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Proposed model for natural resources governance

24th January 2014

By: Jonathan Rodin

  

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United Nations Economic Commission for Africa (Uneca) subregional office for Eastern Africa director Antonio Pedro will be one of the keynote speakers at the Africa Mining Vision (AMV) day to be held at the 2014 Investing in Africa Mining Indaba, which will take place in Cape Town from February 3 to 6.

According to the AMV, mineral resources are part of Africa’s natural capital that can spur its development and industrialisation by creating economic linkages and fostering a transparent and accountable minerals sector in which resource rents are increased and used to promote broad economic and social development, says Pedro.

The AMV promotes good governance in which communities and citizens participate in the processes involved in managing mineral assets and promoting equity in the distribution of benefits. Pedro adds that there is an increase in the knowledge and benefits resulting from finite mineral resources at all levels of mining and for all minerals.

The AMV recognises that artisanal and small-scale mining (ASM) has the potential to improve rural livelihoods if it forms part of and is well integrated into the local rural and national economy. The AMV advocates for a triple bottom line approach where success is measured both in financial terms, as well as according to environmental and social considerations. Responsible mining is that which is safe, promotes material stewardship and includes communities and all other stakeholders in the decision-making chain.

“This is important as it helps to better manage expectations and align the understanding of what constitutes benefits between different stakeholder groups,” says Pedro.

“The AMV aspires for a mining sector where mineral revenues are well managed and invested to build human and institutional capacities towards a knowledge economy that supports innovation, research and development beyond the currency of mining,” adds Pedro, highlighting that “the vision advocates for transparent, equitable and optimal exploitation of mineral resources to underpin broad-based sustainable growth and socioeconomic development”.

Challenges Facing the AMV Theory of Change

The central argument of the AMV is that mineral resources can play a transformative role in Africa’s development, based on the creation of appropriate social and economic linkages. However, achieving this is a great challenge for policymakers and other stakeholders, as mining in Africa has inherited structural deficiencies, says Pedro.

The legacy challenge refers to many mining operations being enclaves in which most inputs are externally sourced and mining products are used outside the territory.

Further, the creation challenge calls for Africa to become a competitive mining investment destination, with an efficient and predictable legal and regulatory framework, which creates and sustains mineral wealth, without compromising the preference for environment quality, material stewardship and social and cultural responsibility, explains Pedro.

He adds that, owing to the irreversibility challenge, which refers to the fact that minerals are nonrenewable resources, it is important to consider strategies and frame- works that ensure the effective use of non-renewable resources, such as minerals, to create assets that benefit everyone, including future generations.

The challenge of investment is multiform and entails deciding wisely on how best to invest transient mineral revenues to ensure lasting wealth that endures once the mineral resource is extracted.

“The distribution of resources and capital is a challenge, as wealth must be distributed fairly, not only balancing and managing conflicting concerns and interests at local and national level but also avoiding corruption,” says Pedro,

He adds that these are difficult propositions in an environment where countries do not have adequate capacity to administer the sector, plan appropriately, or to understand or manage the vagaries of Dutch disease.

“The conundrum of commodity price fluctuations, corruption curbing, rent seeking, adequate public participation in decision-making and expectation management are central to this distribution challenge,” says Pedro.

He notes that the AMV offers a credible framework to support the formulation of policy responses to address the aforementioned challenges.

He adds that through the African Mineral Development Centre, which will be officially launched on December 16 in Maputo, Mozambique, African member States will have a world-class coordinating platform to support the implementation of the AMV, both at continental, subregional and national levels.

However, Pedro says the choice of policies in a given jurisdiction is context-specific and policymakers should be mindful of development paradigms; a country’s learning curve and stage of development in a minerals cycle, which affects its bargaining power; external dynamics arising from international law, including trade and investment treaties, and the state of the world economy; and local context. “In this respect, moving forward, it is important to mainstream the AMV at the national level through country mining visions (CMVs).

Pedro also highlights that, in formulating CMVs, it is important to acknowledge the strength of social movements, bearing in mind local power dynamics and the related institutional environment, as well as the capacity of formal and informal institutions to contribute to the formulation and imple-mentation of policies and to advocate for and implement change.

The African Peer Review Mechanism

The African Union’s African Peer Review Mechanism (APRM), says Pedro, will anchor the effort to strengthen domestic accountability and deepen the impact of the AMV to ensure that mineral resources exploitation generates benefits for all.

The review involves public discussion with all stakeholders through an inclusive, partici-pative and consultative process that can potentially create a real and robust social impact that can outlast political and electoral cycles, which is essential for the mining industry, given the long gestation periods of mining projects.

“The APRM takes a comprehensive view of all aspects of a country’s governance system and identifies and measures governance deficiencies. It also verifies the adoption, consolidation and prescription of appropriate policies to achieve the socioeconomic and political objectives of The New Partnership for Africa’s Development,” Pedro explains.

Further, the APRM emphasises fact-finding and first-hand information gathered at ground level, which enables a customised approach. The exercise contributes to the strengthening of transparency and mutual accountability, helping policy dialogue and building capacity, as well as boosting compliance by monitoring a member State with respect to agreed governance standards and principles.

The African Mineral Geoscience Initiative

The African Mineral Geoscience Initiative aims to scale-up geological mapping and mineral inventory in Africa. Pedro says Africa is one of the least-explored continents and geological mapping and mineral sinventory work have not covered the entire continent.

Better knowledge of Africa’s resource poten- tial will strengthen the continent’s bargaining power during contract negotiations, he adds.

African States negotiate with international mining companies on unequal terms and, in most cases, the mining companies have access to better resources and skills.

Although ambitious, the AMV can improve the legacy of mining in Africa, and change the future of its industrialisation and fight against poverty.

“As we enter into the post-2015 era, the realisation of the AMV would benefit from a specific sustainable development goal on natural resources, which, as a global com-pact, would define the boundaries for the sustainable exploitation of natural resources, including minerals and the contours for partnership building and responsible engage-ment,” he concludes.

Edited by Megan van Wyngaardt
Creamer Media Contributing Editor Online

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