By 
During much of the twentieth century, the African mining sector was seen by many as an enclaved economy, extracting resources to the benefit of the global economy while offering little to meaningfully or sustainably advance social and economic development on the continent. Yet recent mining industry restructuring has fuelled fresh hopes that the sector now carries the potential to drive industrialisation and structural transformation across Africa’s 24 low-income countries. However, empirical evidence from this country group has been lacking, with a focus instead on middle-income African countries (in particular South Africa) and the historical experiences of today’s high-income countries. So what relevance, if any, does the idea of the mining enclave continue to hold for Africa’s poorest areas today?
Since 1980, the World Bank has loaned more than $1 billion to low-income country governments across Africa to liberalise, privatise and deregulate the mining sector, resulting in the en masse arrival of transnational corporations (TNCs) to lead a foreign-controlled, industrial mining economy across the continent. The process has been theoretically sustained, in part, by an emergent group of Global Value Chain (GVC) scholars, who take ‘as their point of departure the flaws of the literature on the enclave nature of extractive industries in Africa’ (Ayelazuno, 2014: 294). The enclave thesis was initially established by Prebisch (1950) and Singer (1950), who used a centre-periphery framework to argue that capital intensive resource extraction in the global periphery has little articulation with local and national economies, and that the benefits accrue largely to the foreign countries and TNCs providing the industrial technology and capital.
Two of the most influential policy papers from the GVC literature challenging this thesis, Kaplinsky et al. (2011) and Morris et al. (2012), observed that the global mining industry has recently restructured away from vertical integration and towards outsourcing the supply of goods and services to independent firms. Historically, so the argument goes, foreign-managed industrial mines in Africa were enclaved productive structures, which tightly managed and controlled all of their activities internally. Yet today, by subcontracting to and procuring from domestic firms and entrepreneurs, these same mines can ‘provide a considerable impetus to industrialisation’ (Morris et al. 2012: 414). For Kaplinsky et al. (2011: 29), ‘the enclave mentality in low–income [African] economies is an anachronism’.
Yet to what extent does this claim about the end of the African mining enclave hold up in reality? This was the motivating question behind my recently published article, which explored the issue through a case study of Twangiza, an industrial gold mine located in South Kivu Province of the eastern Democratic Republic of the Congo, and managed by the Canadian corporation Banro. The answer, in short, is that the empirical data painted a very different picture to the expectations laid out by the theory.
While Banro did outsource a range of activities and services at Twangiza to independent firms, as foregrounded in the GVC literature, it internally managed the procurement of its mid- to high-value supplies – which heralded almost entirely from the Triad states,[1] South Africa and Australia – and subcontracted mostly to foreign firm subsidiaries. Banro only outsourced procurement to Congolese suppliers at the lowest-value end of the chain, mostly for office equipment and stationery, worker safety equipment and basic construction materials (such as steel bars and concrete). As elsewhere in the procurement chain, none of these low value goods were manufactured or procured domestically.
In the realm of subcontracting, in 2017, Banro subcontracted 15 firms to provide 13 different activities and services to the Twangiza mine. Of these firms, outside of the provision of labour, only two were Congolese. This was despite the presence of existing Congolese firms operating in the same areas (such as security, catering, road maintenance, fuel and transportation). Considered together, foreign firms captured an estimated 87 per cent of all value accruing to Twangiza’s subcontractors. In addition, some foreign firms had used their arrival through Banro to consolidate and expand their presence in the Congolese economy, by securing further subcontracts in the country’s mining and other sectors.
Moreover, while the position of labour is not considered by GVC enthusiasts, it proved highly relevant in this case, as corporate outsourcing at Twangiza had altered the nature of the relationship between workers and managers, as well as between different groups of workers themselves. Subcontracting at Twangiza led to the mine’s workforce being split across 15 different firms. This high level of organisational fragmentation weakened the collective power of workers by reproducing and further entrenching pre-existing social divisions between them. Individual firms recruited along certain class, ethnic or territorial lines, that functioned to hinder worker organisation and unity across them. This helps explain the near total absence of labour militancy at the mine, despite the fact that a large segment of the mine’s workers experienced low and declining wages, and poor access to benefits.
While the case of Banro’s Twangiza mine reflected global mining industry restructuring away from vertical integration and towards corporate outsourcing, there was little evidence to suggest this restructuring had invalidated the foundations of Prebisch and Singer’s original enclave thesis. On the contrary, the general picture seemed to confirm this thesis, whereby resource extraction in the periphery has few domestic linkages and is generally disarticulated from local and national economies due to the periphery’s dependence upon external technology and industrial capabilities in the centre.
Drawing on these findings, the wisdom of earlier neoliberal mining sector reform is questioned. Rather than taking a laissez-faire approach to mining industrialisation, African governments would be better served adopting interventionist measures via pro-labour and industrial policy to counter the observed twin tendency of corporate outsourcing to marginalise domestic firms and weaken the collective strength of workers through the organisational fragmentation of labour.
[1] The EU, the US and Japan.
References:
Ayelazuno, J. (2014) ‘The “New Extractivism” in Ghana: A Critical Review of its Development Prospects’, The Extractive Industries and Society 1(2): 292–302.
Kaplinsky, R., M. Morris and D. Kaplan (2011) ‘A Conceptual Overview to Understand Commodities, Linkages and Industrial Development in Africa’. London: Africa Export Import Bank.
Morris, M., R. Kaplinsky and D. Kaplan (2012) ‘“One Thing Leads to Another”: Commodities, Linkages and Industrial Development’, Resources Policy 37(4): 408–16.
Prebisch, R. (1950) ‘The Economic Development of Latin America and its Principal Problems’. New York: Economic Commission for Latin America.
Singer, H. (1950) ‘U.S. Foreign Investment in Underdeveloped Areas: The Distribution of Gains Between Investing and Borrowing Countries’, The American Economic Review 40(2): 473–85.
Picture credit: Ben Radley. It shows cranes at Banro’s Twangiza mine that look out across the surrounding hills.
About the author:
Ben Radley is a PhD student at the International Institute of Social Studies in The Hague. His research interests centre on the political economy of transnationals and development in low–income African countries, with a focus on the DRC. He’s a Leverhulme Trust grantee, and an affiliated member of the Centre of Expertise for Mining Governance at the Catholic University of Bukavu in the DRC.
