A report has just been published which deals with the impact of the global financial crisis on the mining sector in the Southern Africa Development Community (SADC).
The Impact of the global financial crisis on eight SADC countries gives a detailed account of the nature and extent of the impact of the global financial crisis on the mining sector in Angola, Botswana, DRC, Malawi, Namibia, South Africa, Zambia and Zimbabwe. The report also identifies ways in which the impact can be mitigated.
Socio-economic impacts:
- decline in mining production and regional output;
- increase job losses;
- reduced government revenue and reserved;
- decreased social spending;
- increased poverty levels.
Potential social consequences:
- increased social tensions;
- growing frustration with governments’ inability to effectively deal with the crisis;
- pressure on local empowerment initiatives.
Mitigating against the potential outcomes
Short-term responses (2009 to 2010):
- continue to engage with mining companies in order to find optimal solutions to minimise the job losses;
- reduce the impact of the financial crisis on exploration companies by introducing reforms that include measures such as increasing tax credits;
- create an economic stimulus package that targets the mining sector that could include, amongst other things,deferring royalties, reducing taxes and providing incentives to all types of mining companies;
- improve national beneficiation, value addition and downstream processing capabilities of raw materials;
- consider the formation of an agency to be jointly managed by business, labour, and government in order to invest in the economic development of mining towns, or labour-sending areas affected by retrenchments;
- continue investing in power generation, transport networks and telecommunication infrastructure and other public works projects should be made labour intensive in order to promote job creation, increase skills transfer and enhance national infrastructure, which is a prerequisite for a well-functioning mining industry;
- fast track government mining projects;
- if possible, increase government social spending in order to assist retrenched workers and “fill the gap” left by a potential reduction in social spending by the mines;
- rein in political ambitions to drive the investment agenda.
Medium- to long-term responses (2011 and beyond):
- diversify the economy away from its dependence on a narrow and volatile commodity-dependent revenue stream
- invest in agriculture;
- promote political stability and sound macroeconomic management;
- continually invest in and expand on power generation, transport networks and telecommunications infrastructure;
- improve internal downstream processing capabilities in order to enhance the overall global competitiveness of the region;
- develop and implement environmental management programmes;
- introduce or improve national revenue mechanisms through the development of improved fiscal management laws and institutions that smooth national spending and insulate a nation’s economy from the negative impacts of volatile revenues;
- continue to work with mining companies to reduce the impact of HIV/AIDS on the mining industry.
The report has been commissioned and published by the Southern Africa Resource Watch (SARW). SARW's objective is to ensure better governance of natural resources and better use of revenues in Southern Africa.
The Director of the SARW, Claude Kabemba, said “Mining companies have used the financial crisis to withdraw from their social responsibilities, and to lay off a considerable number of workers with huge social consequences for governments and the entire region. In many cases, other measures could be found to spare workers from the possibility of losing their jobs.
“In some countries, mining companies have pushed governments to reduce taxes to allow them to remain in business. As a result, governments that are dependent on revenue from mining are experiencing serious challenges to meeting their social responsibilities.
For more press information or to request copies of the report, please contact Moratuoa on 27 (0)10 590 2600 or e-mail: This e-mail address is being protected from spambots, you need JavaScript enabled to view it
