Monetising mineral resources through diversification into higher multiplier industries

Monetising mineral resources through diversification into higher multiplier industries

Minerals-rich Africa has, for decades, found it arduous to pull off efficient management of mineral resources to create non-resource wealth and to ensure a more sustainable development.

The ‘manufactured’ culprit has been lack of risk capital and technology, thus, inviting international skills and material capital to extract and drive away the much-needed value. In as much as these FDIs are important for purposes of job creation and GDP upscale, it is more salient to procure policy innovations in mining investments properly structured to retain and protect value using optimal natural resource governance regimes and cogent local content programmes.

It is even more exigent to develop extensive mining value chains for visible and feasible investment decisions and to jostle off mineral resource capital to other industries that prop up higher economic multipliers for faster diversification and more sustainable economic development.

If properly designed and implemented, value-retaining, cheaper and optimal risk capital can be procured faster with more feasible investment decisions, freeing up mining royalties to finance industries with wider distributive capacity and higher economic multipliers.

A well-developed extractives industry value chain that visibly documents characteristics of chain nodes with properly profiled interconnected risks has the power of attracting the right fit of risk-visible, lower cost investment capital.

In addition to a more puissant natural resource policy innovations and extractives value chain development to ensure retained value, a quick options valuation exercise may shoot out the wand for Ghana – undertake an options valuation project to assess the relative benefits of investing and concentrating more in gold versus using same capital resources to diversify the economy into simpler, less capital intensive, higher-return and higher multiplier industries like Agro Processing, Industrial Salt, Pharmaceuticals, Petrochemicals, Information Technology, and Textiles.

If correctly configured and managed, these industries can easily replace the duly finite and depletable gold resources to sustain the local and national economies. It may even help in developing more competitive industrial giants in the country and across our sub-region due to the fact that natural resource revenue, as form of investment capital, has always been cheaper than commercial capital.

No doubt, mining has a high propensity of stretching production linkages, backward and forward, and creating powerful

secondary and tertiary industries to build sustainable local, regional, and national economies. Developing sustainable mining hosts, with optimal spill into the wider economy, is tied up with optimal mineral resource governance and effective partnership between government and the mining industry to work together to diversify revenue and infrastructure resources of these communities.

Sustainability and economic efficiency within the minerals sector in the host regions and the wider country, nonetheless, depend entirely on the efficacy of policy innovations to:

  1. Structure effective resource governance around efficient linkages (production, fiscal, and consumption) to benefit fully from the duly depletable mineral resources;
  2. Incorporate mining as part of economic management and develop winning bargaining skill to ensure more value from mining is retained in the country;
  3. Manage mineral assets as environmental national product adjusted for depletion of finite and environmental resources;
  4. Plan Ghana’s minerals economies in such a way as to maximise the development of mining-related secondary and tertiary sectors during the currency of mining operations;
  5. Actively pitch up supplier development and collective efficiency programmes;
  6. Ensure more strategic technical collaborative partnerships between local and international expertise;
  7. Pursue restructuring aimed at optimising supply chains and increasing local supply.

Beyond ensuring efficient resource governance, it is instructive to note that one of the smartest ways in preventing Ghana’s minerals revenue collapse through consumption is to diversify into higher multiplier industries with wider distributive capacities.

Using flexible and strong transformational institutions as driving agent and relying innovatively on winning trade structures, entrepreneurial scale-up, risk management, and optimal financing,

Ghana can accrue more saving from mineral resource revues and build more tacit and sustainable non-resource capital. We can’t afford to get it wrong in ensuring competitive and inclusive economic diversification.

This ensures the change of form of value from natural resources in the ground to other more sustainable assets such as manufacturing, infrastructure, human capital, technology and social capital. The country stands to gain massively when other resilient and growth industries replace the duly depletable mineral and natural resource sectors.


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