A new study from Canadian researchers led by Dr Bonnie Campbell examines the World Bank’s influence in establishing mining codes in Southern countries. It finds that the Bank’s assessment of what was needed to attract foreign investment did not consider broader development objectives. Companies were granted low royalty rates and tax exemptions and allowed to retain much of their foreign exchange earnings in foreign accounts.
Provisions for local procurement of goods and services have been removed, for instance from the 1998 Mining Act in Tanzania. The study comments: “given that provisions to build backward and forward linkages (such as value-added processing of minerals) to resource extraction within the economy would normally be considered important development objectives, it appears that the Tanzanian government has abandoned, or been obliged to abandon, these development objectives.”
The study concludes by questioning whether “a country which deregulates and liberalises in order to be fully competitive… can indeed ensure the enforcement of environmental norms, [and] pursue development objectives that build backward and forward linkages to resource extraction… The answer appears to be more than uncertain.” This conclusion matches that of African civil society groups who gathered in Mozambique in January this year as part of the Bank’s Extractive Industry Review process. They commented: “during the past two decades the World Bank Group and the IMF have promoted the liberalization of the extractive sector through reforms that compel mineral-rich African countries to relinquish ownership and control of extractive industries to foreign mining and petroleum companies”.
The Challenges of Development, Mining Codes in Africa and Corporate Responsibility, GRAMA, 2003. International and Comparative Mineral Law and Policy