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Mr. Dele Alake, the Minister of Solid Minerals Development, is advocating for African countries to explore alternatives to loans by leveraging their established mineral reserves as equity.
Alake revealed that upon assuming office, he faced relentless approaches from institutional and private lenders offering both transparent and clandestine deals.
In a statement issued by Segun Tomori, the Special Assistant Media to the Minister, Alake addressed the Ministerial Roundtable on Powering Africa in Washington DC, emphasizing the need for a paradigm shift.
He highlighted the paradox of African nations grappling with chronic indebtedness while being targeted by loan sharks peddling short and long-term credit to various government entities.
He said: “It is an interesting paradox that in spite of their chronic indebtedness, African countries remain the target of institutional and private loan sharks marketing short and long-term credit to ministries, departments, and agencies. Indeed, in the first month after a Minister is sworn into office, he is literally bombarded by these marketers promising above-the-table and under-the-table deals.”
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Alake, who also serves as the Chairman of the African Minerals Strategy Group—an assembly of ministers overseeing mining and mineral development in Africa—advocated for a departure from traditional borrowing practices.
Instead, he proposed the utilization of proven mineral reserves as a form of equity, presenting a viable and sustainable approach to economic development in the continent.
“In the mining sector, in-situ equity, where the verified value of unextracted mineral can be the equity of the owner in joint ventures, is a better financial arrangement than the road to chronic indebtedness.
Recalling how he had taken issues with indiscriminate loan deals of African governments as a journalist, Alake said only loans that can be liquidated by the returns on the project should be taken to save the people from poverty.