Managing Expectations: Foreign Mining Companies Given Conditional Welcome To Africa

Managing Expectations: Foreign Mining Companies Given Conditional Welcome To Africa

African delegates at a mining conference in Perth stressed that foreign companies are still welcome, but the old way of doing business in Africa is over, according to a report in WorldNewsAustralia.

In a continent of rising expectations, foreign companies must be prepared for business arrangements that are mutually-beneficial and socially responsible, delegates said.

African heads of government, public servants and Australian resource companies met to share ideas, expertise and maybe even sign deals.

Delegates were told Africa has strengthening, transparent democracies and wants to do business.

But investing in a country’s resources also means investing in the people, said South African Mineral Resources Minister Susan Shabangu.

Investment must improve the quality of lives, and investors must recognize that workers also need decent lives, she said. Investors make sure their contribution strikes a balance so workers can take care of their families and their own responsibilities. If not, the contribution will not help bring stability.

Australian companies are viewed differently from the continent’s historic investors, she added.

“They don’t have the baggage of the past. That’s where the issue comes in in South Africa where some of the companies are still stuck or very slow because they come from the baggage of the past in South Africa whilst some of the companies are fairly new so they’re coming in within the current democratic disposition and they’re part of the new regulatory framework. (Some) will compare differently from those who have been there with us who have a baggage.”

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Shabangu also acknowledged South Africa has made its own mistakes – including the deaths of mine workers at the Marikana mine last year.

Thirty-four miners were shot dead by the police as they protested low wages at the platinum mine. An inquiry is underway in South Africa.

The Marikana shootings “really impacted negatively on our economy,” Shabangu said. The country is now working on “how best do we bring back stability in South Africa.”

Also attending the conference was Italian Mario Pezzini who heads the Organisation for Economic Co-operation and Development Center.

“The bad news is that the pace of this growth still is not enough,” Pezzini said. “Only 7 percent of the youths in sub-Saharan Africa have (found) a decent job. At this point it is very clear that you think you need to diversify the economy and therefore to abandon natural resources and move to other production. Well we think that this is not necessarily the case. We think that natural resources could be a very good passport for development under certain conditions.”

Botswana is considered a leader in transparent business deals, standing firm to international companies, and sharing the wealth from resource projects, the report said.

Former Botswanan President Festus Mogae said diversifying the country’s economy is proving difficult for its 2 million people. Income from diamonds has driven Botswana’s economy, but its future is not secure.

“This money is diminishing … we’re aware of that,” he said.

The Botswana government has provided free education, including university, and the literacy rate is close to 90 percent.

Mogae now heads the Coalition for Dialogue on Africa, an advocacy group that shares experiences and expertise among African countries.

It’s crucial that Africans band together to improve their collective strength, he said, but acknowledged there are serious shortcomings in leadership in some countries.

“We need the critical mass to deal with much bigger economies like China, Australia, Europeans, Americans. We do need to share experiences. Really we have pledged to integrate and unfortunately we’re not doing that because there are too many leaders that enjoy being tin-pot dictators all over the place in Africa and so they pay lip service to integration, but do nothing about it. To our disadvantage.”

Frederico Bonaglia from the OECD says African countries with booming resource investment also need to manage their population’s expectations.

“The problem is that every morning in the newspaper in Maputo or elsewhere, people are looking at the gas boom, so you’re generating expectations and people believe that in a couple of years, five or six years, they’ll become middle class, which is probably not going to be the case,” he said. “So the risk here is you’re putting fire on an already tense situation of rising expectations that may not be met. So it’s a very urgent question for governments how to manage the expectations, not only how to manage the exchange rate.”