Africa has been open for investments for a while and mining in Africa has been going on for centuries but Africa’s openness has led to vulnerability resulting into capital and illicit financial flows which lead to Africa losing in excess of US$100billiuon annually.
This was revealed by Albert M. Muchanga, Commissioner for Trade and Industry at the African Union Commission when giving key note address at the Africa Mining Summit held in Gaborone this week. The summit was hosted by GRV Global, an event management company in partnership with the African Union Commission Department of Trade and Industry and the Government of Botswana.
Held under the theme, “The Advancement of the Africa Mining Vision (AMV) through technologies”, the event engaged on key matters affecting the lucrative mining industry which is the backbone of many African economies. It focused on key discussions such as how new explorations and junior mining companies can leverage on technology and innovation to better benefit from the mineral value chains.
However it emerged that in Africa developing its mining industries billions of dollars continue to fly of its boarders “Our openness has led to vulnerability resulting into capital and illicit financial flows stating that Africa loses a lot of money that could otherwise be used for the betterment of the lives of its citizens. It is our duty to put an end the illicit financial flows,” said Commissioner Muchanga.
He further said Africa has been having weak regulatory frameworks and poor compliance enforcement mechanisms for the lucrative mining sector which is worth trillions. Muchanga shared that the Africa Mining Summit was happening at a critical time when the African Union Assembly adopted and launched the most ambitious and biggest Free Trade Area in the world, the African Continental Free Trade Area (AfCFTA).
He emphasized that the establishment of the AfCFTA will bring concrete opportunities to market players in the African mining and related sectors as it will create an integrated market of 1.2 billion people supported by an aggregate economy of about US$3.4 trillion. The AU representative underscored the key role that can be played by the mineral resources in the social and economic structural transformation of Africa to lead into win-win situation and inclusive growth.
“We all know how the sector can create skilled and decent and non-skilled employment for the young people and wealth for countries”. Muchanga also pointed out that African Union Commission sees great scope in the summit mobilizing investments and providing solutions to the challenges facing the mining industry in Africa.
“Africa Mining Summit is as a vehicle in mobilizing the Private Sector to implement the Africa Mining Vision (AMV). We need to see value addition and downstream beneficiation taking place in our countries. We need to see upstream beneficiation along global and regional minerals supply and value chains”, he said.
Giving welcome remarks at the fully attended event staged at Gaborone Avani Hotel, Mr. Andrew Dowel, CEO of GRV Global, expressed his gratitude to the African Union Commission for the partnership and for steadfastly supporting GRV Globe’s efforts in producing the Africa Mining Summit.
He pointed out that mining companies operate in complex geographies where they face increasing challenges in responding to regulatory and compliance requirements. He emphasized the fact that mining companies are also required to adapt to changing market conditions while adopting new innovations as they seek to produce more for less cost.
Dowel said the Africa Mining Vision seeks to actively promote the integration of Africa’s mining sector into national economic and social activities. “We need to think outside the box in order to maximize the continent’s resources wealth”. Officially opening the summit Minister of Mineral Resources, Green Technology and Energy Security Eric Molale said Botswana was a preferred destination for investments that take the rule of law seriously and had robust financial regulatory oversight bodies.
“All our mineral resources are exploited for the benefit of our citizens. It is a win-win situation that encourages Foreign Direct Investment,” he stated. Molale underlined that Botswana has put in place the ease of doing business reforms which he said reduce bureaucracy and avoid corruption. “This enables investors to do business without fear and encourage growth,” he said.
Molale submitted that Africa must be determined to ensuring future export of fully beneficiated mineral resources onto world seaborne markets but admitted that this will continue to depend largely on the logistical infrastructure establishment through international and local investment in the continent. He stressed on the need to have Regional Value Chains giving an example of Botswana which is a Diamond processing Hub for the region not only for Botswana.
The Africa Mining Summit 2018 was attended by High Level Political Authorities from across Africa including the Minister of Mines and Mineral Resources of Sierra Leone, the Minister of Lands and Natural Resources of Ghana, the Deputy Minister of Mines and Mining Development of Zimbabwe and the Permanent Secretariat of National Minerals Commission of the Ministry of Mines and Quarries of Burkina Faso.
The Summit comprises of a two-day conference which includes, Keynote presentations and panel discussions on all aspects related to the Continent’s ongoing mining and minerals efforts. The Event brings together suppliers around the world who are looking to sell to the mining corporates, mining corporates who seek investment, investors who want to strike deals and African Government Ministers and Private Sector who engage all groups to discuss new opportunities in their respective countries and Africa as a whole.
Government is currently sitting on 4 400 vacant posts that remain unfilled in the civil service. This is notwithstanding the high unemployment rate in Botswana which has been exacerbated by the recent outbreak of the deadly COVID-19 pandemic.
Just before the burst of COVID-19, official data released by Statistics Botswana in January 2020, indicate that unemployment in Botswana has increased from 17.6 percent three years ago to 20.7 percent. “Unemployment rate went up by 3.1 percentage between the two periods, from 17.6 to 20.7 percent,” statistics point out.
Leading commercial bank, First National Bank Botswana (FNBB), expects the central bank to sharpen its monetary policy knife and cut the Bank Rate twice in the last quarter of 2020.
The bank expects a 25 basis point (bps) in the beginning of the last quarter, which is next month, and another shed by the same bps in December, making a total of 50 bps cut in the last quarter. According to the bank’s researchers, the central bank is now holding on to 4.25 percent for the time being pending for more informed data on the economic climate.
An audit of the accounts and records for the supply of food rations to the institutions in the Northern Region for the financial year-ended 31 March 2019 was carried out. According to Auditor General’s report and observations, there are weaknesses and shortcomings that were somehow addressed to the Accounting Officer for comments.
Auditor General, Pulane Letebele indicated on the report that, across all depots in the region that there had been instances where food items were short for periods ranging from 1 to 7 months in the institutions for a variety of reasons, including absence of regular contracts and supplier failures. The success of this programme is dependent on regular and reliable availability of the supplies to achieve its objective, the report said.
There would be instances where food items were returned from the feeding centers to the depots for reasons of spoilage or any other cause. In these cases, instances had been noted where these returns were not supported by any documentation, which could lead to these items being lost without trace.
The report further stressed that large quantities of various food items valued at over P772 thousand from different depots were damaged by rodents, and written off.Included in the write off were 13 538 (340ml) cartons of milk valued at P75 745. In this connection, the Auditor General says it is important that the warehouses be maintained to a standard where they would not be infested by rodents and other pests.
Still in the Northern region, the report noted that there is an outstanding matter relating to the supply of stewed steak (283×3.1kg cans) to the Maun depot which was allegedly defective. The steak had been supplied by Botswana Meat Commission to the depot in November 2016.
In March 2017 part of the consignment was reported to the supplier as defective, and was to be replaced. Even as there was no agreement reached between the parties regarding replacement, in 51 October 2018 the items in question were disposed of by destruction. This disposal represented a loss as the whole consignment had been paid for, according to the report.
“In my view, the loss resulted directly from failure by the depot managers to deal with the matter immediately upon receipt of the consignment and detection of the defects. Audit inspections during visits to Selibe Phikwe, Maun, Shakawe, Ghanzi and Francistown depots had raised a number of observations on points of detail related to the maintenance of records, reconciliations of stocks and related matters, which I drew to the attention of the Accounting Officer for comments,” Letebele said in her report.
In the Southern region, a scrutiny of the records for the control of stocks of food items in the Southern Region had indicated intermittent shortages of the various items, principally Tsabana, Malutu, Sunflower Oil and Milk which was mainly due to absence of subsisting contracts for the supply of these items.
“The contract for the supply of Tsabana to all depots expired in September 2018 and was not replaced by a substantive contract. The supplier contracts for these stocks should be so managed that the expiry of one contract is immediately followed by the commencement of the next.”
Suppliers who had been contracted to supply foodstuffs had failed to do so and no timely action had been taken to redress the situation to ensure continuity of supply of the food items, the report noted.
In one case, the report highlighted that the supplier was to manufacture and supply 1 136 metric tonnes of Malutu for a 4-months period from March 2019 to June 2019, but had been unable to honour the obligation. The situation was relieved by inter-depot transfers, at additional cost in transportation and subsistence expenses.
In another case, the contract was for the supply of Sunflower Oil to Mabutsane, where the supplier had also failed to deliver. Examination of the Molepolole depot Food Issues Register had indicated a number of instances where food items consigned to the various feeding centres had been returned for a variety of reasons, including food item available; no storage space; and in other cases the whole consignments were returned, and reasons not stated.
This is an indication of lack of proper management and monitoring of the affairs of the depot, which could result in losses from frequent movements of the food items concerned.The maintenance of accounting records in the region, typically in Letlhakeng, Tsabong, and Mabutsane was less than satisfactory, according to Auditor General’s report.
In these depots a number of instances had been noted where receipts and issues had not been recorded over long periods, resulting in incorrect balances reflected in the accounting records. This is a serious weakness which could lead to or result in losses without trace or detection, and is a contravention of Supplies Regulations and Procedures, Letebele said.
Similarly, consignments of a total of 892 bags of Malutu and 3 bags of beans from Tsabong depot to different feeding centres had not been received in those centres, and are considered lost. These are also not reflected in the Statement of Losses in the Annual Statements of Accounts for the same periods.