THE FOCUS IN AFRICA ISSUE | 2020
LEGAL & BUSINESS
DOING BUSINESS IN A post-Covid-19 Africa Even before the global Covid-19 pandemic, and the implementation of stringent lockdowns and other measures, in response, Africa’s mining and natural resources sector faced significant challenges. By Warren Beech*
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ome of the challenges include policy and regulatory uncertainty, uncertain commodity cycles and prices, ageing and unreliable infrastructure (roads, rail, electricity and water), loss of investor confidence, ageing mines and mining complexes that are extremely expensive to keep running, stakeholder demands – particularly from communities around mines – illegal mining, and concerns surrounding security and corruption. Each year, Africa markets itself to the investment community as being ‘open for business’; however, the various challenges have continued to plague the mining and natural resources sector, but there have been some positive, success stories, along the way – particularly in those countries that support their mining and natural resources sector through the implementation of a financial, regulatory and business environment that makes it easy to do business. Examples include various countries in West Africa, Botswana and Namibia. The global Covid-19 pandemic has changed the landscape, substantially, and, possibly, forever. Several of the positive lessons learnt, particularly those relating to hygiene practices, may be in place for a long time, but the negative consequences of the Covid-19 pandemic are likely to include significant increases in unemployment, which will exacerbate an already desperate socio-economic landscape and may mean that the drive to reopen economies and provide employment will overshadow other lessons learnt from Covid-19. The pandemic has, however, also opened up opportunities for stakeholders in the mining and natural resources sector to do things differently, more efficiently, and more cost-effectively (one of the key concerns regarding the sustainability of mining operations across Africa). The pandemic has created the natural opportunity to reconsider, and possibly accelerate, the transition to mechanisation, automation, and the implementation of structures and business models that rely on the internet of things and artificial intelligence.
Nationalism and nationalisation In the post-Covid-19 landscape, those countries that make it the easiest to invest and do business are likely to not
only survive, but indeed thrive. The mining and natural resources sector cannot be viewed in isolation, because it is generally the ‘engine room’ of the economy, and it is a good barometer of the health of the economy in each country. The sector also typically plays a critical role in transformation and development, and if it is not performing properly, this has a knock-on effect on most, if not all, other sectors. The mining and natural resources sector is multifaceted, and requires a strong network of associated industries and sectors to ensure that it can operate efficiently. Where the mining and natural resources sector is underperforming, it often results in significant adverse consequences (including the failure to deliver on socioeconomic expectations), which often manifest themselves in community unrest and disruption, and provide a basis for stakeholders to argue in favour of resource nationalism. In some instances, underperformance is used to support the call for nationalisation of the mining and natural resources sector. Africa was facing strident calls for nationalisation of its mining and natural resources sector, even before the Covid-19 pandemic, and it is likely, because of the significant and deep socio-economic impact of the pandemic, that many governments will be challenged to move across the spectrum of nationalism, to nationalisation. Many African countries that have vast mineral resources have implemented resource nationalism measures, incrementally, to ensure that investors are not scared off, but will in any event be locked in by their investment, which allows further measures to be implemented, in support of resource nationalism, over time.
Warren Beech has over 20 years’ experience as a lawyer in the mining industry
Mining legal framework One of the most significant challenges, prior to the Covid-19 pandemic was business integrity, corruption and irregular processes. It is likely that these challenges will remain after the pandemic and it is possible that the measures that have been
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