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INSIDE AFRICA

Africa's Natural Wealth

Aired April 28, 2007 - 12:30:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

ISHA SESAY, GUEST HOST: Hello, I'm Isha Sesay. This is INSIDE AFRICA, coming to you this week from Nigeria. Today, we're going to explore some of Africa's natural wealth. From oil to diamonds, gold, rubber and precious stones, Africa has it all. It is one of the richest continents in the world, and yet look around and you'll see much of it remains poor.
Right now, we're in Lagos. This country sits on top of the world's largest oil reserves, yet 70 percent of the population lives on less than a dollar a day. So why the disparity? We tried to find out.

(BEGIN VIDEOTAPE)

SESAY: There will soon be a new man at the top in Nigeria. But what will it mean for the country's poor? Like those in the Niger Delta, surrounded by vast oil wealth, they're among the nation's poorest people.

CHIEF E.K. CLARK, IJAW ETHNIC NATIONAL: In every situation, the man who produces the oil, the wealth of the country should be in a better position. Like a man in Texas, a man in California. But here, we are the poorest. There is no water to drink. There is no light. There is no hospital. It's only in the Delta that there is no (inaudible).

SESAY: But poverty is not confined to the Niger Delta. High unemployment and inadequate investment in education, health care and infrastructure means life for the average Nigerian is hard. The country has generated billions from its oil deposits, but somehow it hasn't benefited the masses.

Political analyst Pat Utomi believes the system is to blame.

PAT UTOMI, POLITICAL ANALYST: In Nigeria, unfortunately, because few people are employed as a result of direct gains from oil, and because of (inaudible) public policy that has not really created wealth, we find that most of the people are very, very poor in spite of all of it.

SESAY: Some economists believe the gap between rich and poor has never been greater, despite the fact that Nigeria is the world's sixth largest oil exporter. It's estimated that 90 percent of the nation's wealth sits in the hands of 10 percent of its population. Some feel the situation has explosive potential.

UTOMI: I have preached for many years this coming anarchy, this revenge of the poor, and it seems to me some psychology of the few who have access to power -- Nigerians are docile, Nigerians will never react -- and you just think, this is a time bomb ticking away. And the day that it happens, it will catch all of them (inaudible).

SESAY: The nation's president-elect, Umaru Musa Yar'Adua, has vowed to kick-start the economy and improve life for all. Something that would be welcomed here in large numbers.

(END VIDEOTAPE)

SESAY: Earlier, I spoke to Nigerian political activist Ledo Miki (ph) about poverty in the Niger Delta and of concerns about government and oil company policies.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: The Niger Delta today, it has become a place where you get the worst forms of poverty that you can even imagine. And where you put it where there is a backdrop of the resources that it sits on top, then you know it's an area of huge injustice. And that has been what has been the underlying problem in that area. People have no water, no pipe water, no electricity, no schools, and even the access to the basic necessities of life do not exist. These are quite an enduring problem that people have come to live with over the years.

SESAY: Ecologically, what is the situation now?

UNIDENTIFIED MALE: These streams where people take water from -- as I said, there's no pipe water. It's polluted as the result of (inaudible) spillages. You know find out that because of that, even the marine, the aquatic life, have been completely degraded. Indigenous people that we are, we do not see land just as some flora and fauna there. They have deep spiritual significance.

SESAY: I have read in some places that those spillages are due to vandalism of the pipes committed by indigenous people.

UNIDENTIFIED MALE: I'm not denying that there's been cases of what you might call vandalism, but again, the responsibility of how to deal with issues of crime is that of the government.

SESAY: Some oil companies saying that they are paying their taxes and the money that they're required to pay that would in turn benefit the community. But somewhere along the line, the money isn't getting to the people.

UNIDENTIFIED MALE: Well, I mean, obviously that is true. There's corruption going on at every level, even the level of the oil companies. But as we've said, I've told you that the problems of the Niger Delta are that of injustice. And that is admitted by all the sides. There's also this - you have accountability. This leads to the issue of accountability. The oil companies themselves need to be accountable for some of the things that are happening. If you speak to the Nigerian government, most times there have been disputes about actually what taxes are supposed to be paid and due.

SESAY: How optimistic are you for a change occurring in the lives, the daily lives of the people in the Niger Delta?

UNIDENTIFIED MALE: Every person now knows that there is a problem in the Niger Delta. The people of the Niger Delta also believe that it cannot be business as usual, all this. Now, there is opportunity for everybody, not only those in the Niger Delta, to say, look, we need to make this happen, so that we don't have another Iraq, we do not have another situation where we'll say international intervention came too late, in this situation, because the Nigerian situation has tremendous impact, or potentials of impact on the rest of Africa.

(END VIDEOTAPE)

SESAY: That was Nigerian activist Ledo Miki (ph), speaking to me a little earlier.

For majority of Africans who may not reach the benefits of the wealth they inherently own and for those who mine it, it's more often a hazard than a blessing. Anderson Cooper reports from the Congo.

(BEGIN VIDEOTAPE)

ANDERSON COOPER, CNN CORRESPONDENT: A young miner descends into the earth, hoping to scratch out a living in the dangerous darkness below.

It's pitch-black in the mine. The ceiling in this mine is maybe 2,5 feet. We're literally crouching down, crawling through the mud.

Hunched over, sitting in a pool of water, we find 23-year old Siba Joua (ph). The rocks he pulls from the ground earn him just a few dollars a day, but they've also created widespread corruption, and helped fuel a civil war that resulted in more than 3 million deaths. Dozens of warring armies and militias have fought for control of Congo's natural resources.

This is a cassiterite mine. It's where tin comes from. We're probably about 100 feet or so inside a mountain in the eastern Congo. The mine itself is a low-tech operation, but increasingly, tin is used in high- tech products. Because of changes in environmental regulations, tin has replaced lead in circuit boards used in equipment like - well, like these cell phones. Chances are if you use a cell phone, you're probably carrying a piece of the Congo with you.

In the last four years, the price of tin has more than doubled. You'd think that would be a great development for cash-strapped Congo, but very little of the money paid for Congolese tin actually ends up benefiting the people here.

JASON STEARNS, INTERNATIONAL CRISIS GROUP: It's a predator state. So you have - the customs officials are completely corrupt. It's estimated 60 to 80 percent of customs are never - are embezzled, never get back to the people. You can blame the people who are doing it, but they're doing it because they can, and they can because there is no state, there's nobody to tell them not to.

COOPER: A 2005 report by the nonprofit group Global Witness found most miners have to pay bribes to local police and military officials just to sell their tin.

Much of the cassiterite or tin ore that is mined here is smuggled illegally into Rwanda and other neighboring African countries. Corrupt Congolese officials are paid to look the other way. According to aid workers, the export of tin is worth at least $50 million, and the Congo should be profiting from that by taxing it, but so far, they're not.

The Congolese government says there is regulation, but the problem is enforcing it. The infrastructure is poor, so it's hard to prevent smugglers and looters from taking mineral resources out of the country illegally.

Theoretically, I mean, the Congo, the government should be making this money and giving the money, you know, in services to people. That's just not happening.

STEARNS: The government provides almost no social services to the people. Ninety-eight percent of the education in the country is actually provided - is provided by the students, the cost of education is provided by the students themselves. I don't think the state provides anything -- next to anything for health or education, the roads.

COOPER: It's not just the illegal export of tin that's a problem. The Democratic Republic of the Congo is rich in natural resources. Cobalt and copper is mined from here. That winds up in the lithium batteries that we use at home. Also, mineral called coltan is mined here. That ends up in cell phones. There is also large mines for diamonds, as well as for gold.

For the miners themselves, the payoff is low, and the risks huge. Last month, a miner died here, while trying to pump water out of one of the shafts.

"It was the gas," Siba Joua (ph) says, "the pump from the generator suffocated him."

Siba Joua (ph) would like to quit, but he has a wife and child to support, and knows of no other way to make a living.

"A lot of us get old in this mine," he says. "I want to make my money and go."

It is just one of the many tragedies in the Congo. Thanks to mismanagement and corruption, the mineral wealth that could be such a blessing remains in many ways a deadly curse.

Anderson Cooper, CNN, Nabibwe (ph), the Democratic Republic of the Congo.

(END VIDEOTAPE)

SESAY: When we come back, satisfying China's hunger for resources. Is the country helping develop Africa's future, or is it, as some claim, pushing a near-colonialist policy on the continent? We take a look. Stay with us.

(COMMERCIAL BREAK)

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: The world's largest mobile operator says it's ready to buy cell phone carrier companies in Africa. China Mobile Communications Corporation says it wants to tap into the continent, which boasts the largest growth rate of cellular customers in the world.

South Africa says it will no longer buy gluten from China after the chemical melamine was found in the product used in pet foods. At least 30 dogs are said to have died from eating the tainted food.

China is now the biggest investor in Zimbabwe. It has more than 35 companies and $600 million invested in the country. Chinese officials say companies are still looking for investment opportunities in Zimbabwe.

(END VIDEOTAPE)

SESAY: Welcome back. You're watching INSIDE AFRICA, coming to you this week from Lagos, Nigeria. Today, we're looking at what happens to Africa's resources, many of which end up in China, which is perpetually hungry for the continent's abundant raw materials. And what they found is a continent desperate for outside investment and very little competition from U.S. and other foreign firms. Some analysts say that lack of competition and decade-long deals now being struck by China could mean Africa isn't getting the true value out of its resources. But others say China reaps while the West is sound asleep. Jeff Koinange has more.

(BEGIN VIDEOTAPE)

JEFF KOINANGE, CNN CORRESPONDENT: China is serious about making its economic mark here, and for good reason.

GARTH LE PERE, SINO-AFRICAN EXPERT: China's footprint has grown tremendously over the last decade, and I think, you know, it's primarily driven by China's resource requirements, the demand for the kind of raw materials that the continent has.

KOINANGE: Compare that to U.S. President George W. Bush's single trip to five African countries back in 2003. Now, more a distant memory than a show of solidarity.

PATRICK LAURENCE, POLITICAL ANALYST: Priority areas for the U.S., I don't think Africa figures as highly as the Middle East, and they are obviously very concerned about Iran. But I think perhaps they have been caught a bit -- they haven't shown the same energy and dedication to Africa.

KOINANGE: Africa experts see a widening gap between U.S. and Sino- African relations. The U.S. more attuned to its global war on terror, and China more focused on issues of trade and aid.

So far on paper, at least, it seems Africa is greatly benefiting from China's seeming benevolence. From Algeria to Zimbabwe, Sudan to Nigeria, and Kenya to Zambia, China's investing in Africa with dizzying speed, and pumping cash into the continent, some $3 billion in each of the last two years, with a potential for billions more in the coming years.

What China gets out of the deal is access to Africa's abundant crude oil reserves, copper and cobalt for its steel industry, and cement to satisfy its growing infrastructure demands. But the deals are raising some eyebrows.

LAURENCE: Don't underestimate the Chinese, and I would add, you know, perhaps it behooves African leaders to read or re-read the tale about the Trojan horse, you know, which led to the saying "beware of the Greeks when they come bearing gifts." Perhaps they should say to themselves, be careful of the Chinese when they come with their offers of free trade and debt relief.

KOINANGE: And then there is the case of making investments without long-term ties to the continent. A few years ago, the U.S. introduced an incentive for Africa -- the African Growth and Opportunities Act, or AGOA, which basically eliminated duties on African-made goods destines for the U.S. But the Chinese had other plans, setting up factories across Africa using cheap labor, and exporting the goods directly to the ready U.S. market.

This was a typical Chinese-run clothes factory in the Lesotho capital Maseru that provided employment to hundreds of locals and was a shot in the arm for the tiny economy. But as soon as the AGOA deal expired, the Chinese in Lesotho simply closed up shop, leaving the factory intact, sawing machines and all, and rendering hundreds out of jobs.

And then there's the issue of Darfur, where Sudan's government is accused of human rights violations, not unlike China, but where the two nations' leaders seem to have found common ground.

LAURENCE: African leaders should see beyond the benevolent smiling charm, and say to themselves, what do these guys want? What do we want? How can we bargain so that we can get enough from them and they can get enough from us, without us losing our independence?

KOINANGE: And that's the fine line African leaders will have to walk as China continues what experts describe as its seemingly unquenchable thirst for African raw materials. So far, it appears to be a win-win situation, and with the other superpower, the U.S., busy trying to extricate itself from both Iraq and Afghanistan, the road ahead for China in Africa, for now at least, seems open for business.

Jeff Koinange, CNN, Johannesburg.

(END VIDEOTAPE)

SESAY: Just a note to Jeff's package: There has been growing criticism of China's labor policies in Africa, as well as of their investment and presence there. Just this week, Ethiopian rebels attacked an oil field in western Ethiopia, killing 65 Ethiopians and nine Chinese workers, as well as kidnapping scores of other Chinese employees. In Nigeria, armed militants earlier this year killed 11 Chinese oil workers and five Chinese telecommunication workers in three separate incidents.

There's much more to come on Africa's vast resources. When we come back, a look at the brighter side of things: A sparkling deal in Botswana. Stay with us.

(COMMERCIAL BREAK)

SESAY: Welcome back. You're watching INSIDE AFRICA.

Diamonds, the mystery, the beauty, the violence - what should be a major asset for Africa has often been a mixed blessing. Over the decades, global demand for these stones has fueled hate, financed wars and created slave labor. In Botswana, it also fueled (ph) one of Africa's fastest growing economies. Jeff Koinange reports.

(BEGIN VIDEOTAPE)

KOINANGE: You're watching the controlled explosion in a diamond mine in northeastern Botswana. It's the world's largest open-pit diamond mine, 600 feet deep so far, and vast. It's as wide as 52 football fields.

This is the most efficient and safest way to mine diamonds. Here in Botswana, the world's largest diamond producer, all the mining is mechanized, controlled and above all, conflict-free. The mines do not produce blood diamonds.

Since they were discovered here four decades ago, diamonds have turned out to be Botswana's best friend. A 50/50 joined venture between Botswana and diamond giant De Beers has led to the creation of one of the most successful businesses in Africa. It's known as Debswana, a partnership that is as rare in Africa as the precious stones they find in these pits.

These huge boulders contain some of the world's best diamond deposits. They are hauled in these massive trucks to a tipping (ph) area, where they are crushed into smaller rocks, before they come here, where water pressure forces out more impurities and so on. One conveyer belt after another in this multi-million-dollar complex. Diamonds are serious business here.

The rough gems will end up in the nation's capital, Gaborone, here, in a 10-story building, where at any one time there are literally millions of diamonds.

This building holds more than 75 percent of Botswana's foreign exchange earnings. This room alone worth tens of millions of dollars, thanks in part to these tiny little precious stones, precious stones that have transformed what was one of Africa's poorest countries to one of its biggest success stories.

MIKE MOROMENG, DEBSWANA DIAMOND: This is a two-karater, roughly. Yes, this is a two-karater, yes. OK. It's two karats. Yeah. It's a wonderful stone. It's a wish stone. Yeah.

KOINANGE: Mike Moromeng is responsible for making sure Botswana's diamonds are among the world's finest. And that when they leave here, they're certified "not conflict diamonds."

MOROMENG: As we receive diamonds from the mines, they are all packaged in such a way that nobody can tamper with them, to ensure that there is no other diamonds that find their way into Botswana diamonds.

KOINANGE: Unlike most other African countries, where diamonds seem to bring greed, chaos and corruption, in Botswana, every stone is systematically evaluated and grouped by quality.

The diamonds are not cut or polished here. Every rock is shipped to De Beers' headquarters in London, and from there sold to diamond dealers around the world.

Botswana's attorney general says despite their care to control diamonds here, she won't be surprised if the movie "Blood Diamond" has a negative effect on diamond sales. She hopes movie goers see it for what it is.

ATHALIAH MOLOKOMME, BOTSWANA ATTORNEY GENERAL: I'm going to watch it, and I'm sure I'm going to enjoy it, but I hope that, like me, all the people in the world, when they finish seeing that movie, they will remember what they have just watched is a work of fiction. For 99 percent of the diamonds of this world, they come from clean countries which are not involved in conflict.

KOINANGE: In fact, our invitation here was part of a public relations campaign to create a firewall against the possible negative publicity the "Blood Diamond" film could stir up. The De Beers company and Botswana hope to make clear they are more than a cut above any bad blood that might come from blood diamonds.

Jeff Koinange, CNN, Gaborone, Botswana

(END VIDEOTAPE)

SESAY: Thank you for watching. It's time to say goodbye from here in Lagos, Nigeria, where there is much more to come next week. So please let INSIDE AFRICA be your window to the continent. Take care.

END

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