US urged to fight Africa’s resource curse

As a beneficiary of the spoils from resource-theft from Africa, the United States should use its strong position in the world to help fight the resource-curse in Africa, Mohammed Amin Adam, Executive Director of the Africa Centre for Energy Policy (ACEP) has said.

Addressing a US Foreign Affairs sub-committee, on whether there is a resource curse in Africa, Mohammed Amin said some of the bad mineral and petroleum deals in Africa have already resulted in deprivation of the resource-owning nation -- and that the United States, like other importing countries, is consuming resources and benefitting from some of those bad contracts.

“This places an important responsibility on the United States to lead by example in ensuring that oil and minerals from countries that promote questionable contracts tainted with corruption are not patronised.”

The need to implement the extractive industry payment disclosure provisions in the

Dodd Frank Wall Street Reform Act is long overdue, as citizens of Africa await the disclosure of relevant corporate information that enables them to hold their governments accountable, Mohammed Amin said.

He further called on the US to support the building of strong institutions in Africa, including beefing-up the negotiation capacity and technical support to help establish the geological data needed to enhance the value of Africa’s resources.

Zeroing in on Ghana, Mohammed Amin said although it has contributed significantly to tax revenue in the country, the cost of mining to the country has been too high -- including the destruction of the environment, human rights abuses, displacement of communities and low compensation to affected communities.

In a bid to avoid the mistakes of the mining sector, he said, Ghana has put in place important pieces of legislation to regulate the oil sector, but said there are challenges.

“The most important risk Ghana faces with oil and minerals is the non-extension of transparency to the whole extractive industries value chain. For both oil and minerals, there is no open tendering or bidding process for acquiring prospecting or exploration rights.

Companies and individuals are awarded licences through an administrative process. There is also no mandatory contract disclosure, and contracts are published at the discretion of the Minister of Energy. Oil and mining deals are kept confidential, and the system provides opportunities for hidden benefits to companies as well as avenues for tax evasion,” he told the sub-committee.

“Notwithstanding this, Ghana remains an important example of a country with functional institutions; but oil has the potential to weaken its institutions if extra efforts are not made to strengthen them and provide them with resources to check impunity,” Mohammed Amin said.

Members of the US House of Representatives are concerned that while their country pumps some US$6billion annually for humanitarian activities in Africa, the continent’s resources are being siphoned away through shady deals.

Members of the committee demanded that the US government makes transparency requirements part of the conditions on which it gives humanitarian aid.

The Chairman of the sub-committee, Christopher H. Smith, said throughout history, African resources have led to negative outcomes for African people more often than positive ones: such as slavery, colonisation, predatory governments and vicious rebel group activity.

“We must do all we can -- not only to ensure that African natural resources benefit the people of African countries economically --but also to guarantee that the human rights of African people are more fully respected by those who wield power through government authority or by the barrel of a gun,” the Chairman said.