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‘Extractive sector can and should benefit human development’

Speakers at the 2015 Mining Indaba stressed on local content Miriam Mannak February 12, 2105: Natural resources must benefit local communities and human development, not just corporate viability. In order to achieve that, the extractive industry should put a bigger emphasis on local content. That was one of the topics on the agenda at Investing in Africa Mining Indaba, which took place in South Africa...

Speakers at the 2015 Mining Indaba stressed on local content

Miriam Mannak

February 12, 2105: Natural resources must benefit local communities and human development, not just corporate viability. In order to achieve that, the extractive industry should put a bigger emphasis on local content. That was one of the topics on the agenda at Investing in Africa Mining Indaba, which took place in South Africa from February 9-11.

“Natural resources must be used to develop human capabilities and empower communities. We need to think of the future. Oil, gas and other resources are endowments to a country, and they will be so forever. If you are not able to find ways they can benefit future generations, then you should keep them off the ground,” said Steve Kayizzi-Mugerwa, Director of the African Development Bank’s Development Research department.

He spoke on the second day of the Mining Indaba in Cape Town, which with 7,000 attendees is the world’s largest mining and investment conference.

Adopting stronger local content policies is one of the ways companies working in mining, oil and gas sector can foster greater levels of socioeconomic and human development, Kayizzi-Mugerwa added. This is sometimes easier said than done. Africa, for instance, struggles with a persistent shortage of appropriate skills.

“Local content is important, but it is often hampered by a lack of local capabilities and skills shortages as well financial challenges and infrastructure gaps,” explained economist John Anyanwu, adding that the skills issue is not impossible to overcome. One of the solutions is for companies to develop the required skills oneself, for instance as part of one’s corporate social investment programme.

“When wanting to foster local content, you have to do a skill analysis, determine what you want to achieve, and know how you want to achieve it,” he explained. Based on this, corporates can come up with “an incentivised, voluntary, and inclusive human development plan for the purpose of empowering individuals” and providing them with the skills the company needs.

Whilst mining, oil and gas firms have a distinct role to play in ensuring natural resources benefit communities and foster human development, governments too have a responsibility. “Revenues from oil, gas and minerals should be linked to human development. 

It is vital,” said Sheila Khama, Director of the Africa Natural Resources Centre at the African Development Bank (AfDB) and the former CEO of the Botswana branch of diamond company De Beers. 

Ayo Ajayi, director of the Africa Team of the Bill & Melinda Gates Foundation, agreed and stressed that governments of mining countries have the duty to spend taxes earned from the extractive sector appropriately. “Human development doesn’t depend on whether governments get revenue from natural resources, but on how these revenues are spent,” he said.Ajayi added that there are various channels mining revenue can be spent on to foster human development.        Ayo Ajayi

“Revenue can, for instance, be spent through the public sector, on social services like health and education, or on infrastructure and construction, which indirectly supports job creation and fosters GDP growth.”

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