- Benjamin Boakye, Executive Director, ACEP
- Hanna Angela Foster, Executive Director, African Centre for Democracy and Human Right Studies (ACDHRS)
- Cecilia Christiana Mattia, National Coordinator, National Advocacy Coalition on Extractives (NACE)
- Engr (Dr) Janet Adeyemi, Executive Director, Women in Mining Nigeria
- Auwal Ibrahim Musa, Executive Director, Civil Society Legislative Advocacy Centre (CISLAC)
Watch the session recording here.
Benjamin (moderator): 30 per cent of global minerals are in Africa, 40 per cent of gold and 90 per cent of platinum. There is also cobalt, lithium, copper and many minerals aligned with energy transition.
In the past two decades, Africa’s challenges in the extractive sector have meant that these resources have not been translated into economic development. The conversation was framed as Africa lacking administrative capacity and good governance to let people benefit.
This causes illicit flows running to billions; $40 billion is lost every year because they are not managing the resources well. It is a challenge to manage the global response to challenges in the sector. GN (Global North) countries passed laws on accounting and transparency and accountability in their companies operating in Africa. Some successes have been achieved. The WB spent so much money supporting these challenges, but there are still other challenges remaining.
Glencore admitted bribing corporations, but the US benefited from its misdeeds, the US took the $700 million fine Glencore paid, even though African countries bore the consequences. African institutions are not acting to defend the interest of states.
In Nigeria, oil export pipelines were tapped, millions of dollars of oil were stolen over nine years. Nigerian oil output reduced from 2.7 to near 1 million barrels a day because of this theft. The state lost a lot of money.
The programme Gold Mafia from al-Jazeera revealed that a lot of gold leaves Africa without national accounting, there were a lot of corrupt officials involved. This illegal trade fuels exploitation of labourers, including women and children, and the environment. These are challenges that have to be addressed by African states.
Revenue management in the sector is a challenge. There is suboptimal investment, and corruption undermines efficiency.
What political reforms are needed to address these illicit flows, that the extractive sector can provide to catalyse development?
The panel will answer this question.
Janet: Nigeria has the laws and local content policies, so what are the problems? Some are related to governance, which is tied to so many things, but varies between countries, the judiciary, etc.
Civil Society Organisations (CSOs) identified critical points, for instance in the regulatory framework. EITI (Extractive Industries Transparency Initiative) exists, but are we looking at it line by line? Having law is one thing, implementing law is another.
Does corruption come from poverty? Or greed?
Community leaders don’t know what their rights are, they give them a few dollars and they approve projects with ‘local backing’.
Governance is structured like civil servants circulating through positions, often without the skills to do their jobs, as the community doesn’t have knowledge to give informed consent. Fiscal and tax policies are essential to maximise the benefits of mineral resources. The institutional and regulatory framework is critical for extractive activities.
Governance is at the heart of the problems, and governance comes from the regulatory framework. In much of Africa, accountability and transparency are missing. The laws are there, they must be strengthened by the inclusion of stakeholders, the CSOs, who will fight for people’s rights.
Holistic intervention is needed to address all these issues.
Auwal: The key is the respect and implementation of laws. Oil theft in Nigeria is a real scandal. The scale is incredible. Officials were syphoning off this oil; and another fraudulent thing is called the oil subsidy, which subsidises commodities. Oil was sent out of the country to be refined, and officials made sure refineries in Nigeria were not working, so oil theft continued… ships came to take stolen oil from Nigeria. Political will could stop this.
Measurements of oil extracted are not good; they rely on foreign oil companies to tell the government how much oil has been extracted.
Officials connive in money laundering, and this happens with the cooperation of banks. An ECOWAS report shows how Nigerian financial institutions finance terrorism. The legislature should oversee government conduct, but won’t do the work it’s supposed to do. They should make sure laws should be enforced.
Resource management problems in Nigeria are a huge concern. They have put Nigeria in perpetual debt. Debt provision in Nigeria is scandalous, a large chunk of the budget subsidises corruption, we need a committed leader and committed politicians to put the necessary capacities of country together to stop this. There is no political will to ensure this necessary capacity. So how do we generate that political will?
Cecilia: The problem with sub national transfers is that they are supposed to go to communities but don’t go to those communities. No organisation in Africa can negotiate contract transparency, CSOs and citizens should be part of contract oversight and negotiations. In Sierra Leone, there is a revenue management bill, with World Bank (WB) assistance. Africa has resources, but they are lost in the value chain.
Governments should spend on infrastructure and healthcare, but politicians want to make money to recoup what it cost them to win power. Development should be in the hands of the people, but contract transparency is needed, and the share that goes to communities should be clear to all. They need a negotiating body for each region of Africa to negotiate on behalf of African states and communities. In Ghana there is a law giving 20 per cent of revenue to local communities; but a year later the government passed new regulation that capped these community revenues, sometimes at only 2 per cent.
Hanna: Violence is employed in cases of corruption, pollution, etc. There are lots of initiatives to address this… Oversight bodies say there is corruption, a lack of legal instruments, and lots of other issues. There are many oversight bodies, but they fail to do their jobs. Political change is required. Rules and regulations must be reviewed and they must be brought into line with international standards of Human Rights.
Corruption is everywhere, even in the Global North (GN), but it’s more sophisticated there. Africans must prioritise local content and job creation and ensure that benefits trickle down to local communities and local enterprise development. If local communities are resource starved, they won’t have the capacity to fight for their own interests. International protocols could be used to govern resources better.
WB representative: The Bank can’t generate political will to reform. The Gambian government has produced a different environment, it had the political will.
Management of the extractive sector is very hard in practice. There is a layered system, paying taxes and policing companies is the first layer. This needs resources, regulations and institutions. Institutions are the key, they are more important than regulations, as no regulations are perfect. In terms of governance, the state operates in accord with the capacity of their regulations. What does a country do with their revenues? Revenues must be used to support administration. But revenues fluctuate, so a stabilisation fund is needed to smooth out consumption. A sovereign wealth fund is needed to support a country after resources are depleted.
There is a need for regulatory capacity, and regulatory skills. This is before corruption is even considered. There are also many other lower level corruption cases in countries that don’t make the headlines. Nigeria passed a new petroleum law, but it took about two decades to pass. The National Nigerian Oil Company (NNOC) plays a massive fiscal role, but there is a rivalry between NNOC and the government; it is a very unusual structure.
Spaces that provide opportunities for corruption must be closed and the issue addressed. Chile is an OECD country, but it still exports raw copper from its mines. Developing an industry takes a lot of time.
Mining is a difficult industry, and lots of things that can go wrong. The role of the state and company must be clearly defined. Expectations management is so important in mining. Making a mining operation profitable can take years. Chile took 20 years before taxes began to come in for international investment in mining, from 1975. The role of the bank is constrained, it can’t tell sovereign countries what to do. So how can we get politicians to take corruption and governance seriously?
The Bank supports the executive arm of governments with capacity building, but it should also support Parliamentary capacity building for oversight.
Auwal: Africa needs strong institutions, not strong presidents; and political reforms are needed, including for elections. There must be sanctions for lawbreakers, no one can be untouchable. This needs dedicated collaborators, CSOs, to provide credible information to the government.
Transparency is important, and there may be a role for conditionality in loans relating to standards of governance.
20-30 per cent of miners in Africa are artisanal miners, informal. The Minamata mining convention outlaws use of cyanide and mercury in mining. Sudan ratified it, but actual implementation is weak.