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Home > Blogs > Anthony Harrington > Why bringing transparency to mining contracts across Africa matters

Why bringing transparency to mining contracts across Africa matters

Why bringing transparency to mining contracts across Africa matters Anthony Harrington

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How do you stop corporate and private graft and corruption, when both have become endemic and are regarded as simply a normal way of doing business? The answer is straightforward enough, and wherever it has been implemented with serious intent, it has been successful. You shine a light on the dark places so that misappropriations, under-pricing, outright theft and shenanigans of all descriptions become visible. When the people can see what is going on, they pressure the politicians for action and everyone involved starts to behave themselves rather better going forward than they have in the past.

In Africa, with respect to the country's vast mineral and oil wealth, what this means is bringing in laws which require all contracts to be published online. Then, you can see what you can't see, so to speak. If you find that companies are using "beneficial ownership" structures to hide who really owns what, you introduce new legislation to force transparency over real ownership. When NGOs can scrutinize contract prices and compare them to global equivalents, under-pricing becomes instantly manifest and the politicians or corporates that enabled that soft pricing can be called into account. According to Caroline Kende-Robb, executive director of the Africa Progress Panel, Guinea represents a very encouraging case in point:

"[...] a country like Guinea is now publishing contracts online. They now have 60 contracts online within the last year. About a year ago, nobody thought that that would happen."

The Africa Progress Panel, which is chaired by Kofi Annan, has given a lot of thought to the question of how Africa's economies can retain more of the wealth created by the extractive industries across the continent. It has produced a report, Equity in Extractives: Stewarding Africa's natural resources for all. In the foreword, Annan calls on all countries engaged in the extractive industries in Africa:

"[...] to adopt and enforce the project-by-project disclosure standards embodied in the US Dodd-Frank Act and comparable EU legislation [...] to all extractive industry companies listed on their exchanges."

Annan points out that, acting alone, African governments cannot resolve the most intractable natural resource governance challenges:

"When foreign investors make extensive use of offshore companies, shell companies and tax havens, they weaken disclosure standards and undermine the efforts of reformers in Africa to promote transparency. Such practices also facilitate tax evasion and, in some countries, corruption, draining Africa of revenues that should be deployed against poverty and vulnerability. We call on the G8 and the G20 to step up to the mark, to show leadership in the development of a credible and effective multilateral response to tax evasion and avoidance."

The report builds on an earlier initiative, The African Mining Vision, agreed by Heads of State and Government in February 2009. This Vision advocates:

"The transparent, equitable and optimal exploitation of mineral resources to underpin broad based sustainable growth and socio-economic development."

What both are addressing is the heart-wrenching fact that Africa's vast resource wealth has gone hand-in-hand for so many decades with grinding poverty and severe infrastructure deficiencies. Money poured out of Africa into the coffers of companies in advanced markets, with some funds being diverted to enrich African politicians and officials, leaving the major stakeholders, the citizens of the countries that owned the resources, with not much more than ruined landscapes and poisoned rivers. With Africa at its current state of development and democratization, those days of easy piracy are just about done, it seems, and a damn good thing too.


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Further reading on Africa




Tags: Africa Progress Panel , African Mining Vision , corruption , Dodd-Frank Act , EU , extractive industries , Guinea , Kofi Annan , mineral , mining , oil , tax , transparency
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