Commodities are potentially the biggest threat to Africa’s future

Lumwana mine truck workshop
Lumwana mine truck workshop

FROM BEHIND THE wheel of an air-conditioned car on the Great North Road bisecting northern Zambia it is easy to argue that Africa can be wealthy and well-governed. The country’s road system is so good that many visitors hire a car and drive themselves. The police are benign and rest stops are plentiful. The same goes for much of southern Africa. Lines of tarmac unspool in all directions across fertile savannahs and open deserts.

Most roads have been financed with what is found below them: a wealth of minerals and metals. Ever since the arrival of Cecil Rhodes more than a century ago, local miners have generated immense wealth and inspired successive eras of Afro-optimism. From colonial railways to modern airports, public infrastructure would not exist without this wealth of resources.

In the central province of Copperbelt, a day’s drive south-west of the Tanzanian border, copper has been mined since 1895. Puffing smelters and hill ranges of slag loom over towns. High-voltage power lines and dual carriageways cut up the countryside. “My firstborn wants to be a lawyer,” says a father of three who guards a mine. “I think it’s possible.”

National copper production recently broke a four-decade-old record, generating enough revenue for the government to announce the building of two new power plants and three new universities. Government income from mining levies increased by 25% in 2012. Across the continent, official budgets are being buoyed by resource revenues. Commodities are estimated to generate one-third of Africa’s GDP growth, not counting indirect benefits. Many expatriate miners, especially Chinese, eventually move into other occupations, spreading skills, contacts and capital more widely. Chinese vendors, for example, have come to dominate Zambian chicken markets.

The Chinese have rushed to Zambia before. During an earlier commodities boom in the early 1970s Mao Zedong financed a railway line from Tanzania. But the gains petered out, mismanaged by officials on both sides of the border. This time may be different. No African resource boom in the past has ever coincided with democratisation. In the 1970s socialists and autocrats held sway. When elections became more widespread in the 1990s, commodity prices were depressed and there was no money to invest. Now for once everything is coming together. Democracy in Zambia and elsewhere is flourishing, prices are high and economic management is improving.

Africa’s economy is not all about commodities. That became clear during the 2007-08 financial crisis: African growth rates did not dip as much as those elsewhere because domestic demand held up. But the continent cannot insulate itself from the world economy altogether.

In Zambia just now all eyes are on copper, which makes up 80% of the country’s exports. One Canadian mining company, First Quantum, generates 15% of the country’s tax take. Agriculture at best ticks over, and the government is committing itself to ever more expensive projects such as highways in remote areas. What happens when world demand for copper falls and prices drop from recent record levels? Ndola, the capital of the Copperbelt, knows the answer. Only ten years ago, in between booms, Ndola was a ghost town. The grand but run-down Savoy hotel, built in the … READ THE FULL REPORT on ….