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Ashraf Patel takes a look at the resource curse thesis that is affecting Africa

At the dawn of the millennium, there was much hope in Africa for sustainable development. The birth of the Africa Union (AU) and the New Partnership for Africa Development (NEPAD) signalled a new ‘social contract’ for Africa. With a high commodity boom, there was a moment those African nations endowed with mineral resources thought they were on a pathway to achieving their UN Millenium Development Goals (MDGs). Sadly, regional conflicts, civil wars, the global financial crisis of 2008-09, and the collapse of WTO Doha development talks put an abrupt end to a viable African industrial development pathway, opening the gates to the austerity, new debt crisis, and new models of dependency we see today.

As the world and UN COP 27 move decisively on meeting climate change targets and implementing the national determined contributions for green energy transformations, a new sobering reality-nighmare scenario is unfolding in that the green transition requires massive extraction in the most under-developed and instable zones in Sub-Saharan Africa.

For decades, the ‘resource curse thesis’ has been subject of international development and governance discourses; the argument being that those nations endowed with valuable minerals—lithium, oil and gas, diamonds, copper, gold, chromium, platinum etc.—are trapped in the resource curse and face enduring conflicts and instability due to an array of multinational and regional forces with vested interests in these nations. The DRC, with large cobalt reserves, were one of the core reasons for the regional war and instability in the 2000s. Nations such as Mali, Niger, Gabon, and recently Mozambique and Uganda have come to represent these multiple resource curse instability crises due to discovery of oil and gas reserves.

Just Energy Transition and Resources Curse 2.0 in a 4IR era

In a recent report, the World Bank projects a potential rise of almost 500% in the extraction of minerals and metals like graphite, lithium, and cobalt by 2050. This surge is expected to be driven by the expansion of technologies for generating and storing low-carbon energy. The surge in demand for these green minerals (also referred to as ‘low carbon’, ‘green’ or ‘transition’ minerals) provides new opportunities for mining jurisdictions in which they occur. The African Energy Week (AEW) in Cape Town also had special focus on new critical minerals, which is the ‘new oil’ in investment circles.

In 2022, global battery demand for clean energy applications increased by two-thirds, with energy storage accounting for a growing total demand. As the average battery size for electric cars continues to increase, demand for batteries for automobiles has surpassed the growth rate of electric car sales. The EV industry has started to follow the conventional car markets’ push toward larger vehicles, putting further strain on critical mineral supply chains. So the big question is, what is there of any value for Africa’s socio economic development?

It is not even noticed by mainstream media, the ‘great green contradiction’, of course. The new wave of critical mineral extraction will cause even more significant environmental damage in African nations, yet it is the silver bullet technology needed for the green energy transition to electric mobility and renewable technologies such as windmills and solar panels. Will it be able to avoid the dire contradictions and conflicts arising from mode of extraction?

The Global North G7’s countless donor funded programmes to the AU have also generally failed central Africa and nation states and locales such as eastern DRC, Mali, Niger, Chad, and northern Mozambique. For instance, a key component of the NEPAD programme has been the Africa Peer Review Mechanism (APRM), which has had resource governance framework, yet these have little impact in the local political economy which is extractive, conflictual, and brutal.

Another complication is geopolitics, with new sanctions on critical minerals being a new tool that inadvertently causes more economic hardship for the Global South and Africa. With bans on chips to China; and the recent G7 attempt at sanctions on Russian diamond exports, it shall have an unintended negative effect of fuelling and deepening contestations and fractured governance regimes on minerals and supply chains. As BRICS nations grow and trade deepens, there is much scope for industrialisation and beneficiation of minerals for African nations. Diamonds can be cut, polished, and distributed globally, and various green minerals can be beneficiated as part of solid industrial programmes. These can be a boom for the SME sector and African beneficiation and entrepreneurship.

Sadly, the very same ‘political economy’ still exists in Sub-Saharan Africa now as it did two decades ago—weak governance, fractured ethnic strife, lack of state and taxation capacity, and weak systems of innovation. Atop of these local challenges, Sub-Saharan Africa faces super high debt payments to a fractured geopolitical order that is reproducing itself on the African continent. These conditions mean that the era of this new ‘critical mineral boom’ will simply lead to more ‘resource curse conflicts’.

And G7-type global governance standards move very slowly. For instance, it took the G20 over a decade to agree on a global base tax regime for multinationals; and the Extractive Industries Transparency Initiative (EITI) have had sub-optimal impacts at national-local levels, meaning that for the North and Multinationals, it is ‘business as usual’ amidst a climate emergency.

The Developing South and African nations are again at the centre of new global contestations for critical minerals. Today, Sub-Saharan Africa faces multiple headwinds—from high inflation, food and fuel, as well as climate emergencies. As the world moves towards a new just green transition and development and diffusion of new green technologies, it’s again putting African mineral endowments back under the global radar for extractives and value extraction, posing major conflict risk for local communities and undermining political stability.

Weaponisation of critical minerals constraining development in Global South

Another complication is that in a highly fractured world and current Ukraine-Russia conflict where trade in commodities—agriculture and now critical minerals—are weaponised, having grave implications for the Developing South. By trying to ban Russian diamond sales to G7 nations etc., it open ups a Pandora’s box. What then will the argument be for banning cobalt and lithium because of environmental destructive extractive practices? How does global regulation apply, and to whom? What are the boundaries and jurisdictions? For instance, banning of Russian diamonds will impact negatively on the Global South and Africa, and tens of thousands of SMMEs that make livelihoods from diamond cutting and distribution are affected, as emerging markets and burgeoning young populations are the new engines of growth.

Africa, Global South, and BRICS nations offer a huge market for intra-continental trade and innovation, and sustainable investment in favourable terms within a Green Industrialisation pathway. At the BRICS summit, energy ministers committed to exchanging

best practices and standards regarding the development and beneficiation of minerals in the country of origin. Delegates also agreed to explore technologies for their energy transitions and carbon reduction.

It is thus important that a rules-based trade and fair trade, as envisaged by the WTO, UNCTAD, and G7 nations, is articulated. A new social contract is required, in addition to the one that takes cognisance of the UN Right To Development (RfD) framework, as approved by the UN General Assembly, while COP 27 processes, equally, need to be in order for sustainable development to be realised in Africa.

Ashraf Patel is a research associate at the IGD specialising in areas of digital economy, trade, and development justice in the global south.

By Editor