The World Bank Group last month released its latest economic analysis for Rwanda forecasting a growth rate of 5.7% in 2014 and of 6.6% in 2015. The report focused on the mining sector and its potential contribution to national development.
Rachel Perks is World Bank’s mining specialist with extensive knowledge of the state of mining within the Great Lakes region and beyond. She also presented a state of Rwanda’s mining sector report. In an interview with The New Times’ Kenneth Agutamba, she among others expounds on how mining can help Rwanda achieve her ambitious EDPRS2 targets and Vision 2020 such as 200, 000 jobs a year as well as attaining a double digit growth of at least 11.5 per cent. Exerpts.
From your presentation last month, you know quite a fair amount about Rwanda’s mining sector, what’s its real worth?
This is the ‘billion dollar’ question that the World Bank, alongside the African Union, hopes to unravel further through its ‘Billion Dollar Map’ initiative.
Truthfully, we do not know the real worth of Rwanda’s mining sector nor do we know that of any other country in Africa. We can only hope to continue discovering more through targeted geological works.
The important thing is for a country to make right decisions about the development of its deposits based on the information and resources at hand. And Rwanda is doing just that.
Our report highlights the robust investment commitments made to geology by the private sector totaling $110 million over the next four to five years alongside the Euro2 million that the government takes from its national budget annually to support investigating Potential Target Areas.
Rwanda’s own budget investment is one of the few examples I have personally encountered on the continent, and we commend it in the report. The challenge is ensuring that Rwanda gets the right investors to develop these known geological deposits with the best eventual benefit arrangements for its people.
At the moment, what’s Rwanda not doing right to exploit the mining sector’s true potential?
I don’t think it is a question of right or wrong. Every country must choose its own development pathway. Where the report does raise some reflections is principally on the question of efficiency. Here, two elements are important.
First, is simply the issue of economies of scale. For instance, does Rwanda benefit from hundreds of small permits, each (operator) producing quite minimal monthly production, as opposed to having fewer permits but with higher production outputs?
Undoubtedly, Rwanda, like many other countries in Africa, has to balance this question of efficiency alongside other considerations such as rural unemployment, which mining helps to reduce. What the report does is to highlight the government’s own target for mine development by 2020 which is to have three medium scale mines and 100 small-scale mines. These seem like good numbers. So it will be a question of whether that target can be achieved.
The second matter regards the mine techniques. What we see often in Africa is the granting of small-scale licenses that, due to financial constraints, cannot develop their potential site optimally. We call this undercapitalisation. This phenomenon exists in Rwanda, like in many other countries. What can the government do to avoid this situation? We highlight areas such as investment in technology and making available loan facilities (akin to those innovations made by the government in small-scale farming) as critical. These of course form already part of the government’s mining strategy from 2010, and so the report is simply encouraging the government to revisit priorities already defined.
Prices for minerals on the international market plummeted tapering Rwanda’s export earnings in the first half of this year, what’s the best way to circumvent this?
Diversification is a common strategy, meaning investing in several different mineral commodities.
Rwanda is, as has been historically the case, dependent on three key minerals; Cassiterite, wolfram and Coltan, but it has significant potential in gold and gemstones. The medium-term strategy would be to ensure a balanced portfolio of commodities being produced.
The government’s current investment in geological works for gold, and some new investments coming on-stream for gemstones are sound mitigation measures for the medium term.
A second strategy, which is under discussion in other countries in Africa, is price stabilisation.
In Burundi, as in other countries in Africa, for instance, the coffee sector is regulated by an agreed price between the private sector, small scale producers and the government on a yearly basis.
Governments in the 1970s offered stabilisation measures for small-scale miners across many countries in Africa to mitigate fluctuations. Of course, there are disadvantages and advantages to this type of strategy that each country has to evaluate carefully.
Other forms of stabilisation come through pre-financing or off-take agreements with international mineral buyers. All these measures can help mitigate some of the eventual fluctuations experienced by the market, and do not necessarily entail direct government intervention in the sector either.
I think it is an area that requires more concerted reflection in the case of artisanal and small-scale mining.
There is this politics surrounding the so-called ‘conflict minerals,’ could you discuss this in Rwanda’s context?
We could spend days on this question. You will note that, in fact, our report does not discuss in detail this issue, though it recognises the influence these wider geo-political issues have on the domestic governance of Rwanda’s mining sector.
In our report, we wanted to try and highlight other areas that have received less attention to date, in the hopes of widening the discussion on the future of mineral development not only in Rwanda but across the region.
Regarding the employment creation potential of the mining sector, you have compared Rwanda’s to other regional countries such as Tanzania, Uganda, Burundi and DRC…you are not happy with the exclusion of statistics for women in this sector; why is it so and how can it be reconciled?
I am so glad that you picked up on the women’s comment I made in the presentation. The report highlights how 40 per cent of artisanal and small-scale mining in Africa is done by women. It also highlights how women typically earn one-third of that of their male counterparts.
In Rwanda, the issue is that women work outside mining permits, often re-working tailings or sedimentation in the rivers. Their work is literally un-documented despite the contribution they are making to their households through the activity. Rwanda is not alone in this situation.
The important element is to find ways to incorporate their numbers into the official census statistics so that we can get an even more accurate assessment of the total workforce and, therefore, the total dependents reliant on mining; as well as provide more concerted policy options for women to officially enter the sector and earn more from their labour.
I have worked in many artisanal environments in Central and East Africa but what I admire about Rwanda is that they are enforcing critical issues such as social security and health insurance.
The report highlights these achievements and encourages the government to further ensure these policies reach every mine worker.
How can mining as a sector help Rwanda achieve the ambitious targets outlined in EDPRS2 and Vision 2020 that includes creating 200, 000 jobs a year and economic growth of 11.5 percent? Do you see the country shooting those targets?
Well, mine employment has already doubled over the decade as highlighted in the report and, therefore, will undoubtedly make a major contribution to these targets. It is also shown in the report that compared to agriculture, labour mining offers more attractive earnings. These are vital contributions to the targets.
The report encourages the government not to lose sight of the ‘better job’ agenda–encouraging more educated Rwandans to enter the sector to help boost production and increase household income.
The government has already invested in tertiary education, and we encourage them to continue in this direction.
As for the growth targets, well I think this should be left to the economists.