How banks can unlock opportunities in Africa's mining sector

As the global markets continue to navigate through challenging times, particularly in the wake of the COVID-19 pandemic, the mining sector in Africa, especially in the Democratic Republic of Congo (DRC), presents a unique opportunity for growth and development. Mustafa Rawji, the Managing Director of Rawbank, sheds light on the significance of a collaborative effort between the government and the financial sector to unlock the potential value addition in the mining of key minerals like copper and cobalt for battery production. In a conversation with CNBC Africa's Kenneth Igbomor, Rawji highlighted the impact of recent market dynamics on the mining industry in the DRC and the need for enhanced partnerships to drive sustainable growth. Here are the key points discussed in the interview: 1. Weathering Market Challenges: Rawji reflected on the challenges faced by global markets over the past few years, including energy price fluctuations and supply chain disruptions. Despite these hurdles, the DRC, as a dollarized economy, managed to mitigate some of the impacts by safeguarding its currency against devaluation. This stability provided a certain level of resilience compared to other African markets, positioning the country for continued growth opportunities in the mining sector. 2. Tapping into the Energy Transition: With the DRC emerging as a significant producer of copper and holding a substantial share of global cobalt reserves, the focus has shifted towards leveraging these resources for the energy transition, particularly in the battery manufacturing sector. Rawji emphasized the need to move beyond simply mining these minerals and towards enhancing value addition by investing in downstream processing and finished product manufacturing. The rising demand for electric vehicles puts the DRC in a strategic position to capitalize on the growing market for battery metals. 3. Strengthening Partnerships for Financing: Rawbank has been actively involved in supporting mining companies by providing financing for their operations and export activities. However, Rawji pointed out the challenges posed by the current risk ratings of the DRC, which hinder international banks from fully engaging in the sector. To address this issue, Rawji underscored the importance of closer collaboration between the government and the financial sector to improve the risk perception and attract more capital investment into the mining industry. Enhancing the risk ratings of the DRC would not only boost investor confidence but also pave the way for greater financial support and sustainable growth in the sector. Quote: Rawji summarized the critical role of partnerships in driving the mining sector's development, stating, "Government and the financial system do need to come together in a more meaningful way to be able to unlock that value." By fostering a symbiotic relationship between banks, businesses, and government entities, Africa's mining sector can harness its full potential and contribute significantly to the continent's economic advancement.