Africans aim for alternative, fully-reformed, minerals sector

Published by MAC on 2009-07-16

ELEVENTH ANNUAL STRATEGY MEETING OF THE AFRICAN INITIATIVE ON MINING, ENVIRONMENT AND SOCIETY (AIMES)

24-26 JUNE 2009, NAIROBI, KENYA

Statement

Introduction

We, 32 members of the Africa Initiative on Mining, Environment and Society (AIMES) from Angola, Cameroon, Democratic Republic of Congo, Ghana, Kenya, Lesotho, Mali, Nigeria, Sierra Leone, South Africa, Tanzania, Zambia, Zimbabwe and our partners from Canada and the United Kingdom participating in its eleventh Annual Strategy meeting call upon African governments to adopt an alternative mining regime that optimises the net benefit of mining and protects the mining sector from being a transmission channel for international crises such as the commodity and credit collapses that occurred late 2008 to date. The meeting which was organised by Third World Network-Africa and hosted by Action Aid took place from June 24-26th, 2008, in Nairobi, Kenya.

Objective of meeting

Conceived as a platform for analysis, dialogue and information sharing, the objective of the eleventh annual strategy meeting was to:

a) Build the capacity of members of AIMES to appreciate the impact of the global economic crises and the implications for advocacy and the reform agenda

b) Reflect on how the economic recession influence the draft model mining regime developed last year in order to re-activate it as an advocacy instrument.

c) Provide a platform for exchange and sharing of information

d) Adopt a strategy for the delivery on the positions and outcome of the meeting

Context

The eleventh annual strategy meeting took place at a time the world is confronted with global economic crises (i.e. the financial crisis arising from speculative anarchy, a collapse in the price of some of Africa's strategic commodities, in particular platinum, diamond and copper). During the early part of 2008 the world witnessed commodity crisis which was a combination of severe food shortage and boom in the price of various metals, minerals and petroleum. This cumulatively impacted negatively on the economies and population of Africa as the continent failed to secure marginal gains from the commodity boom to offset the food shortage. Just as the continent was about to experience a respite from the food shortage the financial crisis set in causing the price of important commodities to collapse.

The extractive sector, in particular mining has been one of the hardest hit sectors, and this has been translated into the loss of government revenue and hundreds of thousands of jobs, but worse the prospect that many manhandled mines will never re-open. The use of derivatives by mine financiers in particular the use by hedge funds of shorting which is betting that the company will fail and sometimes manipulating has contributed immensely to deepen the collapse of the mining sector. Equally important was the artificial inflation of metal commodity prices by traders who bought and sold stocks which were not required to satisfy human need but which resulted in many unnecessary and damaging mining projects being financed only to fail when the huge bear market descended on the world in mid-2008

Mineral resources have been important in the social and economic development of many countries in Africa. In the past few years, the price of various minerals has risen dramatically in the world market reaching unprecedented historic high level in the first half of 2008. However there was recognition and consensus that mineral exporting African countries have not derived the required optimum benefits from the increased exports and price boom of various minerals. This recognition resulted in policy reform initiatives by African organizations of civil society, national governments and continental bodies such as the African Union (AU) in collaboration with the United Nations Economic Commission for Africa (ECA). Some countries have already begun to retreat from either proceeding on domestic reforms and or putting on hold implementation of specific fiscal reforms. In addition to their adverse effect, the global economic crises (commodity price collapse and credit squeeze) have the potential of undermining the policy reform processes initiated by governments and civil society, domestic policy autonomy, compliance to environmental, social and human rights standards as well as community concerns. The crises also have the potential of intensifying geo-political hegemony, in particular between the old economic powers in Europe, North America and Australia, and the emerging economic powers in the south (China, India and Brazil).

During the same period negotiation on the Economic Partnership Agreements (EPAs) between Europe on the one hand and Africa and Caribbean Countries on the other hand is still in progress. The Economic Partnership Agreements (EPAs) has been noted by several advocacy groups as one of the areas where the sphere of influence by Europe is clearly manifested. The Cotonou Agreement which was concluded in June 2000, by African, Caribbean and Pacific countries provided for a shift from non reciprocal trade preferences to the Economic Partnership Agreement. The framework of the EPA includes negotiations in Trade in goods, Trade in services, Government procurement, Investment, competition and Intellectual property rights. Europe is negotiating the EPA with five regional blocks of Africa ESA, ECOWAS, CEMAC, EAC and SADC. By its nature and scope, the EPAs which is essentially ‘Free Trade Agreements' represents a much higher level of liberalization experienced since the launch of Structural Adjustment Programme (SAP) in the 1980s. This is the same period that the international community is engaged in climate negotiations to develop a new framework to replace the Kyoto protocol which expires in 2012. These processes and events not only threaten the marginal economic growth that Africa experienced in the last few years but also have consequences for the negotiating capacity of African governments. This is because the global economic powers who by themselves are hit by the financial crisis would want to seize the opportunity to widen and intensify their control and sphere of influence they have over African political economies.

Observations

The meeting shared experiences in the light of developments affecting the mining sector and the consequences for community interest, ecological sustainability, gender equity and integrated development. In addition, the meeting discussed a range of issues pertinent to the development of Africa's mining sector and approaches by citizens to influencing the adoption of frameworks which address the priorities and needs of African people and their economies. These issues include the global economic crises and the impact on on-going policy initiatives, the convergence of opinion regarding the need for policy reforms and the future role of mining in Africa's political economy.

Since AIMES's establishment ten years ago, it has addressed specific impacts of the flawed mining regimes that are predominant in Africa. In recent times AIMES has moved to address the problems of mining more systemically and proactively by offering alternative coherent frameworks for the development of Africa's mining sector. In line with this, the last annual strategy meeting held 2008 developed and adopted a draft coherent alternative regime for mining in Africa with the hope of feeding this into the reform processes at the various levels. The meeting re-examined the draft model regime in the light recent developments affecting the mining sector.

In the light of the foregoing issues the meeting made a number of observations as follows:

Global economic crises

The structure of African economies exposes the continent to external shocks and price volatility. Despite the continent's heavy dependence on primary commodities yet there is weak policy and mechanisms for determining the volume and price of these commodities. At the same time, the structures of production tend to be competitive rather than complementary (i.e. being enclave production without linkages to rest of economy, same approach to economic industrialization-import-substitution industrialisation, target the same market and competing for the same investors and suppliers of bulk of unskilled labour). This arrangement makes the economies of continent more of an appendage to markets other than the African market. Therefore, although the global economic crises are in reality local and external to Africa, the sock-waves they transmit through the structure of African economies are severe on African people and economies.

On-going policy initiatives

We observe a number of on-going policy initiatives on the continent focusing on the extractive sector. The numerous extractive sector policy initiatives is both an affirmation of failure of current policies in catalysing the transformative role of mining in growth and development and convergence of opinion about the need for reforms.

In 2007, a meeting of African policy officials concluded that the long years of dedicated liberalisation of the mining sector did not correlate with benefits accruing to the continent and called for urgent action to evaluate the African experience in natural resource development in order to make recommendations for ensuring that natural resources contribute to the economic and social development of African societies in a sustainable and equitable manner. Following this conclusion, the AU in collaboration with the ECA initiated a continent-wide process intended to lead to a reform of state mining policies. The process and continent can be improved by taking account of the role of African civil society organisations and communities affected by extractive activity; by consideration of the implication of global economic and political processes on the transformative role of mining.

The Natural Resource and Environmental Governance Sector Budget Support (NREG) is a new Donor framework for improving natural resource "governance". This innovation is currently operating in Ghana and Tanzania. It derogates from the MDBS frameworks in place in most countries and allows coordinated donor funding support to natural resource sectors. In theory it demonstrates the commitment of both governments and development partners: it ties overall support to the natural resource sectors to achievement of specific annual "governance" reforms targets and it promotes CS consultation in target-setting and in evaluation of governance reforms.

The NREG's definition of governance however is in practice narrow and relates not to fundamental class or stakeholder relations or the mining political economy but simply to the performance by national governments of the unambitious efficiency and transparency reforms already targeted - many of which actually entrench the TNC domination of mineral development. NREG also potentially distractscivil society into evaluating specific annual targets and monitoring programme performance and away from their more critical role in promoting transformation.

We observed that in recent times, international investment agreements and contracts with African governments in the extractive sector in particular have significantly increased. By the middle of 2008, more than 2600 bilateral investment treaties have been signed between individual African governments and private corporations and northern governments. These agreements have been signed with limited citizenship participation. Despite their intent to clarify and codify rules around expropriation, these treaties tended to reinforce structures of exploitation and Africa's peripheral status in global political economic order. They have been effective in protecting the interest of foreign direct investment (FDI), constraining public policy space, limiting environmental protection, undermining human rights including labour and community livelihood, and ultimately legalizing capital flight out of the continent.

Despite increasing trend of democratic culture reflected in public statements and frequent elections this has not been translated into lowering alleged cases of human rights abuses particularly in the mining sector. Reported incidents of violence and human rights abuses perpetrated against small-scale and artisanal miners and people living in communities affected by mining and oil projects by State security and private security of mining companies are still pervasive. In many cases, violent actions by the State and mining companies towards local communities and small scale miners become the privileged mode of resolving legitimate concerns.

We observed that increasing liberalisation, in particular the privatization of life supporting and natural resources such as land, water and forest is deepening social and economic inequalities against communities and women. Women are particularly affected in view of their multiple roles and their subordinated status in most African societies. Moreover, the privatisation of land and water has resulted in the marginalisation of women as food producers since most of them depend on land as a factor of production; an increased burden on them as water providers, care-givers and nurturers; a decrease in their productivity and incomes due to environmental destruction; and their increased involvement and containment in the informal economy to find alternative sources of incomes for sustaining their families.

Policy proposal

In the light of the foregoing we make the following policy proposals for adoption by African governments and policy officials, mining companies, bilateral and multilateral institutions, and the international community of nations:

• The ongoing efforts towards policy reforms and regional integration should be considered in both the political and economic context of Pan-Africanism. The policy initiatives being pursued should be approached in a manner that ensure complementarity of structures of production and delivered in a way that reinforces simultaneous economic cooperation and political commitment.

• There is an urgent need for the development of frameworks and mechanisms for determining the volume of production and prices of strategic commodities. This is an approach that offers a genuine basis for economic cooperation but which requires political decisions to enforce and sustain.

• The current institutional arrangement for mining in Africa tends to serves the primary interest of transnational mining companies. Policies are required for redefining this arrangement that guarantee accountability and responsibility to citizens and national interest as opposed to corporations and the market.

• We call for effective mechanisms for participatory monitoring and evaluation of the performance of the mining sector. This would require the need for periodic performance updates and reports as well as development of benchmarks and indicators for participation, reporting and economic transformation including also human rights and the environment. These indicators must of necessity capture issues which are socially recognized and contribute to the development of local communities.

• We proposed a new conception of investment that prioritises a balance between small-scale artisanal and large-scale mining; profitability and ethical investments; and forms of development which promote justice and equity, in particular gender equity.

• African governments should put in place an alternative mining regime, contracts, and investment standards that optimise national benefits including integrated national development, protection of community rights and the environment.

• We call for coherence in the on-going policy initiatives on the continent with the view to optimising the benefits of mining to Africa and its people in both the short and long-term. In this regard, the frameworks which emerge from on-going reform initiatives must focus on the developmental role of mining, a convergence of the social, cultural, economic, environmental and political objectives including the need to improve human development, indigenous knowledge and technology, gender and generational equity.

• We particularly recommend that the processes of reforms and harmonisation should provide opportunity for exploring and putting forward policy options that go beyond the familiar centrality of foreign direct investment in Africa as a whole and in the mining sector in particular.

• We demand national, continental and international frameworks for regulating corporations and their speculative activities.

In order to end on-going expropriation by transnational mining companies we make the following demands:

• Review and abrogate existing contracts which are inimical to the larger interest of African societies, local communities, the environment, labour, national economic development effort and national cohesion. Any such review must be conducted in an atmosphere of transparency and full participation of all relevant sectors of the particular society. Any new mining contracts must adhere to standards that contribute to the transformation of African economies.

• We urge African governments who are holding on to reforms or suspending implementation of aspects of their fiscal regimes to reconsider their position and implement them in full. This call is in recognition of the fact that the current commodity collapse and financial crisis are not permanent situations that should influence a roll-back on progressive policy reforms.

• Governments, mining companies and multilateral and bilateral actors must all commit to public disclosure of information and early notification of all processes and activities in the extractive sector to all persons, especially affected communities and women's organisations. To this end we demand the removal of all confidentiality clauses on environmental audit reports and urge all governments to expedite action on the passage of freedom of information and whistle blowing bills into laws.

• That the public disclosure must be backed by conscious commitment to promoting and ensuring accountability and participatory decision-making through the provision of systems, mechanisms and benchmarks for equal opportunities, collective ownership, detection of abuse of power and feedback.

• All pressures and policy prescriptions for Africa and African governments must cease forthwith so as to allow African governments and people to enjoy the right to policy choices, review their laws and mining contracts without any limitation.

• In relation to the above, we demand the unconditional abolition of all stability clauses as legal provisions in national mining codes.

• African governments must make an effort to improve the technical capacity of their institutions within the framework of regional integration to facilitate the diffusion of knowledge and skills.

Conclusion

We concluded the meeting with understanding and commitment to work together in collaboration and solidarity with communities affected by mining, African civil society organisations, partners from the global north and south to:

• Influence the adoption of extractive sector frameworks which are sensitive to community interest, ecologically sustainable and contribute to integrated development
• End mineral resource plunders in Africa.
• Stop mining related violence against people living in communities affected by mining
• Promote and ensure that Africa optimises the benefits of its mineral potentials in ways that guarantee national economic development, human rights, environmental sustainability and community interest.
• Support the African Union-Economic Commission for Africa reform process consistent with our values and positions.
• Resist any further lowering of national mining standards
• Build pressure for the adoption of our collective positions that advance the development of Africa.

We call on the media to echo our demands and recommendations.

Third World Network-Africa is secretariat of AIMES. For further information please contact +233-21-500419/503669 Email: environment@twnafrica.org

Endorsed by:

1	Cameroon	Lindlyn Tamufor	Third World Network Africa
2	Kenya	Brian Kagoro	ActionAid International
3	Ghana	Abdulai Darimani	Third World Network Africa
4	Ghana	Kwesi Wrekon-Obeng	Third World Network Africa
5	Zambia	Brian Chirambo	Citizens for Better Environment
6	Nigeria	Kentebe Ebiaridor Jackson	Environment Rights Action
7	Nigeria	Celestine Akpobari Nkabari	Social Action
8	Ethiopia	Aster Gebremariam	UN Economic Commission for Africa
9	Liberia	James Otto	Sustainable Development Inst
10	South Africa	Moses Cloete	Bench Marks
11	Sierra Leone	Suna Bundu	Network Movement for Justice
12	Zimbabwe	Gilbert Makore	Zimbabwe Environmental Lawyers Ass.
13	UK	Roger Moody	Mines and Communities
14	DRC	Jean-Luc Muke	Member Avocats Verts Org
15	Angola	Agostino Chicaia	Association Civique de Cabinda
16	Tanzania	Elinami Lowasa	Tanzania Mineworkers Development Ass.
17	Kenya	Maurice Ouma Odhiambo	Haki-Mazingira
18	Kenya	Patrick Ochieng (TBC)	Ujamaa Centre
19	Mali	Mamadou Goita	IRPAD
20	Tanzania	Amani Mustafa Mhinda	Tanzania Mineworkers Dev
21	Canada	Jamie Kneen	Mining Watch Canada
22	Canada	Julie Perreault	Development and Peace
23	Sierra Leone	Turray Mohamed	Network Movement for Justice
24	Lesotho	Ben Van Tonder
25	Kenya	Wilson Kipsang Kipkazi	Endoris Welfare Council
26	Kenya	Alvin Mosioma	Tax Justice Network
27	Kenya	Maurice Ouma Odhimabo	Resource Conflict Instiute (RECONCILE)
28	Kenya	Linda Mwakugu	ActionAid International
29	Ghana	Kyeretwie Opoku	Civic Response
30	Kenya	Andrew Korinko ole Koisamo	Centre for Pastoralist Development
31	Kenya	Jack Ranguma	Tax Justice Network Africa
32	Kenya	Dr. Dereje Alemayehu	Christian Aid - East Africa
33	Burundi	Sandra Kidwingira	Tax Justice Network

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AFRICAN INITIATIVE ON MINING, ENVIRONMENT AND SOCIETY (AIMES)

CALL TO SUSPEND FOREIGN INVESTMENT PROMOTION AND PROTECTION AGREEMENT (FIPA) NEGOTIATION WITH TANZANIA

Nairobi, 26 June 2009

We, members of the Africa Initiative on Mining, Environment and Society (AIMES) from Angola, Cameroon, Democratic Republic of Congo, Ghana, Guinea, Kenya, Lesotho, Mali, Nigeria, Sierra Leone, South Africa, Tanzania, Zambia, Zimbabwe and our partners from Canada and the United Kingdom participating in its eleventh Annual Strategy meeting from June 24-26th, 2008, in Nairobi, Kenya call upon the governments of Canada and Tanzania to suspend negotiation on Foreign Investment Promotion and Protection Agreement (FIPA) until the domestic mining policy reform initiatives are concluded

In the context of the mineral price boom, a number of African countries have initiated mining policy reforms aimed at capturing the windfall associated with the price boom. Tanzania one of the major gold producing countries initiated mining sector fiscal reforms following recommendations of Report of Judge Bomani Presidential Committee on Mining Law Review.

While the proposed reform initiatives are being debated nationally and set to go to parliament, the government of Canada has launched negotiation with the government of Tanzania to sign bilateral investment agreement known as FIPA.

We believe that negotiation on FIPA at the same time of the national debate has the potential for undermining the autonomy of national policymaking process. Experience has shown that Bilateral Investment Agreements between individual African countries and their northern counterparts have had locking effect and non-reciprocal benefits to African countries. Given the size of Canadian mining interest in Tanzania, we believe that this agreement is unlikely to be different in terms of reciprocal benefits. Rather FIPA would further promote and protect the interest of Canadian investment in Tanzania, in particular Canadian mining companies operating in the country.

We therefore called on the governments of Tanzania and Canada to suspend negotiation on the FIPA until the Tanzanian domestic mining policy reform processes are concluded.

Endorsed by delegates to the AIMES Conference, Nairobi 26 June 2009: