Failed resource conversion and Africa’s poverty status

Nigeria’s failure to use its natural resources to transform the lives of its citizens mirrors Africa’s disappointing showing with its abundant natural endowments. Today, Africans are like people who are thirsty at the riverside. They have come to the stream, but they cannot drink from it. Unable to do anything about it, they watch as […]

Nigeria’s failure to use its natural resources to transform the lives of its citizens mirrors Africa’s disappointing showing with its abundant natural endowments. Today, Africans are like people who are thirsty at the riverside. They have come to the stream, but they cannot drink from it. Unable to do anything about it, they watch as the river flows past them.

From our expansive arable land that is left unused, to our human capital, many of whom do not feature in the governments’ plans, to the mineral deposits laying hundreds of metres underground, Africa’s resources are largely unexploited for the benefit of the citizens. And where they are being exploited currently, the benefits are skewed in favour of just a few; in some countries, the resources are being carted away to other continents, some at meagre prices. All these happen because there is a weak conversion process by which each resource can be transformed into a benefit for the country and the citizens.

Two prominent events that made the headlines yesterday, Wednesday prompted today’s topic. First, 19 African leaders at their summit on IDA21 replenishment in Nairobi agreed to step up resource mobilisation to accelerate economic transformation across the continent. IDA is the International Development Association, an arm of the World Bank Group that lends money to poor countries at concessionary terms, which means that such loans are given at meagre interest rates.

Africa has received more than half of the funding provided by IDA since 1960 when it was established. Funding for its activities is provided by members of the Bank group in addition to other donors. Currently, IDA supports 75 nations, 39 of them in Africa, the Association said in a statement it issued at the end of the Nairobi event. It explained that over 70 per cent of its resources are directed toward Africa, playing a vital role in achieving the World Bank Group’s goal of bringing electricity to 250 million Africans by 2030.

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Nigerians, who are right now hurting from our epileptic power supply will easily connect with this, and pray earnestly that this goal becomes a reality.

IDA put the reason for the call for replenishment into context. It comes amid a multitude of interconnected hardships: pandemics, climate change, food insecurity, fragility, and conflict. But then follows the really ugly part of the context: “Yet, Africa is also brimming with potential: vast natural resources, abundant sunshine, and the world’s fastest-growing youth population,” it noted.

For how long will Africans live life with perpetual potential? When will the continent’s potentials be transformed into tangible benefits to be enjoyed by the citizens? This puzzle introduces us to the second event that prompted this topic today. It was the declaration by Dr. Dele Alake, the Minister of Solid Minerals Development that the country’s mineral deposits are worth $750 billion. The figure was based on a preliminary report by a German company, GeoScan, the minister said. And from my understanding of the mining industry, given the power of technology, this value could rise in a few years, as potential recovery rates rise.

That possibility belongs in the future. For now, while Nigerians are supposed to jump up and celebrate this humongous amount, the hard truth is that without a credible resource conversion programme, the billions of dollars represented by natural resources will come to nothing concerning the well-being of the citizens.

Most of the world’s poorest countries are located in Africa. And, by an uncanny twist of fate, many of the mineral deposits demanded in the world today are located in these poor countries. One record says that Africa produces 90 per cent of the world’s diamonds, 55 per cent of gold, two-thirds of cocoa, and about 60 per cent of palm oil. Yet, the African continent has the largest number of poor countries than any other region in the world.  Nigeria is one of the most-endowed countries. But Nigerians have remained poor, and the country is currently the second home of the poor in the world.

Nigeria and indeed most African countries have remained poor because there are no effective programmes to convert their abundant resources to become relevant to the lives of their ordinary people. Resource conversion involves all the activities, regulations, and regulators that are connected to the process of prospecting for, identifying, mining and refining or processing natural resources. This runs throughout the value chain, from their locations underground to the marketplace, where they are converted to revenues for the governments.

This process continues to the point where government revenues become a part of the people’s lives. The government or state begins to use the revenue streams to provide social services or the public goods for which the government exists. In this way, the resources, such as the $750-billion solid minerals deposits in Nigeria must be translated into good roads, healthcare, water supply, education, and other provisions that make life meaningful to citizens. Without this, their existence remains in the realm of potential. And, as Dr. Akinwumi A. Adesina, President of the African Development Bank Group, said in 2012 while serving as Nigeria’s Minister of Agriculture, “Nobody eats potential”.

Inefficiency at resource conversion has brought Africa to where we are, with loads of resource endowments that we boast of, but remain mere potential. From Alake’s revelation, if Nigeria has estimated $750b from just solid minerals alone, we can multiply that several times over as we add other resources not yet explored, plus the ones we already know- oil and gas.

So, because we have failed to make the best of our resources, we have been stuck with poverty, and indeed once served as the capital of the world. As this column has often pointed out, poverty, especially the type ravaging Africa, including Nigeria, is government-induced. It’s caused by the state’s acts of omission and commission.

When central authorities fail to set the policy framework for the optimal exploitation and appropriation of natural resources, they are setting the stage for the multiplication of poverty.