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Lessons from Afghanistan – Nairametrics

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Earlier in the month, the Islamic fundamentalist group known as the Taliban seized control of Afghanistan and emerged as the new leadership of the conflict-ridden country. Since their emergence, many have speculated about what the fate of the large expanse of mineral resources in the country will be.

Afghanistan owns one of the world’s richest untapped deposits of rare-earth and critical metals. The country sits on the Tethyan Metallogenic Belt (TMB) which stretches from Europe through Turkey, Afghanistan and Iran, considered by geologists to hold one of the highest concentrations of metals and minerals in the world.

Afghanistan is noted to have extensive deposits of lithium, gold, iron ore, copper, marble, bauxite, uranium chromium, lead, zinc, marble and rare earth metals estimated to exceed one trillion dollars. These rare-earth metals are also critical for the production of batteries, military hardware, various electronic devices and sophisticated computer chipsets.

In fact, an internal U.S. Department of Defense memo in 2010 reportedly referred to Afghanistan as “the Saudi Arabia of lithium,” meaning it could be as vital for the global supply of the battery metal as the Arab country is for crude oil. According to the International Energy Agency (IEA), the global demand for lithium is projected to skyrocket 40-fold above 2020 levels by 2040, along with rare earth elements, copper, cobalt, and other minerals in which Afghanistan is naturally rich.

Investment One

Afghanistan is also estimated to hold nearly 1.6 billion barrels of crude oil and 16 trillion cubic feet of gas. This means that with its deposit of both oil and gas and other minerals that are critical for clean energy deployment, the country stands to profit significantly from both the fossil fuel market and the energy transition.

Yet it is hardly making any progress. Due to poor security, incessant conflicts, deficient infrastructure, weak legislation, lack of a proper legal framework and corruption, Afghanistan has been unable to benefit from its vast expanse of rare earth minerals for decades, whether internally or through the involvement of foreign investors. As a result, the mining sector currently contributes only between 7 and 10 percent of Afghanistan’s GDP.

With poverty levels at 54.5 percent according to World Bank statistics, the country is listed as one of the world’s poorest countries. To properly exploit its available resources on a large scale, the country requires expertise, yet its professionals are leaving in their droves to neighbouring countries and the West, even more now that the Taliban is in power. Foreign investors are also not willing to invest in such a volatile environment.

The situation of Afghanistan is a cause for concern for Nigeria, as there are a number of striking similarities. Nigeria has in the past decade become a conflict-ridden and security crisis environment. Jihadist violence is spreading in the Northeast, with violent attacks linked to Boko Haram, ISIS and ISWAP becoming the order of the day. Communal clashes between invading herdsmen and local farmers have also left in their trail, many dead and maimed.

According to a United Nations Development Programme (UNDP) report, 12 years of conflict in northeast Nigeria has caused the deaths of some 350, 000 people, the majority of whom are children below the age of five. The Global Terrorism Index already lists Nigeria as the third country in the world most impacted by terrorism, only after Afghanistan and Iraq. Also, like Afghanistan, Nigeria does not have the required social and industrial infrastructure. With a lack of basic amenities for its citizens and absence of industrial installations to properly process its own natural resources, the touted “giant of Africa” is dependent on other countries, some much smaller than itself, to provide social amenities and process its natural resources.

Like Afghanistan as well, Nigeria’s legislation is weak and its legal infrastructure for the energy sector, porous. Much like Afghanistan, the country is corruption-riddled with human rights abuses and muffling of free press replete. Like Afghanistan’s mineral sector, Nigeria’s oil and gas sector contributes only 9 to 10 percent to its GDP, the least among oil-producing countries. Angola, the second-largest oil producer in Africa after Nigeria, has their oil sector contributing up to 50 percent to their GDP.

Ruefully, Nigeria reflects Afghanistan in many ways, and the Nigerian energy sector is starting to suffer for it. With weak legislation, uncertain laws, corruption, insecurity, human rights abuses and the absence of the rule of law, many investors are pulling out. Major multinational oil companies have also cited insecurity and poor legal framework as reasons for divesting. Like Afghanistan too, Nigeria is losing its professionals to other countries in search of more safe, secure and economically viable countries.

A close examination of the trajectory of Afghanistan and how the country has become severely underdeveloped reveals that Nigeria is in the same muddy waters, as despite years of owning enormous natural resources, the country has only become worse for it.

If urgent institutional reforms and overhauls are not undertaken to turn the tides, the country may end up a graveyard of natural resources.

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