The (Uncontrolled) Scramble for Africa’s Resources

By Victoria Ibezim-Ohaeri

Over the last decade, the resource curse in Africa has disappointingly showed minimal signs of reversal, no thanks to the store of unmet expectations of developmental progress associated with natural resource finds.  No week passes without the announcement and ensuing celebration of mineral resource discoveries across Africa. These finds have rarely translated to better infrastructure; increased access to education and basic healthcare and other social and economic benefits despite the monstrous profits and the huge revenues generated from hydrocarbon, gas, gold, diamonds and many other mineral resources.

Among several factors, the lopsided power relations between African governments and the powerful multinationals engaged in extractive projects make sure the flame of resource curse burns so fiercely and continually. Complex contract deals negotiated behind closed doors far away from judicial and public scrutiny, always tilt in favour of the multinational corporations (MNCs). The regularity of such defective deals across the continent puts a big question mark on the capabilities of African leaderships to effectively control their natural resources and undertake macro-economic decision-making relating to fiscal transactions of a complex and multinational nature. It is therefore no surprise that the combined sales of the top 200 corporations are bigger than the combined economies of all the countries of the world, minus the largest 10. The income of MNCs is 18 times higher than the combined annual income of the 1.2 billion people of poor countries (24 percent of the total world population).

Thanks to the Ford Foundation and the African Center for Economic Transformation (ACET), I was among the team of policy experts working on natural resources that visited the AngloGold Ashanti goldfields in Obuasi, Ghana last week. That visit afforded an opportunity to witness firsthand, the artificial mountains dotting the landscape of the vast goldfields created by over a century of unrestrained soil excavation and mining operations. The deep gullies, flooded valleys, forts including the rapidly-eroding topography in and around the goldfields are sad testaments of the extremely harsh consequences of mining activities on the environment, traditional livelihoods and sacred groves.

As Africa’s second largest gold producer with 23 large-scale mining companies, gold alone constitute more than 90% of the country’s total mineral exports. AngloGoldAshanti (ASA) is one of the leading mining companies in Ghana, with its international mining operations spanning over four continents.  Prior to gold rush in Obuasi, indigenous communities depended on the natural habitat for their livelihoods, forestry, games and domestic energy needs. Presently, ancestral lands, cash crops and economic trees on which the economic survival of indigenous groups depend on, have been taken away to pave way for the precious metal business to flourish. As with projects of such magnitude, host communities are often cajoled with promises of better economic opportunities and enhanced service delivery. These undocumented promises are not monitored for implementation or subjected to judicial control.

Apart from the horrifying levels of environmental degradation, mining-impacted communities in Obuasi live at the mercy of the MNCs who enthusiastically brandish an array of development programmes they have magnanimously executed across the country. Perhaps most telling is that these corporate social responsibility (CSR) programmes seem to have received an official nod as acceptable substitutes for environmental remediation and reclamation. Ghana’s most popular CSR program is ASA’s Malaria Control Program which started as an internal corporate strategy to improve workforce productivity. The Malaria control programme was an initial response to the high incidence of about 2,500 employees’ monthly absenteeism, including lateness to work on account of malaria. The program was later extended to the host communities, while a Global Fund grant of $133.5 million dollars enabled the project to be scaled up at a national level.

A TNC-sponsored national health program is no doubt, laudable. It is instructive to note that multinational corporations are business entities, mainly seeking to gain maximum return on their invested capital. However, eyebrows are raised when a multinational company brazenly takes over the role and responsibilities of national health institutions using funds sourced from global donor agencies. This trend has many implications. First off, it establishes a precedent that portrays Ghana’s health institutions as ineffective and incapable of managing and sustaining national health-focused initiatives. Furthermore, it raises a second question of whether private business entities can blatantly take on roles that is traditionally assumed by the government. Thirdly, even when a community development programme is imperative, TNCs with longstanding history and expertise in mineral resource extraction are usually ill-equipped to institute and oversee such large-scale projects on a sustainable basis. And importantly, should a purely commercial, multinational entity take advantage of local problems to fundraise globally and manage grants on behalf of its host country? The propriety of this action is one that requires deep introspection and robust reconsideration, especially with regard to the potential to undermine national sovereignty and administrative independence.

Initiatives framed like ASA’s malaria control programme generally create a culture allowing MNCs to officially launch community development projects in lieu of environmental remediation or payment of compensation to persons affected by their operations. Just like in Nigeria’s oil-rich Niger Delta region, it is common practice for MNCs to decline responsibility to compensate and clean up  the environment in line with prevailing legal regimes, but instead, hurriedly go ahead to institute a development project as though it is a form of charity for affected communities. This approach is dysfunctional and obscures accountability in several ways. For one, by denying responsibility, the victims who have suffered environmental abuses are robbed of justice or restitution. In addition, it leaves the matter of legal redress and compensation wholly to the good will of the MNC. The MNC decides what to provide, how much to provide, and who to provide it to. Some MNCs may sincerely wish to provide sustainable projects, while others may merely wish to placate communities. Community members, with little bargaining power and few resources, are often powerless to assert their rights and challenge this impropriety.

Despite having a solid gold production of 935koz, all of the precious minerals ASA mines from Obuasi are exported abroad! Except for the 12 % of local production by artisanal miners, not a single ounce is reserved for domestic consumption! Millions of exported slabs gold are shipped and processed abroad and a tiny fraction of finished products are then imported back into the country to be sold at shockingly prohibitive prices. This seems to be common place in Africa. In Nigeria, the the constant under-performance of its ailing local refineries has seen Nigerian crude exported and refined abroad, and then re-imported back into the country as refined petroleum products. With increased local refining capacity, the huge costs expended on exportation of crude oil, and buying back of refined products will be eliminated. The savings can then be used for other infrastructural projects, while petrol costs remain stable or even cheaper.  Democratic Republic of Congo is another sad example where the totality of the country’s mineral resources has been given away to foreign multinationals for a pittance.

Quite frankly, every blame of resource appropriation cannot be placed at the door of the MNCs. After centuries of gold mining, one wonders aloud why the Ghanaian government has never ever considered building own infrastructure to locally process and refine its precious minerals and exporting refined products abroad. In addition to being an economic regeneration and job-creation strategy, this will reduce dependence on foreign personnel and technology and bolster local content development in the mining sector. Same applies to Nigeria and the DRC. Why aren’t African leaders thinking towards this direction? Why is emphasis skewed on social and economic development rhetoric even if it is at the price of enormous social dislocation and human suffering?

There are just so many questions begging for unavailable answers….