Letters from an African born in Kenya and living in Ghana

Chickens born in the structural adjustment era are coming home to roost. The global financial meltdown crisis is revealing flawed agreements, especially in well endowed mineral rich economies like Tanzania and the Democratic Republic of Congo (DRC).

That era gave western countries a lot of leverage. In 1996, the Canadian High Commissioner in Tanzania intervened as western pressure was being imposed on African governments to influence revisions to mining legislation as a means of promoting Canadian business interests. Specifically says Paula Butler in ‘Canada’s 21st Century Colonial Interests’, they did so in order to counter the legal claims of local miners questioning the legitimacy of the mining company Sutton and designs on Bulyanhulu deposits.

In June 2008, the staff of the very same High Commission energetically intervened in Tanzanian parliamentary affairs to ensure that the country’s politicians rejected the conclusions of the Presidential Mining Sector Review Committee on revisions of the mining sector. The Committee had recommended a greater proportion of profits generated by higher prices be kept for the country itself.

In 2004 says Denis Tougas in an article entitled “Canada in Africa: The mining superpower”, Canada’s ambassador to the United Nations criticized a part of a report produced by the Panel of Experts on the Illegal Exploitation of Natural Resources in the DR Congo, in which nine Canadian companies were accused of violating OECD (Organization for Economic Co-operation and Development) guidelines during the country’s protracted war.

And now, “in order to formalize the sector’s acquisitions over the last decade, Canada has signed its first Foreign Investment Protection Agreement (FIPA) plan with mining countries, with Tanzania and Madagascar in first place. This FIPA, already established within many Latin American countries, has among its aims the removal of current agreements through placing them under international arbitration. New legislation on the issue by host countries could not be applied without significant compensation”.

The fallout of such transactions are now hurting. In the past three years there have been complaints from different segments of the Tanzanian public regarding contractual agreements between the government and foreign investors in strategic sectors such as mining, infrastructure and energy.

Increasingly, dubious contracts are becoming a source of heated debates in the mass media, parliament, opposition parties, the ruling party, civil society organizations, faith based organizations, academic institutions and among the general public.

The most contentious contracts were revealed in the mining and energy sectors said the Vice Chancellor of University of Dar es Salaam, Prof. R.S.. Mukandala in a state of the nation review forum held last year. With regard to the mining sector, he noted that the following issues had to be noted and resolved:

• All the large scale gold mines are 100% foreign owned. Tanzanians concerned with “economic nationalism” have a legitimate right to ask why this is the case and why the principle of partnership has been abandoned in this and other lucrative areas of investment.
• Earnings from the minerals are kept in offshore accounts for one-sided protection of earnings of the investors. How does the country benefit from this arrangement?
• The export earnings accruing to the country in real terms are minimal, partly because the minerals are exported in raw form and therefore the country loses jobs and earnings from what could have been the added value.
• Mining companies pay lip service to corporate responsibilities, for what they contribute to the so called “empowerment” projects in the mining areas is small and has little empowerment value.
• The royalty of 3% the mining companies pay is almost a mockery of the mineral owners, namely the Tanzanian public.

Such issues do not get resolved in international trade talks. The World Bank (WB) and the International Monetary Fund (IMF), the architects of structural adjustment, were in Dar es Salaam recently talking about what Africa should do in light of the current financial mess. They historically have never taken responsibility over flawed programs.

Results are more likely to be achieved through the efforts of diverse groups of civil society organizations. They need to imagine that mining companies can be held to account for their actions in African countries.

Lasting progress may derive principally from the ability of African and Western civil society organizations to work in solidarity against the negative environmental and human rights concerns associated with the mining sector. They did well in the 1980’s and 1990’s when it came to pushing for good governance, multi-party democracy and liberalization. The time has come again for them to rise to the occasion.