Ahead of the meeting of leaders of world’s major economies the G8, the British Prime Minister David Cameron announced the G8 and 15 developing countries have agreed to work together to make sure that “the poorest people benefit from their country’s natural resources, by improving the transparency of their extractive industries and land rights.”
The G8 which includes US, UK, Russia, Japan, Canada, Italy, Germany and France plays a big role in extractives industry in African countries.
Mr Cameron made the announcement during a panel session with African leaders at the Open for Growth on 15 June 2013. Of the 15 countries, 8 developing countries will be focused on improving the extractives sector while 7 are on land rights.
This seeming shift of G8 countries from aid to improving trade may be driven by various factors – increased Chinese penetration in African extractives industry and also the non-sustainability of the aid model for both receiving and donor countries as donor countries have been hit by the economic crisis.
Today, 265 million people that are hungry in Sub Saharan Africa. In the last 40 years about US $4-6 million per annum has been donated towards aid to tackle hunger.
Yet, Africa has functioned as a “net creditor” to the rest of the world, the result of a cumulative outflow of nearly $1.5 trillion dollars from the continent over the last 30 years according to new data from the African Development Bank (AfDB).
Whatever their driving interests, the efforts by G8 to improve the extractives industries and giving citizens of developing countries their right place to debate and participate in governance of their resources are long overdue.
Among others Cameron said he G8 would encourage companies and countries to adopt the new Extractive Industry Transparency Initiative (EITI)- where companies publish what they pay to governments and governments disclose what they receive from companies for their extractives resources
Also in this partnership new information on extractives can be used to hold governments accountable and also there’s a place for introducing stronger legal frameworks to regulate the sector.
Started in 2002 by Tony Blair, the EITI has now around 50 countries engaged in the efforts to improve transparency of revenues from the extractives sector. The EITI Progress Report 2013, which puts together highlights from the 37 countries that were implementing the EITI has interesting statistic from African countries.
In 2010, Democratic Republic of Congo produced 51% of the world’s cobalt output and 30% of the world’s diamonds. According to the 2010 EITI Report the government only received US $876m in revenues from oil and minerals. This equals US $13 per person.
Gold already accounts for 90% of Tanzania’s exports and there is a significant increase in gas exploration. Congo and Tanzania are part of the EITI.
I met Eddie Rich, Deputy head regional director for EITI programs in Southern and Eastern Africa who said Uganda had been approached in 2008 but they were dragging their feet in accepting to adhere to standards set by EITI.
So far G8 countries are to ‘help’ 8 African countries to get companies to publish their taxes. This is in part a good step especially at a time when the G8 is pushing companies registered in their countries to be more transparent.
So the scrutiny of companies originating from these G8 countries is going to increase but the big change will only be delivered if our governments strive to be transparent. Most countries like Uganda, corruption is deep in the DNA of the regime. We have hardly produced any oil but last year bribery claims involving the top officials of government were reminder that the deeper we dig in oil well, the more corruption we will have to check.
A government which can divert aid money meant for reconstruction of a war torn part of the country into personal accounts of officials and then quickly repays it amidst donor threats to cut aid, will be difficult to hold accountable when the country’s black gold starts to flow.
Currently two Ugandan officials, one former minister and a member of parliament are being held in India over over a Wolfram Mining Licence in southwestern part of the country. Not much is known about mining deals by the Ugandan public.
Debates of natural resources, who is involved and how the money spent should increase in our public debates.
Countries like Ghana have increased transparency over years. Ghana’s latest EITI Report revealed that the government received over four times more from its natural resources in 2011 than in 2010.
The G8 are pushing for this initiative and hope their businesses gain more from the trade but a government, which cannot account to its citizens or even allow citizens to protest its policies is less likely to deliver a transparent system regarding extractive industries. And as long as they have countries like China and India who are new entrants in the search for African minerals, these governments will still have an alternative market if G8 rules prove too tough.
However such global shifts in policies serve as a call for us citizens to push for more local systems to increase transparency otherwise no foreign country will deliver this for us. We need to move from selling our raw materials to industrialisation.
Below is my interview with Eddie Rich of the EITI on what G8 efforts mean for countries in Africa.