1. Creating, sharing and distributing value for inclusive growth Oil Gas Mine Conference, Niamey, NIGER 20 – 24 November 2013 Isabelle Ramdoo Deputy Programme Manager European Centre for Development Policy Management (ECDPM) Optimising mining linkages for Development

2. I Setting the scene: some facts and figures II Enablers of economic transformation 1.Creating the conditions 2. Boosting linkages to create, share and distribute value a.Productive linkages b.Spatial Linkages c.Knowledge linkages Structure of Presentation ECDPMPage 2

3.  Africa’s growth story in the past decade has reverse the trend of the previous tragedy 1. Setting the scene: Growth high and sustained ECDPMPage 3 E&Y (2013): Africa on the move

4. Source: Standard Chartered Inforgraphic Africa’s emerging markets ECDPMPage 4 Eight out of ten fasters growers in Africa in 2012 according to WB Source: Africa Pulse, World Bank, April 2014

5. Growth still largely driven by commodity price and dependence remain high ECDPMPage 5

6. 1.Sources of growth varies: More than just natural resources; 1.But insufficient economic transformation: share of manufacturing fell over time 2.Many social indicators did not catch up as fast as the economic ones – poverty still too high, inequality increasing, health and education fall short of requirements etc.. ECDPMPage 6 Structural transformation remains weak: An imperative! Not a choice! Source: Ernst and Young (2013): Africa Attractiveness Survey 2013

7. 1.Creating the conditions: a)Setting up efficient institutional frameworks; b)Addressing governance issues; c)Providing a conducive business environment to reduce costs of doing business; d)Providing efficient public goods – infrastructure, energy, technology; e)Addressing crippling effects of skills, technology, research and innovation shortages and mismatches; f)Managing expectations; g)Ensure fair share of revenues and “follow the money” and manage revenues and expenditures; h)Striking the balance between investment and fiscal frameworks. 2. Enablers of economic transformation ECDPMPage 7

8. 2. Boosting linkages to CREATE, SHARE and DISTRIBUTE VALUE Involving the mining industry in “growing the pie”: value creation and distribution has large multiplier effects ECDPMPage 8 It is not only about mining – it is about finding the other DRIVERS of growth – within and outside the extractive sector with a view to create direct, indirect and induced opportunities to create more value, jobs and economic prospects

9. Adopt and implement coherent and well-sequenced industrial policies: a strategic approach that require close collaboration with all stakeholders – in particular with the business community Sharing value: “grow the pie” together Mining sector has large multiplier effects: ECDPMPage 9 Source: Facts about mining ins South Africa (South Africa Chamber of Mines, November 2012), The Socio-Economic Impact of Newmont Ghana Gold Limited (Newmont Ghana Gold Limited, June 2011), The economic contribution of large scale gold mining in Peru (World Gold Council, May 2012). South Africa: IDC and Quantec study

10. ECDPM Page 10

11. a. Moving along value chain: Promoting productive linkages within mining sector Current status is consequence of low productivity, insufficient medium to large private sector; activities of mining companies are essentially geared towards exports. Purpose in NOT to turn mining companies into manufacturing companies, but rather to set the right enabling environment to encourage entrepreneurs in developing manufacturing clusters. No “one-size-fits-all” policy strategy for industrialisation Requires to build competitive advantage by setting fundamentals right and by pursing resource governance ECDPMPage 11

12. ECDPMPage 12  Value added manufacturing contributes only to 12.5% of GDP in SSA – half the contribution of Asia  SSA’s share of world exports remains too small – top 5 African exporters (SA, Ghana, Nigeria, Kenya & Zambia) make up only 1% of world’s exports. Share of SA even declined since 1980. Source: E&Y (2013): Africa on the move: The quest for sustainable growth Strengthening industrial capabilities : Industrial devt in SSA has fallen short of GDP growth since 1980

13. Smile Curve Upstream and downstream linkages: Margin increases as value added increase ECDPMPage 13 Source: Adapted from Stan Shih Smile Curve concept Mining clusterManufacturing cluster High labour, capital intensity Low labour, high capital intensity Med to high labour and capital intensity

14. Agriculture and agri-business are the other big sector in Africa; Continent has world’s largest area of uncultivated land Yield is relatively weak – grew only on average by 0.8% per year between 1980 – 2010 Weaknesses include weak market structures, weak market connectivity, inadequate infrastructure (hard and soft); limited access to capital, seeds, fertilizers, machinery etc for small farmers Creating value through support from mining companies – through investment in innovative and productive activities to support businesses living around the mines b. Linking mining sector to other productive sectors Capitalising on agricultural potential ECDPMPage 14

15. Infrastructure on the continent lags behind other countries. Spatial linkages: resource corridors to disenclave mining sector ECDPMPage 15

16. Source: Company Reports, RBC Capital Markets – Extracted from Svensson K., SEGOM Example: Potential/ current iron-ore projects in West Africa ECDPMPage 16

17. Visualizing the deficits: these are opportunities for use of mineral products ECDPMPage 17

18. Creating job opportunities, supporting employability and job stability Today, Africa’s growth is not sufficiently employment intensive nor does it generate sufficient activities that will create productive employment; Africa’s biggest challenge: create stable and productive jobs. Given its favourable demographic mix – continent will have largest labour force in 2035; Failure to do so: will work against the economic strength and result in social and political unrest; Transformative agenda should focus on diversifying growth sources in labour-intensive sectors 3. Knowledge linkages: reaping the demographic dividend ECDPMPage 18

19. Knowledge linkages to address growing human resources ECDPMPage 19 Africa’s youth budge: a demographic dividend or time ticking bomb Urbanization: the next challenge

20. Thank you Contact: Isabelle Ramdoo ir@ecdpm.org Website: www.ecdpm.org www.slideshare.net/ecdpm Page 20