By Dr. Suleiman Walhad
July 10th, 2023
Like the rest of the continent, the Horn of Africa States enjoys abundant natural resources and a potential for high economic growth. It has been growing at an average rate of 5 percent per year over the past decade. Of, course the bigger economies such as that of Ethiopia were growing over 7 percent per year and this has been one of the highest growth rates in the continent.
The region has resources which include among others, minerals, which are required for future economies such as diamonds, cobalt, copper, gold, lithium , platinum and many others. It also enjoys a large youthful population, which needs to be trained, educated and employed positively. Many of the mineral resources and, indeed, its other natural food resources, such as its agricultural lands and marine resources remain unexploited.
Despite these vast resources, the region remains marked as one of the poorest in the world and is always at others’ mercies. It is, thus natural to ask oneself, why the region despite its bounties remains poor, a paradox considering that it has a large potential to enable it to become one of the richest in the continent and the world?
Is it the future possibilities of the region that are responsible for its continuing impoverishment, where others do not want it to rise and hence keep it conflicted using many of its regular disharmonies – the clan/tribe competition for power and inciting some of the politicians that everyone else is against them?
Why have the regional states not been able to attract multinationals to the region to invest? Why haven’t they been able to lay down formidable and unchangeable laws that protect not only every individual but also the rights and duties of investors in the region?
Most multinational corporations and, indeed, every investor looks out for possibilities of protecting its hard-earned incomes and returns, including possibilities of repatriation of its capital and profits. Nations compete over the rivers of global funds that move around the world looking for opportunities. Why is the region blind to these resources? Is this due to its ignorance and hence baseless arrogance that is responsible for its inabilities to attract investors to the region?
Many would, in fact, blame multinationals exploiting the region, but it is far from the truth. It must indeed be due to the region’s inabilities to exploit these resources. There is no free bread anywhere and the region must readjust its attitudes on how they want to exploit potential resources, while protecting its rights, and enabling others to have their rights too. At the end of the day, it must be able to reform not only its legal systems but its attitudes towards others living in the region. It does not have to make every adventurer in the region as the enemy but as a potential investor and employ them positively.
A multinational investor must be made to feel safe under the laws of the land to exploit the resources of the region, but they should also be made to re-invest in the region and hence contribute to the development of the region.
The region’s politicians must be made to understand that while working with others, they must put the interests of their countries first instead of their personal enrichment and ambitions. This is a perfect way for exploiting the resources of the land when the politicians become part of the looters of the resources of the region. There must be a bottom line under the legal systems of the region, prohibiting politicians from crossing and this can only be done through the institution of a strong legal system, which cannot be easily breached and/or changed by politicians as they wish, including limitations to the rule of one person in the country, irrespective of his/her abilities and contributions and/or clan/tribe.
The region has so far been unable to exploit its resources one way or the other and this is the main cause of unemployment and/or underemployment in the region and hence the continuing migration out of the region and the unending conflicts over the meager available resources.
Processing the regional mineral resources into semi-finished products and eventually finished products, in the region, would add on to the economies of the region. Indeed, the African continent is touted as the next frontier of economic development, and it can grow faster than even Asian countries but only if the right mindset was put in place. The region today misses so many opportunities, which include not only packaging its grains and luxury items such as coffee and/or tea but also its meat industries. Indeed, it exports its animals on the hoof and hence misses on opportunities to take advantage of the byproducts of the animals in addition to their meat. These include among others using its hides and skins for leather production for clothing and/or shoes and other needs. Taking advantage of the bones of the slaughtered animals or many other parts of their bodies is also missed, and they would have contributed to billions of dollars to the economies of the region. The region hardly exploits its blue economy despite its vast marine economic zones.
The region must be able, and it would be able to do so, if it put its mindset, to putting measures under the law requiring that its minerals and/or its other natural resources be first processed at the source and there are many multinationals willing to do so, be they from the West or the East. The Horn of Africa States should be able to exploit its mineral resources, which today is generally absent from its economic pie.
The new industries of the world require many of the minerals available in the region, which have industrial applications. These include among others lithium, platinum, copper, manganese, gold and many others, which can add to the economies of the region billions of United States Dollars, if the processing at the source, was also part of the legal contracts with the multinationals that need and require them.
Prices could be adjusted to attract potential investors, for it is profits that move corporations in the first place. The region must relearn how to deal with corporations and offer them opportunities which they cannot decline as long as they respect the laws of the land and the local politicians are made to respect the laws themselves, in the first place.
The region’s natural resources remain underexploited today and the potential for extracting and exploiting them is huge. But the region’s politicians, academia and civic societies and indeed, its elite must be made to understand and respect the possibilities of the region.
The region must work hard to make its policy makers understand that they have at their disposal opportunities that would make the region one of the richest and most sought-after regions of the continent and the world. The region has what it needs, and its leadership must work towards exploiting these resources to transform it from its current poverty status to a wealthy region that is the pride of its future sons and daughters.
The region’s member states must be able to face the tax challenges of the region, its fiscal policies and, indeed, its approaches to investments and investors from beyond the region’s frontiers. Since the region does not possess the local capital resource base, it must put in place legal infrastructures that attract others to invest in the region and if necessary, even import foreign labor and expertise into the region. The processes can be studied and processed according to the needs of the region.
The region still suffers from it old problems – the clan/tribe competition for political power, low skills, underemployment, growing population and lack of opportunities for employing a growing restless youth, foreign interferences and imported terror ideologies and many others. It needs new solutions for these old problems which are mostly to be based on transforming the economies of the region through the exploitation of its mineral and other natural resources using reformed legal infrastructures that not only assure the rights of individuals in the region but also the rights of potential investors irrespective of the source. A new approach is needed, and the region must forgo the past attitudes and build on new ones. It is the way of the future in a world which is becoming more of a village than its vast spaces of the past.
