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Stirring Africa’s resource ‘curse’ into blessing

The annual Tana High-Level Forum on Security in Africa, which convenes in Bahir Dar, Ethiopia, every year, is an independent initiative of the Institute for Peace and Security Studies (IPSS) of Addis Ababa University and of eminent African personalities. The initiative is a response to the Tripoli Declaration that appeals for “African-centered solutions”, and designates peace and security as a collective “intellectual challenge”. The two-day Forum is an informal gathering of African decision makers, peace and security stakeholders, and their large constituencies for an open discussion on security issues and challenges of the continent. The 2017 edition of the Forum, which took place last week, was attended by 120 floor participants where Natural Resource Governance and the debate surrounding it were brought under a microscope, reports Solomon Goshu.

Many of the countries in Africa are among the poorest in world. What makes the persistence of poverty and lack of economic transformation in Africa unique is the availability of abundant natural and human resources that could change the lives of its inhabitants. For instance, studies reveal that the continent alone account for 12 percent of the global oil reserve, 40 percent of the gold deposits, and about two-thirds of the world’s most suitable land for farming and forests.

Unfortunately, and for various reasons, the continent has not been able to fully maximize the developmental benefits that should have accrued from exploiting these resources. The literatures on the African development identify different internal and external factors for the persistence of poverty and bad governance. Among other things, lack of facilitative environment for private sector growth, ineffective leadership, weak institutions, corruption, poor policy implementation; policy discontinuity; and an unjust world economic order can be mentioned in this context.

For example, the mispricing of natural resources in Africa leads to the loss of USD 50 billion every year, more than Africa’s combined foreign direct investment and overseas development aid. In addition, according to an Oxfam estimate, more than USD18 billion per year is lost through resource-related conflicts in Africa, not including indirect costs.

In this context, Tana High-Level Forum provided a unique opportunity to decision making leaders and institutions to exchange experiences and insights on peace and security issues among themselves in view of taking home inspirations and practical lessons; and giving opportunities to political decision makers to interact and consult with a broad-based African constituency as well as with key global actors. The Forum brought together high-level decision makers on peace and security from the government/political sphere, non-AU regional institutions, the private sector, critical segments of continental/regional civil society networks, as well as peace and security experts/resource persons. Representatives of select stakeholders in global peace and security were also invited.

Olusegun Obasanjo, former President of the Federal Republic of Nigeria and Chairperson the Tana Forum Board, in his remarks entitled ‘State of Peace and Security in Africa 2017: Little or No Change’, highlighted key challenges of the continent in the context of security. “We are moving from the fairly liberal, stable if not totally predictable world to an unstable, unpredictable, populist, world with disequilibrium. There is danger for every nation and for every region in such a world. And Africa by virtue of its apparent weakness cannot wish for such a world where it will be a pawn and a victim especially in light of our current precarious peace and security situation,” he said. 

This year, the Forum has tried to explain the challenges in governance of the ‘non-renewable’ extractive sectors (oil, gas and minerals) in Africa. It broadened the scope to include issues around the governance of other natural resources, specifically: (a) land, (b) water, (c) the seas, and (d) forests and biodiversity. It also sought to understand and explain why the exploitation of these resources is increasingly sources of tension and violence in ways that have profoundly disturbing impacts on peace and stability on the continent.

Generally, the Forum showed how, over time, the exploitation of the continent’s rich and diverse natural resources, both on land and sea, have created several paradoxes; in particular, those leading to inequality and poverty, corruption, unemployment, environmental degradation, violent conflicts, and the elusive quest to realize Africa’s full developmental potential. The 2016 African Development Bank report states, “[Over] the last 60 years, in any particular year, between 40 and 60 per cent of ongoing internal armed conflicts have been linked to natural resources.”

As Stergomena Lawrence Tax (PhD), SADC Executive Secretary, presented the ‘Summary and Takeaways’ of the 6th Tana Forum, the Forum reiterated that even if Africa is blessed with countless God-given resources, these resources are often negatively impacted by poor or insufficient systems of governance. “These resources if managed appropriately will transform African economies,” she said.

Solomon Ayele Dersso (PhD), Commissioner, African Commission on Human and Peoples’ Rights, and Peace and Security Analyst, was one of the panelists at the Forum. Solomon is also Chairperson of the African Commission’s Working Group on Extractive Industries, Environment and Human Rights, and heads Amani Africa Research, a policy research consulting think tank based in Addis Ababa.

“Natural resources constitute almost half of the world’s GDP. And Africa contributes a major part of the resource economy of the world,” Solomon told the Reporter. According to him, the resources that are extracted from Africa also contributes to the economic boom of emerging countries such as China, and, therefore, contribute to the efforts of these countries in lifting millions of people out of poverty.

The participants note that natural resources extraction, distribution and usage have social, economic, environmental, and political underpinnings, influenced by both endogenous and exogenous factors. They specifically indicate that there is lack of transparency and insufficient accountability and management mechanisms in licensing, exploration, contracting, extraction, and in revenue generation and sharing.

In this context, the first real problem they identified is related with the ownership of African natural resources. For instance, the African extractive sector is dominated by external interests. In most African countries, the largely foreign-dominated extractive industry involved in the exploration, exploitation and trade of gas, oil and minerals accounts for a large chunk of foreign exchange earnings. In fact, it is also highlighted that the global resource politics is mainly generated by the involvement of multinational corporations. The continent is still unable to overhaul or control the logic and mechanisms that determine what and how much it can produce, as well as whom to sell to. The continent still produces what it does not consume, and consumes what it does not produce. Sadly, Africa is still over reliant on external support for the management of its natural resources and strategies to address its challenges.

Obasanjo observes that one of the reasons for the mixed impact of natural resources on development is the high levels of dependence on foreign technologies, capital and managerial know-how in that sector. “How then can African states endowed with natural resources expect to maintain the levels of regulation and transparency required in the best interest of everyday people when they are held captive by foreign capital, technology and interests?” he said.

Uganda’s President Yoweri Museveni, one of the regular attendant heads of government of the Tana Forum, told this year’s participants that his government’s disagreement with international companies has delayed the country from starting production of oil and its minerals resources.

“Who owns the minerals?” he asked, while explaining that Africa does not own its natural resources.  “We discovered petroleum about 12 years ago. But we haven’t exploited it because I couldn’t agree with those companies. They want to cheat us. I say the petroleum stay there until we agree,” Museveni said.

The President also discussed why Uganda has not started producing uranium, gold and iron.

“Our iron ore deposit in the soil is one of the finest in the world – 70 percent pure (iron). An Indian company gave us 38 dollars per ton to take the soil and process in India. But I didn’t agree because steal prices can go as high as 900 dollars per ton [in the global market],” the President said.

“We also have uranium but I don’t allow anyone to take it. When they asked, I said no. The uranium stays in the ground until we start our own nuclear station,” President Museveni said.

While explaining his government’s stand, Ethiopia’s Prime Minister Hailemariam Dessalegn said, “We can’t afford to keep them for years like President Museveni said.” Ethiopia is planning to start gas production from Ogaden area.

“We have to harness these natural resources effectively in a way that can benefit people of Africa and transform the African economy,” he said.

Consequently, the participants argue, there is lack of, or inadequate benefits that accrue to the intended beneficiaries. This has fueled social inequalities, where the locals have not benefitted from the extractions while the global actors have become grandiose. Most transnational companies are free to act with impunity in ways that impact weaker host communities negatively. Illicit and illegal extraction of natural resources along the entire value chains benefits a few individuals, and illegal international syndicates at the expense of communities that own the natural resources.

The participants also submitted that environmentally unsustainable methods of exploitation of natural resources have significantly contributed to the environmental degradation across the continent. “[N]atural resources have been bad for Africa because of the adverse environmental impacts that their extraction continues to have on local host communities. One of the most obvious examples, sadly, is the Niger Delta region of Nigeria where decades of oil exploration has resulted in a blighted environment,” Obasanjo said.

In turn, this results in conflicts and, hence, insecurity, which gives an advantage to the global illicit players to smuggle the resources. For instance, the participants point out that it is well known that gains from the extractive and non-extractive sectors have been used to finance state-sponsored wars as well as non-state armed insurgencies of the types witnessed in the Democratic Republic of Congo (DRC), Sierra Leone and Liberia. The displacement of people, coupled with the food crisis, unemployment and poverty, are factors that are breeding conflicts in some of the countries in Africa.

While investors have brought investments into the African states, there are obvious cases where the costs associated with the loss of the resources are more than the benefits from the investment. Investors leave behind huge environmental challenges which national governments have to address. This has become a source of conflict and dissatisfaction in many communities across Africa.

 

The growing interest in the African natural resources has led to an increase in foreign military presence. This is especially the case in areas that possess resources of global strategic relevance, such as oil, uranium, diamond and rare earth minerals. Unfortunately, the presence of foreign militaries is a source of conflict, in its own right, and has sometimes resulted in human rights abuses.

African governments are advised to re-examine the whole issue around attracting foreign direct investments (FDIs) into the extractive and non-extractive sectors. While it is good to create incentives for FDIs, investments into natural resources should be based on actual or real returns on investment, rather than investments incentives, which distort the markets and make African governments lose the much needed revenues, they contend.

“The discussion about resources is also about the channeling of these resources from Africa’s land into other parts of the world. It is not about the processing of these resources here in Africa, and adding value to these resources,” Solomon points out.

The main story on the African natural resources focuses on environmental disaster, the displacement, the dispossession, the poverty that the extraction of resources creates, and the conflicts that the extraction of resources contributes to. Solomon argues that there are exceptions whereby the use of natural resources actually brings about material benefits to the people. 

The other point the participants emphasize deals with capacity building in African governance. They note that Africa needs to build the necessary capacities, in both, state and non-state actors, that will facilitate proper management and governance of natural resources among others, contract negotiations and management, enforcement of rights and responsibilities, monitoring and evaluation, etc. It is also suggested that deliberate efforts should be made to promote and facilitate reviews of national policies and legal frameworks in order to promote ownership and facilitate transparency and accountability in natural resource management and governance, while ensuring optimal use and benefits.

The existing contracts are also believed to have been poorly negotiated leaving African countries at grave disadvantage. Yet, African governments still find the recent contract offers a bit complicated. And this was the concern of the Ethiopian Prime Minister.

He noted that many African countries have not been benefiting from the mining contracts they have signed in past. “I recently asked at the G7 meeting how they can assist us to build the capacities of African countries to understand the complex mining contracts before signing them with the multinational companies,” he said.

According to many reports, the current trends of natural resources in Africa shows that it continues to be curse rather than a blessing for the African societies. “States endowed with natural resources, as many African states are, need to get their house in order. They need to elaborate a clear vision and strategy anchored on understanding that these resources are first and for most for the benefit and development of the people.

“Leaders need to have a sense of ownership and responsibility to the country and the people on his behalf they are in a position of power. The nature of the state in Africa also needs to be transformed. The state was created for the purpose of extraction and exploitation. It was instituted as a conduit for looting the resources of the countries. The state has to be redesigned to be at the service of the people,” Solomon opines.

“Unless we manage these resources properly, they will become sources of contention and conflict, instead of serving as resources for economic growth and human development. It is, therefore, important that we have an honest dialogue on what governance arrangements are required to prevent resources from resulting in human misery, violent conflicts and exploitation,” Hailemariam said.

“It is not enough that only few of us get the governance of natural resources right. We should all get it right. The truth is that unless all of us get it right, nature will not serve anyone of us. While we are separated by political and administrative borders, nature and its riches have united us. Mismanagement of nature in one part of our continent will affect millions on the other side of Africa and beyond,” the Ethiopian Prime Minister added.

Solomon shares Hailemariam’s view when it comes to cooperation. “The issue of capacity can be best addressed if there is a regional effort in Africa. There are various rules and regulations that affect the negotiation of these contracts that makes them complicated. Agreements relating to trade and investment need to be factored into this equation. So, you actually need to have a complete and full picture and sense of understanding of all the relevant legal regimes. Sometimes, these technical and legal complications arise from the exploitative tendencies of the resource industry particularly those with the bargaining power,” Solomon elaborates. 

In terms of taking the debate forward and improving the lots of Africa on natural resources governance, there could be a number of takeaways for the individual countries, researchers, civil society organizations, and policy actors, in order to pursue those ideas and the information that was availed, Solomon contends. “One concrete example is the proposal from the Commissioner for Peace and Security of the African Union Commissioner, Ambassador Smail Chergui, where he raised the possibility of appointment of a special envoy of the Chairperson of the African Commission to address issues of conflict in natural resource governance. If that is going to come to fruition, then it would be one of the concrete outcomes of the 6th Tana Forum.”