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Continue Extracting and Shipping or Let the Mineral Be Underground for Now?

 

By: Kandjengo kaMkwaanyoka

 

One of the most uncomfortable conversations in Namibia is weighing the benefits of continuous mining and sending raw materials abroad in exchange for employment and some other benefits.

Every year, I examine the mining sector’s contributions in terms of employment, taxes, procurement, and more, comparing them to the quantity of minerals shipped out.

Transparency in reporting is lacking, particularly when it comes to independent validation of contributions, especially in local procurement.

This leads me to ponder: what if we left the resources in the ground until we developed the capacity to process them domestically and integrate them into our industrial agenda?

If you raise this question in Namibia, you are likely to be blasted by politicians and economic analysts.

Statements like “the mining sector is the biggest contributor to the Namibian economy and brings in foreign currency as it dominates export” are often used to defend the status quo of exploration and export.

Anyone who questions or suggests increased state shareholding in the mining sector is often criticised for not understanding the risks involved and the capital outlay required.

Namibians are frequently deemed ignorant and told to accept the current situation.

However, an honest debate should evaluate the benefits of extracting and shipping the country’s valuable minerals, only to buy back finished products from global manufacturing powerhouses. Can we assess the benefits rationally, perhaps slowing down the rapid exploration driven by a few beneficiaries and multinational companies seeking raw materials?

Can we realistically measure the benefits that accrue to Namibians in exchange for our minerals?

Many educated and economically aware individuals might point to employment statistics, which are below 120,000, or taxes, despite some mines not paying corporate taxes due to being under EPZ.

If one calculates the amount of minerals Namibia extracts and exports, would a rational person accept what the country receives in return? Should we encourage more exploration, or should we say enough is enough?

I strongly suggest we sit down and evaluate the monetary benefits of our mineral resources. Are we content with extracting and exporting in exchange for employment and some taxes?

Is this sufficient for the third-largest uranium producer, one of the largest diamond suppliers, and a significant copper smelter?

Procurement numbers amount to billions annually, but can someone perform due diligence on what mines in Namibia are procuring? Why is this not expanding the country’s industrialization process?

Many political leaders and economic facilitators are convinced that exploration, extraction, and shipping constitute economic development, as long as a few jobs are created and some taxes are paid.

This is essentially an exchange of minerals for wages, and we celebrate consecutive quarterly GDP growth without questioning if this output growth translates into human development across the country.

If those entrusted with our resources celebrate extraction and export with minimal processing, and are content with crumbs from the generated revenue, then there is a problem.

We need to have hard, empirically guided discussions about whether to continue with our current approach or scale down.

Patting ourselves on the back for supplying the world with uranium, copper, gold, diamonds, iron, and lithium while receiving minimal returns can be an insult to our ancestors and future generations.

Measuring the economic benefits and losses of extracting and shipping is crucial. I believe the opportunity cost of not extracting is not as significant if our future generations will benefit from processing these minerals.

Those entrusted with managing and providing custodianship over our resources must be ready to have difficult conversations and interpret economic situations differently. It is also wise to start reading manifestos on mineral resource management.

 

NB: Kandjengo hails from Okwalondo, with a deep interest in African economic matters and financing. He writes based on his daily exposure, reading, and the economic realities in various corners of Namibia.

 

He can be reached by email at: gerastus16@gmail.com.

 

Kandjengo kaMkwaanyoka

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