GOVERNANCE - 24 DEC 2018

The African Party - Is Australia invited?

The African Party - Is Australia invited?
Lagos State Governor, Mr. Akinwunmi Ambode (2nd right), with Australian High Commissioner to Nigeria, Mr. Paul Lehmann (middle) during a courtesy call by the Australian High Commissioner in Lagos.

Back in the late 19th century, Europe began and brought most of Africa into colonial rule. It was known as "The Scramble for Africa", as European countries competed for resources on the African continent.  

In the quest to organise this scramble, the Berlin Conference was initiated to formalise and soothe any colonisation tension, as European nations such as Britain, France, Belgium, Spain, Portugal and Germany met in Berlin to negotiate their claims to territories in Africa. The end result was a partitioning of territories’ in Africa amongst European nations as they sought natural resources in Africa to fuel the industrial boom in Europe.

Though the Scramble is now history, it appears that eyes on Africa's resources have taken another dimension. However, this time around, the players are not restricted to Europe. This new scramble has an economic face and has seen an influx of financial interest including trade and FDI from the United States, United Kingdom, and more recently, loans from China. Chinese loans to African governments more than tripled from under $10bn in 2010 to $30bn in 2016. 

The renewed interest in Africa is not surprising. 

According to the United Nations, Africa has a reported population of over 1 billion people. With more than 50% of the world’s global population increase to occur in Africa by 2050. According to PwC, Nigeria and Egypt will be in the top 15 largest economies in the world with Nigeria growing at 4.2% between 2016 and 2050. 

Interestingly, there seems to be another nation interested in joining this African Party – Australia.

 

Masters of extraction

Australia announced its interest at an Africa Week event held in Perth, Australia. Specifically, it highlighted the need to explore more options in the African continent in sectors such as mining, trade, and education. Also, in Australia's 2017 Foreign Policy White Paper, the Australian Government expressed a desire to diversify its commercial activities in Africa due to its burgeoning middle class, and an increase in demand for goods and services in a continent where Australia’s extractive sector is a major player.

Australia has a massive extractives sector, it is one of the leading mining countries in the world, exporting more than half of the total iron ore exports in the world. With cutting edge technology and expertise in this sector, the extractives sector is one to look out for if Australia seeks to expand its business footprint in Africa.

In this area, Australia seems to be doing well, as it has over 200 exchange-listed companies which have operations in over 30 countries in Africa, and the continent is Australia’s largest market for Australian Mining, Equipment, Technology and Services (METS) outside of Australia.

One of these companies is KCM Mining Limited, located in Kogi State, which is the subsidiary of Kogi Iron Limited, an Australian based company that has been actively exploring for iron ore and steel for close to a decade and seeks to reduce the importation of steel into Nigeria via its subsidiary. KCM Mining presently holds two mining licenses for its Agbaja iron-ore and steel and was granted an additional mining lease covering four kilometres valid for a renewable period of 25 years. 

 

What is the implication of all this for Nigeria?

Australia is also an acclaimed world leader in agriculture with expertise in activities such as soil fertility, and animal husbandry etc. Australia also is responsible for feeding over 60 million people in the world annually.

Crucially, agriculture is the poster child sector for the Buhari government. The Federal Government has highlighted the agricultural and the solid minerals sector being part of the six priority sectors indicated in the Economic Recovery and Growth Plan (ERGP).

If we are to compete globally, Australia's interest in Africa could boost or hamper our chances depending on if we learn or compete with them. The Australian High Commissioner to Nigeria announced at the start of the year that trade between the two countries in 2016 and 2017 was worth about ₦100bn. However, the more important question is who is winning from the increase in trade. There needs to be a transfer of technology and expertise from Australia in both the minerals and agriculture sectors. There was news in 2015 of Australia partnering with Obafemi Awolowo University in agricultural development, but it's not clear what has been achieved. 

Looking at the government's attitude towards the African Continental Free Trade Area agreement, it is clear that there is a Nigeria first mentality. This is what the Nigerian government should employ when working with Australia and indeed other foreign countries - create a conducive environment for business but ensure Nigerian wins. Only then will we avoid another one-sided extraction of our continent's resources and sovereignty.  

Kenneth Chijioke-Keme

Kenneth Chijioke-Keme

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