Massive potential in African mining: IFC
7 February 2013
Africa's under-invested mining sector has huge potential, supported by increased economic growth and political stability, and could play a vital developmental role on the continent, the International Finance Corporation's (IFC's) Bernard Sheahan told the Investing in African Mining Indaba on Wednesday.
"The core message about the continent today is that Africa is rising," Sheahan, the IFC's director of infrastructure and natural resources for Africa and Latin America, told delegates in Cape Town.
Africa is expected to grow at an above-average 5.5% per annum over the next five years, and according to projections in a recent McKinsey report, will have a larger labour force than China and India within the next two decades. Projections also point to rapid urbanisation, with the majority of Africa's population expected to be living in urban areas by 2023.
Increased political stability
At the same time, Sheahan said, there were signs of improvement when it came to political risk on the continent.
"There is increased political stability ... we've seen positive political transitions in countries like Guinea, Senegal and Ivory Coast. This means better economic governance. It is not perfect in some countries, but there are improved policy choices which points to progress in investment climate reform.
"Underpinned by social transformation in Africa, the continent is about to see a demographic dividend."
Sheahan said the IFC - a member of the World Bank Group - was taking advantage of the potential it saw in African mining, which now accounted for more than half of the IFC's mining investments.
Opportunities in infrastructure
He said he believed the main opportunities in Africa lay in infrastructure. The continent has a huge infrastructure deficit, which the IFC believes will need an annual investment of US$93-billion.
"Multi-user infrastructure can be an opportunity for mining to enhance the developmental impact of mining."
At the same time, Sheahan said, the mining industry could play a critical role in reducing the political risk to doing business in Africa through job creation and skills development. "We need more cooperative approaches between companies and other stakeholders, and this is where the mining industry can play a role."
He lauded the African Mineral Skills Initiative of the United Nations, in partnership with Anglogold Ashanti, for its role in skills development on the continent.
He cautioned, however, that companies should be strategic in their community investments, and make them a core part of the mine project planning process.
Local procurement was another area where the mining industry could contribute to reducing risk, he said, while stressing that a holistic approach was needed towards local sourcing.