News / Africa

    Resource-Rich African Countries Struggle, Resource-Poor Ones Grow

    FILE - An artisanal miner washes tin ore before it is bagged up and weighed, ready to be transported to the nearest major town for export in the Kalimbi tin mine near the small town of Nyabibwe, DRC.
    FILE - An artisanal miner washes tin ore before it is bagged up and weighed, ready to be transported to the nearest major town for export in the Kalimbi tin mine near the small town of Nyabibwe, DRC.

    Resource-poor countries like Kenya, Rwanda and Ethiopia are experiencing growth, while resource-rich countries like Nigeria and Angola are battling.

    The former finance minister of Zimbabwe, Tendai Biti, told the Investing in African Mining Indaba annual conference Tuesday that diversification is key, but African leaders in resource rich countries don’t learn. However, he said the silver lining to the current slump is for policy makers to see this as an opportunity, a sentiment also expressed in the National Bureau of Statistics of Nigeria outlook report.

    The focus for Investing in African Indaba was on mining, rather than crude oil, whether a particular mineral, diamonds, iron or gas.

    The issue is global commodities are in a slump, and during the boom, leaders put an unnatural focus on a specific sector while ignoring other areas of the economy. They failed to industrialize around commodities and never put resources back into the community. Biti pointed out that poverty is at its worst where the actual minerals have been extracted.

    What is Rwanda doing right?

    Rwanda is one of the countries that is seeing growth.

    The key to African nations competing in the global marketplace and attracting foreign investment is first and foremost transparency, and that is what Rwanda is doing right. Rwanda ranked well in the World Bank’s "Doing Business 2016" report regarding the ease of doing business, which encourages investor confidence.  Operating as transparently as possible with minimal bureaucracy has led to a healthy operating environment and is starting to earn the trust of the international community.

    The private sector outlook is shaping up to be bullish in 2016, and that is due in part to the success of a Single Customs Territory (SCT) implemented in 2013.

    According to the Northern Corridor Integration Projects, SCT makes it easier for people to do business in the region. The Northern Corridor links Uganda, Rwanda and Burundi with Kenya’s maritime port of Mombasa. It also serves the eastern part of the Democratic Republic of Congo, South Sudan and Tanzania. Thus, the Northern Corridor connects the five countries of the East African Community. An SCT reduces the cost of doing business by eliminating duplication of processes, and also reduces administrative costs and regulatory requirements.

    An SCT also enhances trade in locally-produced goods and encourages the relationship between the private and public sectors, making Rwanda an attractive foreign, domestic and cross-border investment. Through this project, Rwanda is aggressively growing its economy with sectors outside of commodity dependence, such as construction and development and agribusiness.

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