A GNA Feature by Desmond Davies, London Bureau
London, April 19,
GNA – Former Nigerian President Olusegun Obasanjo does not usually mince his
words and he was at it again while addressing the press in the run-up to this
year’s Tana Forum scheduled for April 22 and 23 in Bahir Dar in Ethiopia.
Given that this year’s focus will be on the contentious matter of resource management in Africa, Obasanjo, Chairman of the Forum’s Advisory Board, called on African governments to improve their negotiation skills to ensure that their citizens got the best deal from mining and oil drilling companies operating in their countries.
He urged those governments to “stand up to the parties they are negotiating with” in order to avoid financial losses and inequitable terms and conditions when granting access to natural resources.
“We are not where we should be on natural resource management,” Obasanjo said when asked to assess the state of resource governance on the continent.
“We need to look at the issues holistically and also what needs to be done differently and how. “We need to ensure that the proceeds from resources are well managed.”
In an era of complex global financial systems specifically set up to bypass the payment of taxes and royalties, Obasanjo appears to be asking a lot of the continent’s leaders, many of whom have not been perceptive enough to take on the multinationals.
At least in Bahir Dar, these leaders and other stakeholders will use the gathering to refocus on how to have better control over the extraction of natural resources; and to ensure that Africans truly benefit from the resources.
The Forum notes that the scale and diversity of the continent’s natural resource endowments reveals that it has 12 per cent of global oil reserves, 40 per cent of global gold deposits, and about two-thirds of the world’s most suitable land for farming and forests.
But many of the big global companies that operate in Africa’s natural resource sector have not been transparent enough to allow the continent to greatly benefit from these natural assets.
According to an estimate by Oxfam, the mispricing of Africa’s natural resources has led to the continent losing some $50 billion each year, more than its combined foreign direct investment and overseas development aid.
In addition, according to Oxfam, more than $18 billion a year is lost through resource-related conflicts in Africa, not including indirect costs.
During such conflicts, the foreign beneficiaries of resource exploitation have seldom been made to account for their nefarious activities.
The issue of transparency in the oil and mining industries has been a major problem for African countries that have to be constantly on their guard to deal with the wiles of those in the business.
As Obasanjo said, there should be constant monitoring of the various oil and mining deals.
But do African governments have the capacity to do so even when there is no leadership problem?
Obasanjo himself does not think so, arguing that the problem goes beyond bad leadership.
Even with effective leaders, he said, “good intentions are not enough”.
The lack of information remained the major obstacle to Africans fully realising the gains from natural resources, he said.
Of course, NGOs, such as the Washington DC-based Natural Resource Governance Institute (NRGI), a policy advice and advocacy group, are helping by providing questions that African governments should ask investors about natural resource governance and their ability to be transparent.
In 2017, it launched the Natural Resource Charter Benchmarking Framework, which provided 170 questions to be posed relating to the management of oil, gas and mineral resources.
But because the expected dividends from the extractive industry deals appear huge, many African governments tend to take their eyes of the ball while negotiating the terms for natural resource extraction.
They should however always focus on transparency and better policies that would benefit not just the investors but also citizens.
In all this, African governments should also focus on training their negotiators so that they can stand a better chance of getting a fairer deal for their countries.
Indeed, Obasanjo wants to see the knowledge gap between the multinationals and African negotiators narrowed, while allowing also African governments to be in control of the process.
It is not an easy task, though, because the big businesses are always fighting back.
There was great disappointment among activists in the US when, in February, American legislators revoked a June 2016 Securities and Exchange Commission rule implementing the extractive industries payment transparency provision.
“Following a campaign of misinformation by the American Petroleum Institute and backers such as ExxonMobil, Republican lawmakers have shown themselves to be pro-corruption and have demolished US leadership in this area,” noted a disappointed Daniel Kaufmann, President and CEO of the NRGI.
“We are very disappointed that the rule implementing this trailblazing US law, which deters corruption and improves governance in the notoriously opaque natural resource sector, has been gutted.”
Nevertheless, some 30 countries, many in Europe, have a similar legislation in place, which would give citizens the chance to hold their governments and multinationals accountable for the manner in which they exploit Africa’s natural resources.
The Tana Forum could well provide the first step for Africa to come up with a more robust answer to the perceived resource curse inhibiting the continent’s development.