An evaluation of the mining licensing regimes in the SADC Region : the case of Angola, Botswana and Zambia

Abstract

Mining is an important strategic sector in the Southern African Development Community region with significant contributions to the gross domestic product, employment, poverty reduction and foreign exchange earnings in many of its member countries. It is also a major producer of rhodium cobalt, chromium, tantalum, manganese, industrial and gem diamonds where some of the member countries are ranked among the top ten global producers. The limited mine development in most African countries due to insufficient investment and inadequate exploration for minerals has resulted in most African countries to compete with the rest of the world for risk capital from foreign mining companies who in addition to technical and managerial abilities have the ability to mobilise the high-risk capital needed for such investment. Consequently, most African countries revised their mining codes to cope with the stiffer competition for foreign direct investment and mounting pressure from major donors. An appropriate mining regulatory framework is one of the four factors for attracting investment and reducing investment risks for private mining companies. The regulatory framework together with mining codes stipulate the allocation, tenure, and operation of mining rights. Therefore, the licensing regimes enshrined in the mining codes are critical factor for analysing the mining regulatory framework. This paper evaluates licensing regimes for Zambia, Angola and Botswana mining codes to assesses whether they are appropriate for attracting investments and minimising investment risk for private mining companies. A six-point assessment tool was developed based on the characteristics of an appropriate regulatory framework to make the assessment. It was found that the three countries under review have favourable regulatory frameworks to attract FDI and reduce the investment risk with Botswana meeting 92% (5.5 out of 6) of the requirements, followed by Zambia with 75% (4.5 out of 6). Although the Angolan mining rights could not be explicitly evaluated it was found to meet at least a third of the requirements. In addition, artisanal and small-scale mining that are reserved for citizens in all the three countries are not expected to attract foreign direct investment.