Talking about extractive industry (mining, gas and oil) in Africa we are referring to a complex reality. The new model of global economic development makes access to natural resources essential.
The special wealth of the subsoil in Africa makes the continent a scenario coveted by extractive industry because of the ease with which local governments grant extractive companies licenses to exploit these resources. The extractive companies repeat the same pattern of behaviour that is well-known by all stakeholders: governments, lawmakers, companies, shareholders, consumers, activists, population, civil society, and so on. The consequences of mining industry in Africa are interconnected with political, economic, social and environmental factors. But if all these consequences are identified, why are these attitudes which perpetuate them are allowed to repeat over time? How can this system of extractives model be reverted?
Political Changes. The exploitation of the natural resources in Africa is rooted in the time of the European colonialization. The consequences of that era have a direct bearing on different political problems such as the Africa´s democratic fragility, the economic dependence on Western countries and the corruption of their political leaders with the complicity of developed countries. Political fragility means that the continent is in a permanent struggle for the control and redistribution of natural resources, which not infrequently leads to armed conflicts.
The management of mineral, oil and gas resources requires political changes that make such natural wealth a leverage for economic development in Africa. A review of national mining codes, the implementation of international due diligence on Business and human rights, the transparency in mining concessions and the fight against corruption are urgent and necessary measures. Multinationals and international institutions such as the World Bank and the International Monetary Fund cannot dictate the rules governing the management of natural resources in Africa as they have done in the past. But first of all, African countries must assume its international commitments without undermining their own interests.
Economic Changes. The extractive industry (minerals, gas, oil) has an indisputable economic impact on Africa. The development of the extractive industry supposes a continuous growth of the direct and indirect investment in the countries with economic resources. However, only 10% of the profits generated by the extractive industry remain in the continent. Moreover, Africa loses $80 billion annually in illicit financial flows, 70 per cent of which comes from extractive industries, particularly mineral resources. However, not all African countries rich in natural resources have seen their GDP increased in the long term. In addition, the economic impact of natural resources is undermined by unfair tax systems that benefit extractive companies and forget reinvestment in land-owning communities and their populations.
Faced with such reality, transparency becomes a key factor in reversing the increase in inequality in Africa. Changing the tax system affecting large multinationals is a necessary measure for better economic management of natural resources, but it is not enough. It is urgent transparency mechanisms that report all economic movements realized by extractive companies such as amounts paid to governments and local authorities, taxes paid, profits obtained, quantity of minerals exported, investments, reinvestments, compensation to local communities and all payments made by the company in the country where they carry out their economic activities. When natural resources are exported, the surplus value generated by these resources remains in the rich countries and deprives countries rich in natural resources of the wealth generated by their transformation.
Social Changes. The direct consequences of the extractive industry in Africa are directly reflected in the population. Extractive companies transform the environment in which they operate by making traditional means of survival such as agriculture or livestock unviable. It is evident that those populations that are closer to extractive activities suffer a direct impact: on health, deterioration of living conditions, displacement, worsening of infrastructures and with continuous abuses that end up being violations of human rights.
The social changes to reverse the negative impact of the extractives goes through different factors. From a global point of view is required a change in consumption patterns as well as policies that encourage a circular economy that involve technology companies, reducing and reusing their own products. Regarding to the population, respect for human rights must be guaranteed and no economic interest can take precedence over people’s rights. Social changes require equal opportunities and multinationals cannot claim the exclusivity of a territory’s natural resources. On the contrary, artisanal mining must be protected and guaranteed by local authorities.
Environmental changes. If any of the characteristics of the extractive industry has taken a center stage in recent years, this has been the impact it causes on the environment. Sometimes not only the mineral extraction processes cause contamination, but the chemical processes used to obtain the minerals are substances of high toxicity. Often chemical wastes are dumped around the mines next to nearby towns causing not only health problems among populations but destroying aquifers and arable land.
The change in national and international legislation is essential to mitigate the environmental impact generated by extractive companies. This environmental impact is directly associated with the impact on climate change and requires urgent measures to mitigate it. I consider that the initiative of the United Nations treaty on multinationals and human rights would be an effective instrument to end impunity of for those multinationals that do not follow the established recommendations.
The paradigm shift in the behaviour of extractive companies in Africa requires the efforts of all: governments, companies and civil society. On the one hand, it requires the unconditional involvement of States: not only from developed countries but also from those that host natural resources. No government can be complicit in the violations of human and environmental rights included in international legislation. Secondly, extractive companies must compulsorily assume the guidelines established by the United Nations and the OECD. As a society, we cannot continue to ignore the negative impact of mining companies and remain indifferent to the day-to-day tragedy of plundered Africa.
José Luis Gutiérrez Aranda,
Trade Policy Officer,
Africa Europe Faith and Justice Network (AEFJN)