June/July 2011

Bridging the gaps

Good governance and transparency keys to development in Africa

By Peter Braul

As more and more companies establish mines in Africa, questions about development and sustainability are growing more complex. Where, for example, does one draw the line when it comes to roles and responsibilities of mining companies and African governments when dealing with the issues of governance, transparency and development?

These were the main themes discussed at an international forum held in Montreal in April. The conference, titled “Mining investment and development in Africa: Roles and responsibilities of actors concerned,” was organized by the Canadian Network on Corporate Social Responsibility, L’Entraide missionaire and UQAM’s Research Group on Mining Activities in Africa. The one-day event featured a series of panel discussions and attracted a wide range of stakeholders.

CSR limits

Despite the fact that mining companies have undertaken extensive corporate social responsibility (CSR) campaigns, some presenters questioned their effectiveness in dealing with large-scale issues. “While CSR projects may effectively address some of the symptoms or the outcomes of mining-related impacts, they are often less well adapted to dealing with structural and long-lasting development deficits that may be created at the local level,” said Catherine Coumans, a member of the Canadian Network on Corporate Accountability and research coordinator at MiningWatch Canada.

“When we deal with public sectors and the attempts to resolve conflict and initiate peace-building activities, we are almost always condemned to frustration,” said Jim Freedman, one of the presenters and a professor emeritus at the University of Western Ontario, who suggested that industry has the means to fill the governance roles traditionally reserved for host governments. “The private sector has developed a governance capacity in areas of conflict, which sometimes can be quite sophisticated,” he said.

But even if the private sector has developed this capacity, the question remains whether governance should be the burden of the miner. “The best approach is regulation by the host government,” said Tony Andrews, executive director of the Prospectors and Developers Association of Canada. “The industry can do all the corporate social responsibility it wants,” he added. “But if there’s not similar progress with host country governance capacity building, the progress we can make is limited.”

Financial transparency

Susan Maples, a post-doctorate research fellow at Columbia Law School, pointed out that mineral development agreements made between countries and corporations can vary wildly in their fairness, but are difficult to examine because of limited transparency.

“The contracts that these deals hinge on are not public,” said Maples. “And the fair deal conversation cannot be had without the contracts.” She views the reasons that corporations give for keeping contracts private, such as the need for competitiveness and commercial confidentiality, as being no longer acceptable.

If development issues in Africa are to be solved, “it’s going to require a public-private partnership at an unprecedented level,” Maples explained. She acknowledged that a civil dialogue “just cannot happen without transparency.” To achieve this, Maples said companies would have a more positive impact if they shifted their energies away from CSR programs and utilized the Extractive Industries Transparency Initiative (EITI), which is designed to reinforce governance by improving transparency and accountability in the extractive sector. It requires companies to disclose what they pay, and governments to divulge what they receive. The figures are reviewed by an independent party and then made available for public scrutiny. Maples hopes that EITI will expand to include company payments to CSR infrastructure projects, which has already happened in some cases. “We need the whole package,” she said.

Governance gaps

On the subject of the mining industry stepping in to fill the governance void, Gordon Peeling, the outgoing president and CEO of the Mining Association of Canada, said, “Industry is willing to fill a gap, but it can’t be the long-term solution for Africa. It’s one thing to collect tax, but if you don’t know how to invest it for the best outcomes for your societies, it will all be wasted,” he added.

Antonio Pedro, the director at the sub-regional office for Eastern Africa of the United Nations Economic Commission for Africa, explained that good governance takes time to develop. “African governments impose very modern and aspirational legal and regulatory frameworks, and yet don’t have the capacity to enforce them,” he said. “Balancing the provisions in the law … with the capacity to enforce is a major problem.”

When it comes to addressing the challenges of mining in Africa, Pedro said, “there is no universal recipe.” He believes that dialogue remains the key to developing the best understanding and best practices for the region. He added that developed and developing nations can learn from one another, and that the problems Canadians face trying to address First Nations issues are echoed in many African jurisdictions.

Andrews declared that mining companies have an opportunity to radically change the way they are perceived. “You can contribute in a very real way, and become known as a mechanism for the alleviation of poverty and the strengthening of economies in the developing world,” he explained.

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