Better resource governance in Africa: On what development agenda?

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Notes

1. ‘Structural conditionality’ is the term used by the IMF in its Malian Country Report of June 2004, No. 04/184 (Mali: Request for a Three Year Arrangement under the Poverty Reduction and Growth Facility (PRGF) discussed below.

2. www.mineweb.net/events/conferences32005/samda2005/489480.htm ‘Mining to play key role in World Bank Africa plans’ by Gareth Tredway, September 20, 2005.

3. “Poverty Reduction in Africa: On Whose Development Agenda? Lessons from Cotton and Gold Production in Mali and Burkina Faso” by Bonnie Campbell, Vincent Nabe Coulibaly and Gisele Belem, Oxfam America 2007. To be published in December 2006. The central arguments of this study may be summarized as follows:

While poverty reduction is at the forefront of the World Bank's mission, some of its policies require substantial trade‐offs between economic growth and poverty reduction. The study argues that World Bank policies promoting privatization of the cotton sectors while encouraging the expansion of gold mining across Mali and Burkina Faso may undermine poverty reduction efforts in both countries. Even though gold now generates more export revenues than cotton in one these countries, Mali, and it is destined to do so in the other, cotton generates substantially more benefits to poor sectors of the population than gold. Cotton sustains well over five million people in both countries, strengthens food security, and generates strong backward and forward linkages to the rest of the economy, contributions unmatched by gold mining. However, current reforms are undermining the cotton sector, while promoting the expansion of mining without the institutions to ensure that, at the minimum, local communities do not bear the costs of environmental degradation. Findings suggest caution in assuming the link between export‐led growth and poverty reduction, and stress the benefits of continued policy space for national governments and of pacing liberalization.

4. Eric Hazard, ENDA Prospective Dialogue Politiques, ‘Mali, Yellow Gold and White Gold’, November 2004, page 5. Oxfam America Eminent Persons Delegation to Mali: December 1–4, 2004.

5. ‘Analyse de la pauvreté au Burkina Faso’, INSD, 1999, Ministère de l'Économie et des Finances. Quoted in Louis Goreux and John Macrae ‘Reforming the Cotton Sector in Sub‐Saharan Africa’, March 2003. Draft study for the World Bank. p.7.

6. It should be noted that the other conditionalities that have been requested of Mali by the IMF as part of its Poverty Reduction and Growth Facility include the privatization of the public telecommunications company (SOTELMA) and of the public company that produces pharmaceutical products (UMPP). With regard to the public water transport company and that which produces sugar, state participation is to be reduced to 20% of total shares.

IMF, Country Report of June 2004, No. 04/184 (Mali: Request for a Three Year Arrangement under the Poverty Reduction and Growth Facility (PRGF). pp. 16–17.

7. ‘Perspectives on Growth and Poverty Reduction in Mali’ by Mohamed Ali Marouani and Marc Raffinot, Document de travail DT 2004/05. Développement, Institutions et Analyses de Long Terme, Dial, Paris, September 2004.

8. Ibid. p. 18.

9. To recall rapidly the context, it is worth underlining that as a result of the subsidies, world cotton prices declined by almost half as of the mid‐1990s. Between 2001 and 2003, American farmers received 3.9 billion $US worth of subsidies (i.e. 230 $US per acre) and the total amount represented the doubling of the figure ten years previously, in 1992. According to Oxfam International, doing away with these subsidies would have permitted an 11¢ increase per pound of cotton, i.e. a 26% increase in price paid to African producers. Just to give an idea of the importance of American subsidies, American farmers received in this period in the form of subsidies for their cotton more than the GDP of Burkina Faso and almost three times more in subsidies than USAID's budget for all of Africa. See: ‘Cotton Cultivation in Burkina Faso: a 30 year Success Story’. A case study from ‘Reducing Poverty, Sustaining Growth – What Works, What Doesn't and Why. A Global Exchange for Scaling Up Success,’ prepared for the World Bank, 2004, p. 8.

10. Bonnie Campbell (Ed.), Regulating Mining in Africa: For Whose Benefit? Discussion Paper 26, Nordiska Afrikainstitutet, Uppsala (Suède), 2004, 89 pp.

11. This work also has involved the Democratic Republic of the Congo. See: Marie Mazalto, ‘La réforme des législations minières en Afrique et le rôle des Institutions Financières Internationales. Le cas de la République démocratique du Congo’, L'Annuaire des Grands‐Lacs africains 2004–2005, Septembre 2005, 25 pp.

12. Thomas Akabzaa, ‘Mining legislation and net returns from mining in Ghana’ in (Ed.), Regulating Mining in Africa: For Whose Benefit? Ed. Bonnie Campbell, Discussion Paper 26, Nordiska Afrikainstitutet, Uppsala (Suède), 2004. It should be noted that the revisions of the country's most recent mining code have been finalised since this study was performed.

13. SMCD: Supreme Military Council Decree

14. PNDCL: Provisional National Defence Council Law

15. This proposal was before Parliament for ratification in 2002.

16. Craig Emerson, ‘Mining Enclaves and Taxation’, World Development, vol.10, no.7, 1982, pp.561–71.

17. Ministry of Finance and Economic Planning, Ghana Extractive Industries Transparency Initiative, ‘Inception Report on the Aggregation of Payments and Receipts of Mining Benefits in Ghana.’ Prepared by Boas & Associates, Ghana, September 2006.

18. This section is based on Bonnie Campbell ‘Walking a fine line. Liberalization, Policy Space and the Challenges of Development: Lessons from the Guinean Bauxite‐Aluminium Sector’, Presentation to the World Bank Group Extractive Industries Advisory Group, Oil, Gas, Mining and Chemicals Department, IFC, Washington, June 20 2006. To be published in a forthcoming volume of the Political Economy of Mining in Africa.

19. World Trade Organization (WTO), Trade Policy Review: Republic of Guinea – Report by the Secretariat (Revision), Trade Policy Review Body, WT/TPR/S/153/Rev.1, December 14 2005, p. 63. Guinea's contribution to United States has decreased slightly recently. U.S. Geological Survey, ‘Bauxite and Alumina’, In Mineral Commodity Summaries, U.S. Department of the Interior, January 2006, p.32.

20. International Monetary Fund (IMF), Guinea: Selected Issues and Statistical Appendix, IMF Country Report No. 06/25, Washington DC: IMF, January 2006, p. 48.

21. Integrated Framework, Guinea: Diagnostic Trade Integration Study, August 22 2003, p.3 [PDF] http://www.integratedframework.org/files/guinea_dtis‐vol1_25nov03.pdf

22. International Monetary Fund (IMF), Guinea: Selected Issues and Statistical Appendix, op. cit., p.55.

23. International Monetary Fund (IMF), Guinea: 2004 Article IV Consultation – Staff Report; Staff Statement; and Public Information Notice on the Executive Board Discussion, IMF Country Report No 04/392, Washington DC: IMF, December 2004, p. 29.

24. World Trade Organization (WTO), Trade Policy Review – Report by Republic of Guinea, Trade Policy Review Body, WT/TPR/G/153, September 14 2005, p. 9.

25. WilfredEdwin, SpecialCorrespondent, TheEastAfrican, 6/26/2006, Nairobi

‘Last week, the government publicly acknowledged that major mining companies have been fiddling with figures to avoid paying the requisite duties and royalties. Deputy Minister for Energy and Minerals, Lawrence Masha, disclosed in Parliament that a recent audit report by government appointed assayers Alex Stewart had noted that reports presented by large scale gold mining firms on their operations were not correct. Mr Masha said that the investigations by the assayers were still going on. “The preliminary report by the committee is ready. I request the MPs to be patient as such problems and many others will be sorted out after the review process,” said Mr. Masha.

Members of Parliament last week pressed the government for more action on mining contracts, with the legislators demanding better profit sharing arrangements and better accountability to the communities where the mines are located. Legislator Chacha Wangwe demanded a government explanation for what he described as the mining companies’ “insignificant contribution to the communities” compared with the profits they were making. Companies are obliged to pay $200,000 annually to respective local authorities “depending on the tax regime of the district and additionally pay a royalty of 3% of the value of exports to the Tanzanian government.”

The government had in June 2003 entered into a contract with Alex Stewart (Assayers) Government Business Corporation of the USA to verify the cost of production, transportation of gold, and capital invested by large scale miners. The mining sector grew by 15.7% in 2005 compared with 15.4% in 2004, contributing 3.5% and 3.2% to GDP, respectively. The Minister for Planning, Economy and Empowerment, Juma Ngasongwa, says the government has formed a special committee to undertake an in‐depth evaluation of why the revenue accruing from mining activities is so small.

Dr Ngasongwa attributes the higher growth of the sector to additional investments in Tulawaka Gold Mine in Biharamulo. Gold is the main mineral export with 48.2 tonnes being exported in 2004, but its impact on economic recovery and job creation has been very minimal. Review of the mining contracts was one of the priorities identified by President Jakaya Kikwete when he took office last year. He promised to provide a fair balance between returns to investors and the country's interests‥ …’

26. J. M. Otto, Guinean Mining Taxation System: Analysis and Recommendations for Reform, Final Report, Prepared for Ministry of Mines and Geology, August 2005.

27. World Trade Organization (WTO), Trade Policy Review: Republic of Guinea – Report by the Secretariat (Revision), Trade Policy Review Body, WT/TPR/S/153/Rev.1, December 14 2005, pp. 64–65; see also International Monetary Fund (IMF), Memorandum of Economic and Financial Policies of the Government of Guinea for 2001–2004, p. 4.

28. World Trade Organization (WTO), Trade Policy Review: Republic of Guinea – Report by the Secretariat (Revision), op.cit., p. 54.

29. Global Alumina Corporation, Notes to Interim Consolidated Financial Statements, September 30 2005, p. 1.

30. James M. Otto, Guinean Mining Taxation System: Analysis and Recommendations for Reform, op.cit., p. 9.

31. Organisation des Nations unies pour le Développement Industriel, Guide de l'homme d'affaires, http://www.unido.org/file‐storage/download/?file_id = 21714 p. 21.

32. Thomas Akabzaa, ‘Mining legislation and net returns from mining in Ghana’ in Regulating Mining in Africa: For Whose Benefit? Op.cit.

33. Ibid., p. 14.

34. This section draws on the contribution of Gisèle Belem to ‘Poverty Reduction in Africa: On Whose Development Agenda? Lessons from Cotton and Gold Production in Mali and Burkina Faso’ by Bonnie Campbell, Vincent Nabe Coulibaly and Gisele Belem, Oxfam America. Forthcoming, December 2006.

35. Interview with the Minister of Mines, Mali Novethic, 2003

36. Source: interviews

37. MMCE, January 2004

38. The following section is based on the research of Gisèle Bellem who is completing a doctorate degree at the Institut des Sciences de l'Environnement at the Université du Québec à Montreal and on her forthcoming chapter: ‘Development policies and poverty reduction: Lessons from the Malian gold mining industry’ to be published in The Political Economy of Mining in Africa, Y. Graham and B. Campbell, editors.

39. The funds amounts to 100,000$ USD in the case of Sadiola, 5000$ USD per month in the case of Morila, and 100,000$ USD in the case of Yatela.

40. 1999 Mining code, Article 126.

41. Mali mining code 1999, Article 43

42. Article 117, Mali mining code 1999

43. The CSA Group. 2004. ‘Audit technique et financier des sociétés d'exploitation minières au Mali’.146 pp. (Technical and financial audit of mining corporations in Mali). p. 94.

44. Thiam I, Sangare T, Moran R. 2004. ‘Tarnished Legacy: a social and environmental analysis of Mali's Syama Goldmine’. Research Paper, Oxfam America. Washington.

45. Resolute Mining Ltd. 2006. ‘Development overview: Syama’. Online. http://www.resolute‐ltd.com.au/res_d/syama.html

46. Soulemayne Dembele, ‘Environnement au Mali. ONG: Partenaires ou Prestataires de services?’ In Info‐CCA, Bulletin de liaison du Comité de Coordination des Actions des ONG au Mali, No. 152, Bamako, September 2000.

Claudie Gosselin and Touré Bani, ‘Cohérence des politiques et interventions Canadiennes dans la lutte contre la pauvreté: Le cas du Mali', The North‐South Institute, Ottawa, November 2000’

47. Bruno SARRASIN, Élaboration et mise en œuvre du plan d'action environnemental à Madagascar (1987‐2001): construction et problèmes d'une politique publique. Doctoral dissertation in Political Science, Université de Paris 1, 2002.

48. World Bank, Project Appraisal Document for a Mining Sector Reform Project, Report No. 17788‐MAG, Washington, DC, June 2, 1998, p. 6.