Interview: Africa advised to use local resources to diversify economies

14:39, May 01, 2011      

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African countries should ensure that they use local manpower and resources to diversify their economies instead of depending on external forces, an economic commentator said.

Embarking on the diversification of economies while depending on external investment was dangerous and will not bring the much needed economic prosperity for the African continent, Fredrick Mutesa, an economic and development expert and former lecturer in the School of Development Studies at Zambia's highest learning institution - the University of Zambia (UNZA) - told Xinhua.

"If we have a strategy of diversification that is dependent on external investment, the local people will not benefit much and the local economies will not benefit much. We have seen it in the mining sector (in Zambia) where copper prices are high but the government is getting very little while local suppliers and contractors are getting raw deals," Mutesa said ahead of the World Economic Forum on Africa, to be held early May in South Africa under the theme "From Vision to Action, Africa's Next Chapter."

"We need a strategy that will embrace local enterprises. We need to look at how we can empower local farmers to expand their production," he said.

"We need to find ways of how we can help small businesses to expand their businesses," he added.

Zambia was among African nations that have been trying to diversify their economies. The country's economy was dependent on copper which accounts for about 70 percent of the country's foreign exchange earnings.

Zambia's Minister of Finance and National Planning Situmbeko Musokotwane said earlier this month that the future of African economies lies in diversifying their economies.

According to Mutesa, Zambia was not benefiting much from its main natural resource because of government's refusal to reintroduce windfall tax, which was removed in 2009 at the height of the global financial crisis.

Zambia is currently trying to increase the production of copper following increased investment in both exploration and production. The country's copper production this year was projected to rise to 900,000 tons from about 819,000 tons produced last year due to expansion works by mining firms.

The government had projected annual production to hit 1 million tons by 2012.

Current high copper prices on the international market which have hit 9,000 U.S. dollars per ton were likely to spur production of copper by mining firms and attract new investments in the sector.

Last year, Zambia attracted new mining investments estimated at 2 billion dollars and the trend was likely to continue this year.

It has taken 5 billion dollars in investment over the last decade for Zambia to get back to current annual copper production.

Copper production declined steadily from the early 1970s to about 250,000 tons in 1999 before rebounding on new investment.

Source: Xinhua

 
 
     
 
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