (contracts/licenses)• Resource-based COST- construction/infra African Development Strategy“EITI” launched ’07 (UK)

RADS• The "Equator Principles“: A financial industry benchmarkfor determining, assessing and managing social &environmental risk in project financing• The Equator Principles Financial Institutions (EPFIs) haveadopted the Principles in order to ensure that the projectsthey finance are developed in a manner that is sociallyresponsible and reflect sound environmental managementpractices.• Over 50 Banks have joined (mainly 1 st World).• These Principles are intended to serve as a commonbaseline and framework for the implementation by each EPFIof its own internal social and environmental policies• Disadvantages: Mainly 1 st World driven (WB/IFC & NGOs)and 1 st World concerns (don’t look at the developmentalimpact)Resource-based African Development Strategy

Governance of “Conflict Minerals”RADS– Minerals used to finance civil wars &crime need governance systems,particularly precious & semi-preciousminerals targeting the “fashion” market.– Diamonds:• The Kimberley Process Certification Scheme(KPCS) is a PPP process designed to certifythe origin of diamonds from sources whichare free of conflict. The certification schemeaims at preventing "conflict diamonds" (alsoknown as "blood diamonds") from enteringthe mainstream rough diamond market.– Other Minerals: Regulate gold (fashionmarket), coltan, etc. in a similar way?Resource-based African Development Strategy

RADSSHE: Safety, Health & Environment• Need a continuous method of independent SHEmonitoring of all extractive plants (as per EITIsystem);• Need commonly accepted African SHEstandards, to be objectively monitored on aregular basis (e.g. Cyanide Code). Suchstandards need to be reconciled withinternational (e.g. ISO) standards;• Need to ensure that the post-mining rehabcosts are amortised through annual transfersduring life of mine and periodically reassessed(5 yearly?): Any surpluses to accrue to centralfund for rehab of “ownerless” mine sites.• Kyoto: CDM useful, but needs to be based oncarbon footprint (consumption) and to valoriseResource-based African Development Strategyconservation (forests) as well as forestation.

Managing Windfall RentsRADS• Windfall mineral rents need to beequitably appropriated (rate of returntax regime, as per oil & gas sector).• However, large forex inflows coulddistort the economy y( (Dutch Disease).Need a method of inflowsmanagement:• “Stabilisation” or “Future” Funds forinvestment in long-term Africaninfrastructure t (c.f. Pan-African InfraFund: PAIDF)?Resource-based African Development Strategy

e.g. Norwegian Global Fund• Oil & gas taxes are invested in a global l portfolio and earningsare used by government for current expenditure.RADSSource: Fridjof Barents, UNCTAD 2006For African countries, the windfall earnings could beinvested in an offshore African investment fund(PAIDF?) & committed to long-term infrastructuretinvestment, to ameliorate currency appreciation(Dutch Resource-based Disease) African Development & improve Strategynational competitiveness.

National Capacity for Minerals GovernanceLocal govt:CommunitydevelopmentMineralRegulationLicencesInfra:TransportPoweretcMineralsInputs:(supplierindustries)Geo-dataexpl. licenses(GSD)MineralProjectMineralHRD,R&DEnviro:SEA, EIAsTrust FundsMineralbeneficiationMineralTaxation:FutureFundsLabourRegulation,Health &SafetyRADSEach requires capacitation/support!Tall order? But achievable collectivelyResource-based African Development Strategy

Multi-layered MineralsGovernance?National:Govt, MPs, pvt.sector, civil soc.DC HoS Bilateral:X-border infragovernance?Min ofLabourMin ofMinesMins ofInfrastructureREC Institutions:power pools, waterbodies, FTA, CU,CMA, chambers,etcRADSMin ofFinanceMineralProjectMin ofEnviroResource-based African Development StrategyMin ofIndustryAfrican:AU/ARPM,NEPAD, AfDB,UNECA, PAIDF,geo-data etcInternational:UN, WTO, WB,EITI, ICMM,Kimberly, Kyoto,Equator, SHE, etc.

IIIIIIIVVSchematic RADS Phasing (relative economic importance)Phase 1 Phase 2 Phase 3 Phase 4Resource InfrastructureResource ExploitationUnskilled resource labourResource rentsImport of Resource InputsResource Beneficiation (value-addition)Densification InfrastructureSkill intensity (HRD)Rents from Resource diversification industr& catalysed industrResource Inputs production & Lateral migration(diversification)VIImport of Resource TecnologiesResource R&D. high level skills and tech developmComplex regulation, M&E, arbitration, governanceVIIContract/license resource & infra (PPP) governanceRADSResource Exploitation& infrastructure phaseResource Consumables &HRD phaseResource-based African Development StrategyResource R&D, capitalgoods & services phaseLateral migration &diversification phase

Emerging global actorsRADS• Need flexibility to trade resourcesaccess for infrastructure, HRD,beneficiation & investment (offsets:develop local capital)• What is the appropriate fiscal regime forresource management? Look to oil/gasfiscal regimes eg. auction resourceblocks for investment in “DC”;• New Asian (China & India) players haveshown a willingness to look at integratedwin-win approaches to AfricandevelopmentResource-based African Development Strategy

RADSWay Forward• Use resource boom to leverage high rent resources(e.g. minerals) to establish infrastructure t for higherhimpact agriculture, tourism, manufacturing, etc.;•Invest in African resource-knowledge infrastructure(e.g. geosurvey) & facilitate the development Africanresources companies (AfDB: JRC DFI?);• Ensure equitable state share of resource and windfallrents and management (UNECA ISG project, WBprojects);• Establish DC capability: NEPAD, AfDB/WB, REC?• Finalise AfDB, WB, REC?, ADCP DC pilot partnership;• Launch 1 or 2 pilot, high impact, DCs as learningprogrammes (RECs?, AfDB, NEPAD, ADCP);•Link requisite infrastructure financing to user(resources) investment (“use or pay”)- PPPs;•Ensure “densification” (donor agencies- ADCP?) andrealisation of collateral opportunities to avoid enclavedevelopment;Resource-based African Development Strategy

RADSWay Forward (governance)• Use concrete DC projects to develop “bottom-up”x-border trade & regulatory harmonisation (easierif already in place- RECs);• Use DCs to build X-bordergovernance &institutional capacity (REC?) for areas with higheconomic potential (power pools, water catchmentauthorities, transport authorities, etc.): AfDB/WBet al support;• Support from WB/AfDB on negotiating large DCinvestments t & building ongoing (REC/state?)t negotiating, monitoring, auditing, regulatingcapacity;• Deepen and widen continental and internationalresource exploitation protocols (Equator BankingPrinciples, APRM, SHE, EITI, COST, KimberleyProcess, Africa-PRC “Compact”?, etc.)Resource-based African Development Strategy

RADSe.g. an Africa-PRC “Compact”for Growth & Development?• Configure a mutual benefit “compact” of intentbetween the AU/AfDB and PRC that “balances”access to resources and markets with:– Infrastructure not only for resource extraction, butalso for integrated development (Nepad SDP concept)– HRD in all the FDI areas– Resource beneficiation before export– Resource inputs (supplier) industries– JVs to develop local capital– Investment t in geo-survey (joint “Afro-Sino” JRC DFI?)– Location of consumer products industries for productsdestined for African markets (where viable) – (AGOA,EPAs, MGOA?)– Adherence to codes of conduct (EITI, Equator Banks,SHE codes)• Establish a joint Africa-PRC investmentfacilitation & monitoring commission?ACHIEVABLE??Resource-based African Development Strategy

e.g. Iron/SteelSome SS African Opportunities(Fe ore, coal/gas deposits)Nouakchott:Tiris Fe,Chinguetti gasDakar:Faleme Fe,Diam gasBuchanan:Nimba Fe,delta gasAjaokuta:Itakpe Fe,delta gasResource Scarcity:Link resource access to:local processing,infra estab/rehab,inputs industries, HRD,etc.Kodo: Kodo Fe;S.Sudan gasLiganga:Liganga Fe;Ruhuhu coalTete: Muande Fe;Moatize cokeRADSLuanda: KissalaFe, Soyo gasS.Bay: Kathu Fe;Offshore gas?Coega: Kathu Fe,Resource-based Molteno African Development coal? StrategySource: MINTEK - CDC PresentationGauteng: BCFe, coal finesMatola: PhalaFe, Pande gasR.Bay: P.Retief FeKZN coal/gasgas line

Thanks to:• AU Commission• NEPAD• UNECA• AfDB• RECsRADS• RSDIP & MintekResource-based African Development Strategy

RADSResource-based African Development Strategy

RADSResource-based African Development Strategy