harnessing africa’s resources for sustainable development · how have we “mis‐governed” our...

Harnessing Africa’s Resources for Sustainable Development

By

Dr. Raymond A. Atuguba & Ms. Baaba AmoahFACULTY OF LAW, UNIVERSITY OF GHANA, LEGON

& ATUGUBA $ ASSOCIATES, [email protected]

+233 24 4675611

Presented at the International Management of Resources & Environment (IMRE) Alumni Conference

Organized by the IMRE of Freiberg & The Business School of KNUSTUnder the theme Managing Africa’s Resources Sustainably

24th to 27th of March, 2009 26th March, 2009

4/8/2009 1ATUGUBA $ ASSOCIATES

NATURAL RESOURCE


DEPLETED OIL FIELD


ROADMAP

• What Resources are there in Africa?

• How have we Sought to Harness Resources?

• How Should we be Harnessing Resources?

• Governance of our Resources.

• How have we “Mis‐governed” our Resources?

• Governing Oil.

• What should we be doing?

• Conclusion.


What Resources are there in Africa?Africa is one of the richest continents in the world:• Human Resources‐very tough and hardy people.• Food Resources‐you can live without working the soil in Africa.

• Medicine Resources‐plant medicines, etc.• Water resources‐so much we use it to produce electricity.

• Mineral Resources‐Platinum, Gold, Diamond, Bauxite, etc.

• Forest and Wildlife Resources.• Time Resources‐hours and hours on weddings, outdoorings, funerals, drinking, chatting, etc.

• Spiritual Resources‐capacity to think, act, and feel transcendentally.

• Cultural Resources.4/8/2009 5ATUGUBA $ ASSOCIATES

MINERAL RESOURCES IN AFRICA• Africa boasts of holding 30 percent of the world's mineral resources, including 40 percent of gold, 60 percent cobalt, 90 percent platinum, 72 percent chromium and approximately 65 percent of the world's diamonds.

OIL• Africa currently contributes 12 percent of the world's liquid hydrocarbon production, and one in four barrels of oil discovered outside of the U.S. and Canada between 2000 and 2004 came from Africa.

WILDLIFE AND FORESTS• African tropical forests represent one of the world's great remnant blocks of closed canopy habitat.


How have we Sought to Harness Resources?

• We started by allowing our human and material resources to be taken away in the context of the Slave Trade and the Colonial Enterprise.

• Then we allowed our cultural, spiritual and knowledge resources to be pillaged, adulterated or destroyed.

• Then we started taking huge loans to harness our natural resources.

• Now debt‐ridden, we are seeking foreign investors to help us harness our resources.


How should we be Harnessing our Resources?

• “Harness” is the wrong word to use because it means “exploit”.

• Because Africa depends to a large extent on its natural resources in the form of primary products, it is the height of foolishness (excuse my directness) to seek to harness them.

• What we should be doing is seeking to govern the resources.

• A continent that has its lifeline as primary natural resources cannot make progress by exploiting/harnessing the resources.

• You can only make social progress by governing them.


Governance of our Resources.• The business of governments is to govern properly and justly.

• Governance is not only about anti‐corruption.• Governance is the process by which we:

– Generate resources (from power to food);– Distribute resources; and – Resolve conflicts related to the generation and distribution of resources.

• The resources Africa depends on so badly need to be governed.

• It is the “non‐governance” and “mis‐governance”of these resources that have led to poverty, disease, social dislocation, debt, etc.


How have we “Mis‐governed” our Resources?

• Lets take the example of our Cocoa resources and lets look only at Ghana.

• In 1957, at independence, Ghana grew one third of the world’s Cocoa.

• Cocoa made up two thirds of Ghana’s exports.

• We needed to adopt a strategy for governing this resource for optimal and enduring results.

• We did not; rather our Cocoa governance strategy distorted our economy and society.


• Hundreds of thousands of workers migrated from Northern Ghana, Burkina Faso and Niger to work as sharecroppers for Ghanaians who owned land in the rich cocoa belt (Asante, 1963). – The colonial government did nothing to deal with this major migration issue; intra and inter‐state.

• To facilitate the European cocoa‐buyers’ shipments of cocoa to Europe and America, it built railroads from the cocoa‐growing area to the sea, and a few port amenities. – It built almost no feeder roads to enable the farmers bring the crops to collection points.

• Laws were introduced to protect the property rights of the European buyers of the Cocoa.– No laws were introduced to solve the serious disputes that arose under customary law over African farmers’ land titles, which exacerbated with the increase in value of Cocoa.


• Instead of providing agricultural credit, it permitted the large cocoa buying companies and local money lenders to keep the peasants in perpetual debt.

• Today:– Rural poverty;

– The dependence on unprocessed cocoa;

– The nationality issues of some Ghanaian residents;

– The rural‐urban drift;

– The numerous, costly and unending land disputes and litigation;

– The sub‐optimal food production; etc are all functions of how we governed our Cocoa then.


• There was more mis‐governance of Cocoa:– By the 1930s, four giants (United Africa Company, G. B. Ollivant, Ltd. CFAO (a Swiss firm) and Cadbury and Fry) had absorbed or driven smaller European competitors out of the Gold Coast Cocoa markets.

– Their business reached every corner of the cocoa belt: they financed and purchased the cocoa crop at they set, and shipped it overseas; they imported and sold manufactured goods to the farmers.

– As in Kenya, taxes forced African subsistence farmers either to work for a pittance on the British‐owned gold mines, or as sharecroppers‐ at a third of the cocoa price the companies paid African farm owners.

– Court‐enforced rules of property, contract and criminal law clothed these firms with the power to structure the cocoa growers’ limited freedom of choice: to sell to us or not at all.

– The African landlords, often related to the chiefs who allocated the land, emerged as members of a new class. They invested in trade and speculated urban real estate. Their children went toschools to learn the administrative skills required for Britain's ‘indirect rule’.


Today:

• The over‐taxation of the rural poor;

• The over‐exploitation of labour;

• The widening gap between the rich and the poor;

• The menace of land guards and agents; all find their roots in the way in which we mis‐governed our cocoa resources.

• The points I am trying to make are these:

– There is no guarantee, and we do not seem to be providing any, that we are not going to mis‐govern our oil the way in which we mis‐governed Cocoa and Gold.

– Secondly, the mis‐governance of a major national resource, does not rest with the sector from whence that resource cometh, but affects all other aspects of our national lives: political, economic, social, etc.


THE EXAMPLE OF OIL AND GOVERNANCE

• Oil is a major resource and so it must be governed, not harnessed.

• How does the government in Ghana govern and how will it govern the oil?


GOVERNANCE:POLICY, LAW, pOLICY

• Government in Ghana sets the parameters for governing through three moves:

• POLICY:– Fundamental Petroleum Policy for Ghana, June 2008

• LAW AND INSTITUTIONS:– Ghana National Petroleum Corporation Law, 1983 (PNDCL 64)

– Petroleum Exploration and Production Law, 1984 (PNDCL 84)

– Petroleum Income Tax Law, 1986 (PNDCL 188)

– ETC

• pOLICY– Detailed rules for implementing the Policy and Laws through Legislative Instruments, etc


OIL POLICYSTRENGTHS:

• The fact that we have a policy to guide us is commendable.

• The policy is wary of Ghana being taken for a ride by oil. companies:– Processing the ore outside and sending us returns.

– FON, metallurgical engineering story.– Nigerian inspector who turns his back.

– Enjoy tax breaks and when they do not qualify anymore, they pack and leave or incorporate a new company which automatically gets fresh tax breaks.

– Chad‐Cameroon pipelines offshore.

– OURS TOO!

• The policy seeks to address the concerns of those who will be directly and hard hit by the oil thing.


WEAKNESSES:• The Policy Goal as stated has never worked anywhere in the world:– It is the direct use of oil revenues that creates the resource curse.

– The Scandinavian countries produce oil but do not suffer from the resource curse.

– They use their oil resources to invest in other sectors, including the social sector and then “chop” from those sectors.

• Sweden recently declared that it will create an energy and transportation economy that runs free of oil by the year 2020.

– We would be better off setting a goal of say using oil revenues to improve healthy lifestyles for Ghanaians‐very sustainable.


• The Policy is too government focused:– It is as if it is only government that can deal with the oil issues.

– And government is both a player and a referee.

– What of the private sector?

– What of the Chiefs who own 90% of the lands in this country?

– What of civil society who alone can ensure the peace and calm without which no investor will feel welcome and safe to invest?


• The Policy does not state how it will use the learning from other extractive industries we have depended on for centuries to improve the management of oil production:– Mining companies take the gold to Amsterdam and then tell us how much was smelted.

– Mining communities are screwed:• Cyanide spillage

• Police and Military brutalities

– A policy that cannot show that we have learnt from the bad ways of mining gold etc and are going to apply that to the governance of oil is not worth the paper it is written on.


OIL LAWS

GHANA NATIONAL PETROLEUM CORPORATION LAW, 1983 (PNDCL 64)‐OUTDATED.

PETROLEUM EXPLORATION AND PRODUCTION LAW, 1984 (PNDCL 84)‐OUTDATED.

PETROLEUM INCOME TAX LAW, 1986 (PNDCL 188)‐OUTDATED.


THE ENVIRONMENTAL PROTECTION AGENCY ACT, (Act 490)

• This Act provides for Environmental Impact Assessments (in Section 12) for activities that have, or are likely to have, adverse effect on the environment .

• The EPA can stop any government Department or Agency from issuing a licence, permit, an approval or a consent in connection with a matter affecting the environment, and related to the EIA, without the prior written approval of EPA.

• The EPA shall by serving an enforcement notice, prevent activities of an undertaking which pose a serious threat to the environment or to public health.

• Anyone who refuses to comply is liable to be fined up to two hundred and fifty penalty units and in default to a term of imprisonment not exceeding one year or to both the fine and the imprisonment.– This is a very low penalty‐a penalty unit is GHC 12.– In other laws, there is a penalty for every day the violation continues.– Here, there is nothing like that, arguably.4/8/2009 22ATUGUBA $ ASSOCIATES

E.G. Section 93 of the Fisheries Act, (Act 625)• “93. Fisheries impact assessments(1) A person or government department or any other agency

planning to conduct an activity other than fishing, which is likely to have a substantial impact on the fishery resources or any other aquatic resources of the Republic, shall inform the Commission of the plans prior to the commencement of the planned activity with a view to the conservation and protection of the resources.

(2) The Commission maymake or require reports and recommendations by those conducting the planned activity regarding the likely impact of the activity on the fishery resources or other aquatic resources of the Republic and possible means ofpreventing or minimising adverse impacts, which shall be taken into account by the person, government department or other agency in the planning of the activity and in the development ofmeans of preventing or minimising any adverse impacts.

FISHERIES REGULATIONS, 2007 (L.I. 1832)• It contain nothing on Fisheries Impact Assessments.


ENVIRONMENTAL ASSESSMENT REGULATIONS, 1999 (LI 1652)‐good law.

• It provides that no one may engage in Oil and Gas operations without prior registration by the EPA and receiving an environmental permit‐Regulation 1.

• It also provides that no person shall commence activities in respect of any undertaking which in the opinion of the Agency has or is likely to have adverse effect on the environment or public health unless, prior to the commencement, the undertaking has been registered by the Agency and an environmental permit has been issued by the Agency in respect of the undertaking.

• It further provides that before an Environmental Permit is issued in respect of Oil and Gas operations, there must be an Environmental Impact Assessment‐Regulation 3.


What should we be doing?• Review the oil policy and develop a strategy for getting what we want from the oil and preventing what we must prevent that comes with the discovery of oil.

• Review our laws on oil.

• Look to our essentially timeless constitution for guidance on how to deal with issues regarding oil.


1992 CONSTITUTION• Article 23 on Administrative Officials and Administrative

Bodies:– Complying with the requirements laid down by law;– Acting fairly and reasonably.

• Articles 12‐33 on Fundamental Human Rights Provisions and enforcement by the High Court.

• Economic Objectives of the State in the Directive Principles of State Policy in Chapter 6 seek to provide equal opportunity for individual and group private enterprise.

• Article 41 on the duty of the citizen to protect the environment.

• “The State shall take appropriate measures needed to protect and safeguard the national environment for posterity…”‐Article 36.

• The National Development Planning Commission shall “make proposals for the protection of the natural and physical environment”. Article 87


• Article 296 on discretionary powers:– that discretionary power shall be deemed to imply a duty to be fair and candid;

– the exercise of the discretionary power shall not be arbitrary, capricious or biased either by resentment, prejudice or personal dislike;

– shall be in accordance with due process of law; and– where the person or authority is not a Justice or other judicial officer, a requirement to published by constitutional instrument or statutory instrument, Regulations to govern the exercise of the discretionary power.

• Decisions to grant oil drilling licenses, environmental permits and licenses are all governed by article 296.


CONCLUSION• The Resource Curse is really nothing but an over‐concentration

on oil wealth which benefits just a little portion of the upper and middle class in a Country to the exclusion of all others.

• BUT also and more important, it is the neglect and/or the destruction of other sectors due to an oil find, or in order to forward the oil resource exploitation agenda.

• The problem is that the range of backward and forward linkages in the economy that are created by all these other sectors that are neglected or destroyed are cumulatively greater than those created by oil.

• We must NEVER allow the oil find to lead us to neglect those other sectors.


• In the Natural Resource world, two areas constantly strive for mastery: – The “big, quick and dirty cash resources” (Oil, Minerals, Timber) and

the “small, slow and neat cash resources” (Canoe fisheries, Agriculture, Vegetation cover for water bodies etc)

• Let us keep these broad issues in mind as we fashion ways of accommodating the oil find in our extant economy and society.

Sardinella aurita


Recommendations

• Web search “how to better manage Africa's resources”


CONDITIONS FOR SUSTAINABLE DEVELOPMENT

• The Peace, Security, Democracy, and Political Governance Initiative

African leaders have learnt from their own experiences that peace, security, democracy, good governance, human rights and sound economic management are conditions for sustainable development. They are making a pledge to work, both individually and collectively, to promote these principles in their countries, sub‐regions and the continent.


• "Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs”.

It contains within it two key concepts:• the concept of needs, • the idea of limitations .


• The resource curse (paradox of plenty) refers to the paradox that countries and regions with an abundance of natural resources, specifically point‐source non‐renewable resources like minerals and fuels, tend to have less economic growth and worse development outcomes than countries with fewer natural resources.


• Since the mid 1990s oil‐exporting countries have grown more than three times faster than non‐oilexporting countries.


• Limited investment in natural resource management: limited research, strategy, training, etc.

• Relative capacity of the Africa State vis‐à‐vis huge Transnational Corporations (TNC):– EPA borrows equipment from mining companies to monitor those companies.

• Elite capture‐TNCs are good at capturing the political class, the middle‐class (public servants‐including security services and environmental services, lawyers, bankers etc) in aim of often exploitative agendas.

• The story of Gold resources is even worse.

• We are most likely to govern our oil the way we governed our cocoa and Gold.


• When you have too much of something, you tend to undervalue it.

• Limited National Consciousness and Orientation regarding our natural resources.

• Limited group action at the continental level and hence limited bargaining power due to atomization of the various countries on the continent. atomize


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