VALUE ADDITION TALKING
The African governments have to adopt developmental economic policies which will place the African economy on a production-lead growth trajectory in order to tackle the continent’s developmental challenges of unemployment, inequality and poverty. A particular focus is to ensure greater local processing of Africa’s abundant natural resources. Africa is host to considerable mineral reserves of strategic significance to the global economy, with an estimated in-situ value of trillions of USA dollars making the continent wealthiest mining jurisdiction . Africa can be defined as an economy with low levels of beneficiation, in the most of its minerals are exported as ores or semi finished minerals rather than high value intermediate to finished products. The value addition to raw minerals is aiming at providing a strategic focus for Africa’s minerals industry in of developing mineral chains and facilitating the expansion of beneficiation initiatives in the country, up to the last stages of value chain. In economics, the difference between the sale price and the production
cost of a product is the value added per unit. Summing value added per unit over all units sold is total value added. Total value added is equivalent to Revenue less Outside Purchases (of materials and
services). Value Added is a higher portion of Revenue for integrated companies, e.g., manufacturing companies, and a lower portion of Revenue for less integrated companies, e.g., retail companies.
The 2008 Nobel recipient for economics, Paul Krugman supports value addition of commodities from producer countries. It is possible to industrialize by leveraging on a country’s natural resources with government driving the beneficiation initiative .The NORDIC countries benefited from value addition concepts. Africa historical mineral industry strength, there is a potential to attract and develop technological excellence in mineral industries. This involves a range of activities including large —scale capital intensive activities such as smelting and refining as well as labour—intensive activities such as craft jewellery and metal fabrication such as machinery and equipment manufacture, research.
There are some constraints to beneficiation as we have limited access to raw mineral for local benefician as the bulk of current producers remain geared towards export of raw minerals, long term contracts
with their international clients .The international price determination of raw and intermediate minerals,
which do not discount proximity to production further compound the requisite access to input minerals for local addition. Most African countries must geared up encouraging mining giants to develop smelting and refining unlike to export raw minerals
The benefician strategy provides a framework that seeks to translate the country’s sheer comparative advantage inherihited from mineral resource endowment to a national competitive advantage. The value addition concept is aligned to a national policy which will enhance the quantity and quality of exports, promote creation of decent employment and diversification of the economy. The governments in Africa should keep calling for paradigm shift in mineral development, strategic investment in assets to maximize long term growth beneficiation, enhance value exports and increase sources for consumption of local content
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