Wednesday , April 24 2024

Exploration and production of fossil fuels controversially remains central to the development trajectory of several developing countries

The South African delegation at the World Economic Forum,recently, affirmed that the country is ready to partner with the local and global community to boost investment opportunities that will yield economic development. But the country faces a worsening energy and logistics crisis — resources critical for creating economic development, jobs and sustainable growth.

The energy crisis has already caused significant damage to the country’s economy. BusinessTech reported in July last year that economists estimated losses between R1.5 billion and R4 billion a day because small-to-medium enterprises were hurt by four to six hours of power cuts in a day.

In light of this, 2023 GDP growth was recently reforecast down to 0.3% from 1.1% in November 2022. The electricity supply problem has contributed to the unimpressive economic outlook and associated weakening investor confidence.

African resource-rich states continue to suffer from the resource curse, a term coined by scholar Richard Auty in 1993 to illustrate the confounding nature of the relationship between natural resource abundance and underdevelopment.

Since the 1970s, there has been a correlation between natural resource wealth and poor development outcomes in resource-rich countries. Some of the key manifestations of the curse include corruption, widespread poverty, limited human development, weak institutions, undermined freedom of expression and little transparency and accountability.

In the context of climate change, which disproportionately affects low-income and developing countries, reversing the resource curse is more critical than ever. This can only be achieved by strengthening institutional quality and good natural resource governance mechanisms. The most important element of sound governance in this respect is to empower local people to play a key role in decisions pertaining to extraction projects in their ecosystems.

The conclusion of COP27, the 27th iteration of the United Nations Climate Change Conference, further cemented the need to bolster institutional quality and build strong resource governance mechanisms to adapt to climate change and ensure energy justice for all.

Despite significant progress since 1990, more than 600 million people (nearly 60% of the continent) still don’t have electricity. To reverse the resource curse and ensure energy justice for all Africans, radically improved environmental, social and governance (ESG) performance has become increasingly important.

At COP27, the Global North’s responsibility for climate change was not sufficiently recognised, while disunity among African leaders to proactively deal with climate change effectively remains unhelpful. African countries do face a double-edged sword, because those with fossil fuel resources remain adamant that these should be exploited for development gain, while doing so risks those countries being locked into development pathways that crowd out renewable energy opportunities.

To realise the latter, African countries such as Zambia, Mozambique and South Africa must unlock investment into exploring for and extracting critical minerals required, such as cobalt, lithium, copper, platinum group metals, manganese, chrome, and nickel, both for a global energy transition and to confront energy deficits at home.

A combination of state-owned and multinational mining companies, such as Zambia Consolidated Copper Mines Investment Holdings, TotalEnergies and Anglo American in the respective countries have continued to show great interest in exploring and extracting critical minerals.

Unlocking this investment into African mining will require stability, security and responsible supply chains anchored on addressing environmental, social and governance risks in operating environments. Moreover, ESG integration has become the cornerstone of attracting investment and African governments should be geared towards creating a policy environment that champions genuine ESG performance in the mining sector and curtails greenwashing.

While the African continent is positioning itself to benefit from the green energy transition, the exploration and production of fossil fuels controversially remains central to the development trajectory of several developing countries such as South Africa, Zimbabwe and Mozambique.

Fitting with the Mining Indaba theme, Good Governance Africa (GGA) will present insights into mechanisms that may reverse the resource curse and enable sustainable and stable supply chains to meet a low-carbon future through an integrated ESG approach.

The GGA’s natural resource governance and human security and climate change programmes will present recent and ongoing research work in Zambia, South Africa, Zimbabwe and Mozambique. The work on Zambia explores the potential role of copper mining, not only for cementing Zambia’s position in the critical minerals supply chain, but also for catalysing sustained industrialisation in that country.

The work in Mozambique, Zimbabwe and South Africa addresses the question of how fossil fuel exploration and production affects climate change mitigation and adaptation efforts, and what effect it may have on existing resource curse dynamics. The overarching question is what justice means for different stakeholders when the world speaks of a just energy transition.

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