(PROGRESS) Mining costs Ghanians more than it benefits them

Why mobile money is popular in Africa, but not in the US
banking mining resource curse cost benefit ground rent

Mining costs Ghanians more than it benefits them

African consumers have leapfrogged traditional banking systems by using mobile phones while their academics speak up for making mining benefit everyone. We trim, blend, and append two 2012 articles from (1) Christian Science Monitor, Jan 13, on mobile cash by C. Hopkins; and (2) Joy On Line, Jan 17, on mining.
by Curt Hopkins and by Joy On Line

Why mobile money is popular in Africa, but not in the US

How cool would it be if we could pay for our meals with our phones? For several years now, Western technology commentators and analysts have proclaimed the imminent rise of mobile cash -- the ability of users to conduct financial transactions using an application on their phone. And for several years now, Western technology users have remained uninterested.

But in Kenya, the futuristic world of mobile money is accepted by most Kenyans as the norm; that country’s mobile applications industry is booming. There are, at last count, 17 mobile cash companies in Kenya alone. Why is mobile money more acceptable in Africa than in America?

The slow growth of mobile cash in the US comes down to Americans’ trusting relationship to banking institutions, despite recent protests. The banking system is very much accessible to Americans, unlike in many African countries. In most parts of Africa, where mobile cash is extremely popular, it is often the only way, excepting paper money, to buy a fridge.

In Africa, Internet penetration and use of e-banking and e-commerce is low, so mobile money fits the bill; it has been going gangbusters for years. Mobile money offers a way for the unbanked to bank their money. Even among those who use a traditional banking institution, most banked people in urban Kenya prefer mobile money for its convenience and speed.

Mobile money has leapfrogged the payment card industry, which requires expensive ATM and Point of Sale (POS) networks to function. ATMs and POS Terminals require regular maintenance and, with ATMs, regular liquidity balancing. By leveraging third party retail outlets and making the phone the primary means of exchange, mobile money bypassed the need to distribute ATMs and POS Terminals.

Mobile cash facilitator M-Pesa and its competitors have to make their services as responsive and simple as possible to accommodate a wide spectrum of user needs, education levels, and technology types.

For Americans, there is too much complexity and too little utility for mobile money. There is no shared platform for payments and most of the current offerings are merely wrappers for credit cards. And, most importantly of all, in the Western world, mobile cash is not a solution to a problem.

To see the whole article, click here .

JJS: A solution to an invisible problem -- that is one reason why proponents of a tax on land or other means of recovery of the socially-generated value of “rents” have such a hard time advancing their cause. It’s hard to connect “land dues” to displacing other taxes, curbing sprawl, raising wages, channeling investment into useful enterprise, etc, eventho’ that has been the track record of the land tax.

Perhaps if proponents were to downplay the tax aspect and play up the notion of sharing any recovered rents -- a la Alaska’s oil dividend -- then they might get further with the public. They’d not be alone in issuing such a call. Sharing the rental revenue from resources is a demand that some prominent Africans do on occasion make.

Mining activities under microscope of New Year School panellists

At the symposium on “’Yellow Gold’ management for the past half century: Implication for the ‘Black Gold’”, opinions diverged.

While the Chief Executive Officer of the Ghana Chamber of Mines, Dr Tony Aubynn, contended that mining contributed to the national economy, other panelists at the 63rd Annual New Year School and Conference at the University of Ghana declared that mining has been more costly than beneficial to the nation.

The Co-ordinator of the Third World Network (TWN), Africa, Dr Yao Graham; a senior lecturer at the Department of Economics of the University of Ghana, Dr Daniel Twerefou, and the Executive Director of WACAM, Daniel Owusu-Koranteng, were unanimous that the cost of mining to the nation far outweighed its benefit.

Dr Graham said sometimes it was better to leave minerals unmined, especially if the mining would be more costly to the environment and communities; further, the state does not well regulate mining companies. Also, he stressed the need for the revenue accruing from mining to be distributed equitably.

When Owusu-Koranteng revealed that mining companies paid 50Gp per annum as ground rent for a one-kilometre square of land, the audience responded with spontaneous remarks of disapproval.

Mr Owusu-Koranteng said that as mining shifted from underground to surface, that created lots of environmental problems in mining communities.

He said in assessing the cost and benefit of mining, it was important to also consider the destruction of the cultural and spiritual heritage of mining communities that were intangible but invaluable.

Dr Twerefou agreed it was important to put value on the social and environmental impact of mining and not just the benefits, adding that the impact of mining was inter-generational.

He observed that only 22 per cent of revenue accruing from mining was injected into the national economy as against about 98 per cent from cocoa.

To see the whole article, click here.

JJS: And if African governments were to distribute natural resource revenue equitably, then individual Africans could receive their share on their phones -- and they’d be way ahead of ordinary citizens in America.

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Editor Jeffery J. Smith runs the Forum on Geonomics and helped prepare a course for the UN on geonomics. To take the “Land Rights” course, click here .