- At least 700 million people worldwide lack access to energy, and 600 million of them dwell in the African continent.
- The speakers at the session challenged local authorities to establish strong standards and regulatory bodies in order to monitor and inform local policy implementation.
- According to speakers, experts have a duty to advise governments on what kind of geological information is required to help enhance investor-community relations.
Conflicts of interest and bad policies continue to rob Africa of its place in development through the extraction of green minerals.
During a recent Twitter Spaces session hosted by Power Shift Africa focusing on The place of Africa’s Green Minerals in the Continent’s Development, speakers regretted that despite Africa having 30 percent of the world’s mineral reserve, it has continued to lag in development as foreign investors enjoy the fortunes.
This revelation comes in the wake of a new study that at least 700 million people worldwide lack access to energy, and 600 million of them dwell in the African continent.
According to Alaka Lugonzo, an Advocate of the High Court of Kenya and Extractives Strategist at Oxfam, energy is important for people to flourish, and Africa is well placed to develop due to the presence of the varied green minerals such as lithium, zinc, phosphorus, manganese, aluminum, carbon, copper and the platinum group of metals.
Speakers at the session called on government leaders to speed up mineral-based industrialization since the continent has the capacity to drive its development agenda by tapping the green minerals spread across Africa.
Ms. Lugonzo reminded regional leaders that mineral-based industrialization promises job creation opportunities, food security, improved quality of living, enhanced security within the continent, and increased foreign investment.
She hit out at the African governments for failing to provide leadership in the mining sector and passing the role to investors keen on maximizing profits.
Getting the beneficiaries
A discussion on minerals to communities, according to her, must take into consideration the socio-economic dimensions because it is where people work and live and, most of the time, could turn around the hope of a community.
Africans were asked to appreciate that they own the minerals currently in high demand.
Leaders were urged to increase the economic worth of the minerals by improving their quality and processing stages to enhance their competitiveness in the global market.
The speakers at the session challenged local authorities to establish strong standards and regulatory bodies to monitor and inform local policy implementation.
The policies and regulatory bodies, according to Evans Rubara of the Foundation for ASM Development (FADev), should be friendly to investors but must answer the questions of Africa based on socio-economic dimensions.
“Africa must develop investment agencies and centers to facilitate access to foreign markets and empower agencies together with trade policies to persuade investors.
There is a demand to transfer skills to communities and workforce to actualize a green mineral industrialized continent,” said Rubara.
Infesters, no longer investors!
Rubara decried the frustrations communities in Africa go through as investors turn out to be infesters in their midst.
The policies, he says, must improve livelihoods within communities and enable producers to obtain premium markets for value-added products.
He challenged financial institutions such as Africa Development Bank and the World Bank to focus more on improving the living conditions of communities rather than conspiring with investors to make unjustifiable profits.
At the Twitter Space conference, it was clear that Africa needs to show more commitment to research and educational institutions.
Rubara explained the role of research centers in fostering innovation, offering technology training, and conducting research to improve processing techniques.
He says some investors have always used non-human and non-environmentally friendly techniques while extracting minerals, hence frustrating genuine efforts in combating climate change and environmental degradation.
“Countries such as the Democratic Republic of Congo, South Africa, Zimbabwe, Mali, Burundi, Zambia, and Tanzania have high stakes in green minerals.
To maximize economic value and improve the living conditions of communities, leaders should lead in policy formulation, which adds value to the commodity and enhances community involvement in all the foreign operations within their boundaries,” commented Rubara.
Reasoning with taxes
Mukupa Nsenduluka, a Tax Policy Expert at Tax Justice Network Africa, said there is an urgent need for robust and objective tax provisions to inform institutional arrangement and foreign sector involvement.
“In Africa, governments engage in extractive activities because there is the benefit of getting revenues that can fund their budgets and other investments.
In all instances, governments sign agreements with these investors, but in most cases, companies fail to honor their fair share of signed agreements.
Through advocacy, governments have been urged to tighten tax laws so that African countries do not become victims of illicit cash flows,” says Nsenduluka.
The tax expert revealed the continent’s UN report of 2020, where it was found that Africa loses $89 billion annually to illicit cash flows.
Shockingly enough, of the $89 billion, $40 billion comes from the extractive sector, which captures the extraction of oil and gas.
This, according to Ms. Mukupa, indicates that the extractive sector is a major contributor to mega illicit cash flow, hence delaying Africa’s development journey.
In another damning report, according to the International Monetary Fund, sub-Saharan Africa lost $730 million in the mining sector alone in the year 2021.
She stated that curbing illicit cash flows would generate enough revenue for development and a just energy transition for the continent.
Ms. Mukupa called on governments to stop awarding overly generous tax incentives to investors since such deals are redundant, enhance impunity, promote unnecessary competition, and encourage conflict of interest.
She expressed her disappointment with governments for awarding tax incentives without conducting objective research and the risks involved during the extraction process.
According to speakers, experts have a duty to advise governments on what kind of geological information is required to help enhance investor-community relations.
“There is a need for the continent to invest in geological information. As a continent, we are excited that we are in the era of green minerals boom, yet we do not know how much copper, lithium, and graphite are in the ground.
It is shocking that Africa relies on information from the investors on the quality and quantity of minerals in the continent and uses the very information provided to direct tax policy requirements and legislations,” Ms. Mukupa said.
African governments were blamed for their continued opaque approach in awarding mining contracts.
Most of the mining contracts, according to Ms. Mukupa, are shrouded in secrecy, leaving communities and other relevant agencies, such as environmental activists, in the dark.
She underscored the need for governments to declare the terms of the agreement as signed and also the taxes entered.
While delving into the discussion, Fatma Nyambura, a Policy Manager, Extractive Industries Transparency Initiative (EITI), laid bare the EITI Treaty, which was signed by 27 countries.
The treaty compels the 27 countries to make public all the agreements signed beginning January 1, 2020, on their website.
Such information is disseminated to all communities and interested parties in the sector to enhance information access.
Ms. Nyambura stressed the involvement of multi-stakeholder groups, comprising governments, companies, and civil society groups organizations, which review, dissect contentious clauses, and facilitate interrogation of governments on agreements and how such contracts would benefit the affected communities.
“Many governments are eager to ensure they benefit generally from mining. However, governments have entered into agreements with investors through state-owned enterprises, as is the case in Zambia with Zambia Industrial Mining Corporation.
These enterprises tend to be plagued with corruption and poor governance structures. The government should ensure these enterprises have robust structures in place to mitigate against corruption,” said Nyambura.
The government must ensure the existence of trading desks and effective recruitment procedures for traders.
Ms. Nyambura says EITI is keen on revealing the true owners of companies by locating the beneficial ownership since most agreements are signed by politically exposed personalities who don’t serve the spirit and terms of agreements.
She opines that through opening extractives, EITI works with companies’ registries to develop templates, which state-owned companies use to collect data.
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The Twitter Space engagement, held only two months after the African Climate Summit and a month before COP-28 in Dubai, was attended by the African Union, Oxfam, Tax Justice Network Africa, Global Institute for Sustainable Prosperity, AfCFTA Policy Network, Extractive Industries Transparency Initiative, and African Minerals Development Centre, among representatives of other organizations.