Mutumwa Mawere

After 54 years of independence, many African countries remain among the least developed and yet paradoxically are richly endowed with mineral wealth.

How could God be so unfair to Africans? Why place minerals in the geology where black Africans are in the majority and yet alienate the natives from the exploration, exploitation, beneficiation and distribution process of minerals?

It is important to pause and reflect on the political aspects of the African economy.

In particular, we have no choice but to locate the impact of party politics on the formulation and implementation of policy or on economic development.

The nexus between party politics and business in the African context has to be critically examined as the existence or otherwise of a connection between the two variables is useful in that it allows for a better analysis of the character of the state which in turn helps explain key economic policies like indigenization and economic empowerment and the manner in which they have been implemented or manipulated for political expediency in various African states.

It must be accepted that a significant outcome of some of the economic policies pursued by post-colonial African regimes has been the accumulation and concentration of wealth derived from economic rents and rent-seeking activities.

The nature of the post-colonial African story suggests that a strong association must necessarily exist between politics, policy development and implementation, the concept of rent and related concepts of rent seeking.

The colonial regime exposed the strong association between politics and business that has proved to be difficult to eliminate.

The post-colonial political class was by virtue of the colonial project alienated from accessing resource rents from mineral commodities and, therefore, the most politically expedient route has had to be the institutionalization of the association between political patronage and access to resources through policies like indigenization, nationalization and citizen economic empowerment.

The role of political parties in the decolonization process cannot be denied and yet their role in the post-colonial transformation has proved to be controversial not only because there is no consensus on how rents should be allocated and who should benefit from God given resources like land, water and minerals but the business class has largely abdicated from its responsibility to be part of the negotiation on what kind of Africa we should have.

The colonial business class, though closely associated with state actors, was more organized and integrated into the political economy.

The critical economic decision makers in Africa are remotely connected to the political processes that shape economic policies.

Revenues from mineral resources represent an important source of revenue for many African states and, therefore, strategies to access this wealth are important to governments.

Such strategies range from direct participation in mining activity by means of state-owned companies to more indirect methods such as taxes levied on mining activity.

Various versions of public/private sector configurations exist in the mining sector ranging from direct participation, market-led and sustainability models.

Direct participation experiments have so far failed to produce the kind of outcomes anticipated and yet even market-led solutions have also not impacted positively on poverty reduction strategies.

Mining activities are associated with social and environmental costs that have to be taken into account and that compel us to think of sustainable business models.

South Africa is a key African pivot state and the manner in which it has chosen to pursue its development agenda has implications for the rest of the continent.

In South Africa, mineral rights are now vested in the state and anyone who wishes to access such resources has to apply for a license.

The license system has already proved to be a convenient source of economic rents for the new political class.

Established companies are compelled to convert existing rights into new order rights and therein lay the catch.
It is not automatic that a company can convert old order rights into new order rights.

The nationalization of mineral rights has opened a new window for rent collection.

Stories are abound of well connected individuals being allocated new order rights on the back of knowledge that such rights carry high economic value to the company denied access.

Through connections, individuals have managed to leverage their personal wealth in a manner that has encouraged many political players to look at mining as a convenient and easy road to wealth accumulation.

All you need is to fall into the class of historically disadvantaged person and with a few connections; it has been proved that one can ride the opportunity ladder with an elevator rather than on the rough side of the mountain.

Last Friday, Mr. Julius Malema, President of the ANC Youth League visited Zimbabwe as a guest of ZANU-PF.

Mr. Malema is acutely aware that Zimbabwe has the kind of mineral resources that South African mining houses want and yet they have been concerned about the implications of indigenization laws on mining investment.

In the context of South Africa, the black economic empowerment laws have been embraced and accepted by the same mining houses that are opposed to the Zimbabwean approach to economic power distribution.

Some may argue that what is good for South Africa must be good for the rest of the continent including Zimbabwe.

Mr. Malema by associating himself with the party that holds the power to selectively apply the laws and to put into place the same kind of institutional mechanism that has proved financially rewarding to the well-connected, he will no doubt be the bridge at a cost for South African companies who are scared of engaging ZANU-PF directly on empowerment issues.

After 16 years of democracy, BEE has produced its own graduates while the majority of the population remains outside the formal economic system. BEE can be rewarding and can be used against anyone who chooses to challenge the system.

It was not surprising that Malema had this to say during his visit: "We hear you are now going straight to the mines. That's what we are going to be doing in South Africa.

We want the mines. They have been exploiting our minerals for a long time. Now it's our turn to also enjoy from these minerals. They are so bright, they are colorful, we refer to them as white people, maybe their color came as a result of exploiting our minerals and perhaps if some of us can get opportunities in these minerals we can develop some nice color like them."

It is significant that only five months ago, Malema said Mugabe should go. What conceivably could have led to Malema's change of heart? Could it be his links to companies that see potential in Zimbabwe's rich mineral resources but have no access to the people who control the indigenization agenda in Zimbabwe?

Malema knows where the power to make the kind of decisions that mining companies expect in Zimbabwe lies.

It could not have been a mistake that his itinerary included Zimplats and not Rio Tinto, for example.
Zimplats is owned and controlled by Implala Platinum, a South African based mining company that has embraced BEE and would not have a problem in Malema being an intermediary for an acceptable transaction in Zimbabwe.

It is common knowledge that South African based companies are now exploiting Zimbabwe's diamonds.

With Malema in the equation, it is not unthinkable to see him collecting rents in Zimbabwean transaction in as much as his colleagues in ANC are collecting in the name of BEE.

All that is required is for President Mugabe to see Malema in a different light and his just ended visit has managed to position him as an advisor on mining issues as well as a convenient political weapon in the domestic political equation.

Malema has thrown his weight with ZANU-PF and he is smart enough to know what many may not know.

If ever, he were convinced that MDC was a factor in the future of Zimbabwe, he would have chosen a different itinerary and language.

Clearly his intelligence has told him that it is safe to align with the ZANU-PF because that is where he perceives the power to be.

It is common cause that resource rents from mineral commodities have contributed to economic growth, the allocation of rents, in various forms, to promote "social" objectives has been important in securing legitimacy and support for the government, rents have also been created by the government to encourage industrialization and to bolster investments.

However, in a confused political climate, rents can be allocated inefficiently as a result of political patronage.

It is never too late to pause and think critically about what kind of values, beliefs and principles are required to lift Africa up. Political hypocrisy and prostitution can distort and retard economic progress.

Companies that wish to do business in Africa and have embraced BEE may live to regret the hypocrisy on the question of economic empowerment as it is rolled out in the rest of the continent starting with Zimbabwe.

The beneficiaries of South African BEE policies may very well be the toxic pills in the quest for a just and equitable Africa.

Malema has opened the door to a new conversation on empowerment and the response has to be considered and informed by history; performance, financing and other risks associated with any economic development enterprise.