Page 6 - 25 Reasons

A GLIMPSE INTO THE

FUTURE

he year is 2044 and South Africa Mining as a driver of economic growth is
is firmly the fourth-largest Economist Thabi Leoka highly contested because it is often a
economy on the continent after looks into the future dominant sector in many resource-rich
Nigeria, Ethiopia and the countries, where it also often hinders the
Democratic Republic of Congo. It and examines mining’s development of other activities.
Tremains the most developed. However, adopting the right policies
The miraculously strong economic growth changing role in the attracted investment that had previously
the continent experienced in the preceding 10 declined significantly. According to a report
years, led by the diversification of economies economy over the by Citibank, in the late 1980s, South Africa’s
away from a single commodity and the share of global mining was 40% with about
effects of the African Continental Free Trade next 25 years and 880 000 jobs linked to the sector. By 2014,
Area (ACFTA), helped grow many struggling it had declined to 4.5% with fewer than
African countries. where the current 500 000 jobs.
After nine wasted years of stagnant growth, The mining sector plays a pivotal role in the
high unemployment and the burden of the trends are leading us industrialisation and economic transformation
twin deficit, South Africa adopted stringent across sectors, of resource-rich countries, stimulating inclusive
reforms. and sustainable growth. Beyond the profit
The most effective was the restructuring of as well as the role motive, mining companies are looking for
the economy to one that was more inclusive. stability, security and certainty.
Before reforms, the fastest-growing sector was the fourth industrial There is a symbiotic relationship between
the finance sector, which is a low labour- the mining and manufacturing sectors, and
intensive industry that typically absorbs highly revolution and policies that encouraged manufacturing from
skilled labour. what is mined and exporting finished goods
To achieve sustainable economic growth, the technology will play in helped both sectors.
highly labour-intensive sectors such as mining, The manufacturing sector had declined in
Thirdly, unemployment leads to social ills ‘‘
manufacturing and agriculture had to be tomorrow’s economy terms of its contribution to both economic
prioritised. These sectors are tradeable sectors growth and employment.
that benefited from the ACFTA. Over the years, The manufacturing sector accounted for
trade with Europe declined as trade with the about 20% of GDP in the 1990s. By 2019, the
rest of the continent improved. sector accounted for only 13% of GDP.
Key to restructuring the South African
Similarly, the mining sector accounted for
economy was the prioritisation of the high about 12% of GDP in 2001 to about 7% in
unemployment rate. The socioeconomic costs Economic growth is 2019 – a decline of 33%.
of unemployment were threefold. Firstly, Factors contributing to this decline include
unemployed South Africans represent lost good for job creation, increases in labour costs, higher costs of
economic output today. Secondly, unemployed electricity supply, high import costs and policy
workers were not acquiring the necessary but equally important uncertainty.
experience and skills that would contribute to The fourth industrial revolution changed the
their productivity in the future. This foregone for jobs is that growth way sectors operated. It was characterised by
future growth would have been costly. technologies that integrated the physical,

robotics, artificial intelligence, nanotechnology
that accompany a loss of hope. These social must increase digital and biological spheres. It featured
ills include crime, disengagement and a lack of productive capacity of and the internet of things.
investment in one’s future wellbeing. Labour graduated from low-skilled to more
The economy was in ICU, with economic sectors that have the technologically advanced as machines replaced
growth having averaged at less than 2% some jobs. The consequences were not
between 2010 and 2019. The unemployment potential to absorb outright job losses, but, as with the third
rate, at more than 27%, impeded any growth. industrial revolution, workers moved to other
Economists track the relationship between labour on a large scale areas. Mining was less extractive but more
jobs and growth using Okun’s law, which says collaborative.
that higher growth leads to lower Mine workers had long complained about
unemployment. Economic growth is good for the moving goal posts of policy. Policy
job creation, but equally important for jobs is tradeable sectors – manufacturing, mining and uncertainty led to a loss of investment over
that growth must increase productive capacity agriculture. South Africa adopted export- the years, however, policy certainty brought
of sectors that have the potential to absorb oriented strategies that increased the relative back the much-needed investment. Electricity
labour on a large scale. profitability of producing tradeable goods. This supply stabilised after the completion of the
The high unemployment and low growth generated economic growth by pulling labour Medupi and Kusile power stations, and the
rates were the result of the shrinkage of the into productive activities. inclusion of renewable energy lowered the
6 ANGLO AMERICAN 25 REASONS TO BELIEVE