Mismanagement of Natural Resources: States, Business and Local Communities

Kumeh, Mensah EricAsante, Joseph Neequaye, Trudy EmilyDolphine, Delphina Wihelmina

Introduction: Background and Rationale Concept and Definition

Mismanagement

Case Studies of NR Mismanagement The “Paradox of Plenty” in Equatorial Guinea The CSM Plague in Ghana Unsustainable Charcoal Production in Ghanaian

Communities

Root Causes of NR Mismanagement “Removing the Tumor” not “Alleviating the Pain” Tackling NR Mismanagement: The role of NREG

Graduates Conclusion References

Presentation Outline

‘Without natural resources life itself is impossible. From birth to death, natural resources, transformed for human use, feed, clothe, shelter, and transport

us. Upon them we depend for every material necessity, comfort, convenience, and protection in our lives. Without abundant resources prosperity is

out of reach’. (Gifford Pinchot, Unknown)

Introduction: Background

Human survival and economic growth are inextricably linked to natural resources management. Proper management ensures:

Economic development Accountability on resource rent Fair and equitable share of resource benefit Reduced poverty

Resources are therefore a blessing for the countries that possess them only if properly managed.

Research correlating resource endowment with economic growth shows that they are not always positively correlated (Corrigan, 2015).

Introduction: Rationale

Management is the attainment of desired goal (economic, social, environmental) in an effective and efficient manner through leading, controlling and coordination resources. (Sampson and Daft, 2012).

Failure to attain desired goal resulting from inefficiencies with regards to leading, controlling and coordinating implies mismanagement.

Concepts and Definitions: Mismanagement

Underdevelopment

Abject poverty

Poor transparency and accountability on resource rent

Inequitable benefit distribution

Indicators of Mismanagement

Case Studies of NR Mismanagement

For ease of understanding, three peculiar cases of NR mismanagement are presented:

The “Paradox of Plenty” in Equatorial Guinea (State)

The “CSM” Plague in Ghana (Business)

Unsustainable Charcoal in Ghanaian Communities (communities)

Public Trust Doctrine was put in the public forum by the ancient Roman Empire.

“certain resources like air, sea, waters and the forests have such a great importance to the people as a whole that it would be wholly unjustified to make them a subject of private ownership” (Nshala, 2002).

The Ghanaian legal system-based on English common law includes the public trust doctrine as part of its jurisprudence.

The state is the trustee of all natural resources, which are by nature meant for public use and enjoyment

(Kameri-Mbote, 2007).

Public Trust Doctrine

Every mineral in its natural state in, under or upon any land in Ghana, rivers, streams … is the property of the republic of Ghana and shall be vested in the President on behalf of, and in trust for the people of Ghana (Constitution, Article 257:6).

“The most fundamental duty that a Trustee has is the duty of loyalty - the obligation to act solely in the interest of the beneficiaries. The trustee also has a duty to use care and skill to preserve the trust property. In addition, the trustee has a duty to furnish information to the beneficiaries, a duty to make the trust productive, and a duty to deal impartially with beneficiaries. In meeting its duties, the trustee must act prudently, diligently, and in good faith.” (Paul; 1996 In: Nshala, 2002).

Public Trust Doctrine

Situation when abundant natural resources contribute to economic stagnation because capital and labor generate increases in tradable exports, but fail to strengthen knowledge, skills and expertise of citizens (UNDP, 2014).

At the heart of this menace (resource curse) is underdevelopment, rapacious corruption, institutional erosion and civil conflicts (Anshasy and Katsaiti, 2013; Kolstad and Soreide, 2009)

Papua New Guinea Equatorial Guinea Nigeria

The “Paradox of Plenty” in Equatorial Guinea

Resource Endowment (PNG)

Source: UNDP, 2013.

Source: World Bank, 2015.

Chainsaw milling refers to the on-site conversion of logs into lumber for commercial purposes using chainsaws.

CSM was prohibited in 1998 but remains widespread despite measures put in place by government to enforce the ban (Marfo, 2010).

Ghana loses about GHC 25 million annually in stumpage revenue from trees illegally harvested by chainsaw operators.

Principal causes of CSM are: unclear policies, corruption and weak governance, political interference and lack of political will (Marfo and Nutakor, 2009).

The “CSM” Plague in Ghana

Pictures

“Each man is locked into a system that compels him to increase his herd without limit - in a world that is limited. Ruin is the destination toward which all men rush, each pursuing his own interest in a society that believes in the freedom of the commons” (Harden, 1968).

Tragedy of the Commons

An estimated 400,000 people who support over one million dependents, are engaged in charcoal production which is primary fed by wood resources from open access (Energy Commission, 2006).

Locals (indigenes and migrants) pay a token to traditional leaders to enable them fell and carbonate trees

(Brobbey, et al., 2015 unpublished).

Accelerated transitional forest and savannah degradation, increased incidences of wildfires and drying up of water bodies.

Unsustainable Charcoal Production in Ghanaian Communities

Charcoal Production in

Ghana

Inconsistent policies

Profit oriented resource extraction

Non existence of transparency and accountability mechanisms

Inter-sectorial conflicts

Root Causes of NR Mismanagement

Weak state institutions

Poor law enforcement

Corruption

Lack of capacity

Poor governance

Root Causes of NR Mismanagement

Clear legal institutional and policy frameworks – use international expertise when negotiation over terms of new resource development or improvement of existing agreements.

People centered exploration and extraction of resources - redefine and concretize benefit sharing schemes, establish grievance mechanism.

Advanced human development and strengthened social capital – allocate revenue to areas of high social return e.g. education, health, water, sanitation, etc.

Prudent revenue collection - better transparency and accountability for revenue flows, exhibit greater fiscal restrain, institutionalize periodic reviews, etc.

“Removing the Tumor, not Alleviating the Pain”

The world thrives of empirical information; technical decisions are based on empirical information.

How can local communities be positioned on a pedestal to demand for greater accountability on the use of resource rents?

Why not “us”? Is state management of natural resources the only way out?

How can benefit sharing schemes be redefined and concretized to entrench community rights?

Tackling NR Mismanagement: The Role NREG Grads

Mismanagement of natural resources result in resource curse in many natural resource endowed countries.

This results in underdevelopment, abject poverty, poor transparency and accountability on resource rent and inequitable benefit distribution.

Natural resources are therefore a blessing for countries that possess them and are able to manage them well bringing all stakeholders on board.

Mismanagement of natural resource has impacts on political, economic and environmental situations of a country

Conclusions

Anshasy, A. A. El., and Katsaiti, M. S., 2013. Natural resources and fiscal performance: Does good governance matter? Journal of Macroeconomics 37 (2013) 285–298.

Brobbey, L.K., Asante, J., Sampong K.E., Kumeh, E.M., and Nketiah K.S., 2015. Securing Rights to wood resources for charcoal production in Ghana. IIED small and medium forest enterprise Series, Tropenbos International Ghana.

Corrigan, C. C., 2013. Breaking the resource curse: Transparency in the natural resource sector and extractive industry initiative. Resource Policy 40 (2014) 17 – 30.

Hardin, G., 1968. The tragedy of the commons. Science, New Series, Vol. 162, No 3859. pp 1243-1248.

References

Kameri-Mbote, P., 2007. The use of the Public Trust Doctrine in Environmental Law’, 3/2 Law, Environment and Development Journal (2007), p. 195.

Kolstad, I. and Soreide, T., 2009. Corruption in natural resource management: Implications for policy makers. Resources Policy 34 (2009) 214–226.

Marfo, E. and E. Nutakor. 2009. The social and political environment for the enforcement of the chainsaw milling ban. In Marfo, E., K.A. Adam and B.D. Obiri (eds.). Ghana case study of illegal chainsaw milling. Developing alternatives to illegal chainsaw milling through multi-stakeholder dialogue in Ghana and Guyana project. FORIG Research Report (CSIR-FORIG/TR/EM;KAA;BDO/2009/18).

References

Nshala, R., 2002. Management of Natural Resources in Tanzania: Is the Public Trust Doctrine of Any Relevance? Available at http://dlc.dlib.indiana.edu/dlc/bitstream/handle/10535/1405/nshalar042400.pdf?sequence=1

Paul, T. J., 1996. The Public Trust Doctrine; Who Has the Burden of Proof. In: Nshala, R., 2002. Management of Natural Resources in Tanzania: Is the Public Trust Doctrine of Any Relevance?

Sampson and Daft, 2012. The Fundamentals of Management.

UNDP, 2013. Global development report 2013. World Bank, 2015. Gross Domestic Products.

Available at www.data.worldbank.org/country/papua-new-guinea

References