Governing Natural Resources for Africas Development Prof Hany

Governing Natural Resources for Africa’s Development Prof. Hany Besada, Deputy Executive Director, Diamond Development Initiative & Senior Research Fellow, United Nations & Senior Fellow, University of Ottawa & Research Professor, Carleton University

New Shifts in the Global Economic Order • Twenty-first century globalization is markedly different from twentieth century globalization • New trends in the twenty-first century are the rise of the global South, the growth of South-South relations in trade, energy and politics, and the growing role of emerging societies and sovereign wealth funds • China is projected to overtake the US as the largest economy by 2020 in purchasing power parity terms and by 2027 in market exchange rate terms. India should become third ‘global economic giant’ by 2050.

New Shifts in the Global Economic Order (continue) • There are “paradigm shifts, ” among them economic and power shifts toward emerging economies, growing public debates on the respective roles of public and private sectors in generating sustainable growth, and the unprecedented growth in demand for natural resources. • The private sector and foreign investors are seen to be engines of growth in developing regions. • BRICS countries’ continuing impact on the demand for and price of energy and minerals, international discourse evolved around the myriad development issues surrounding the governance of natural resources in Africa.

Sustainable Development in Africa • Share of the African population in extreme poverty ($1. 90/day) did decline —from 57 percent in 1990 to 43 percent in 2012. However, the number of poor increased by 100 million due to population growth. • Since 2000, African governments have witnessed annual average economic growth rate of 5 per cent or more facilitated by burgeoning foreign direct investment • Strong internal demand from its rapidly growing middle class, increased spending on basic infrastructure by both governments and the private sector, adoption and penetration of ICT • Foreign direct and portfolio investments have reached a record US$80 billion by 2015, particularly in the area of natural resources

Africa’ Resource Endowment and Governance • The continent has 300 million hectares of potential land for rain-fed agriculture and 80 transboundary rivers and lake basins, including 17 large catchment areas exceeding 100, 000 square kilometers each. • With respect to minerals, the continent holds roughly 60 per cent of the world’s diamonds, 40 per cent of its phosphate, and 30 per cent of its cobalt reserves, 40% of its gold and 30% of total mineral deposits. • Abundance of natural resources proves to be a curse or blessing depends on the nature, extent and outcome of the effort and experience of an individual state in governing and managing such assets.

Africa’ Resource Endowment and Governance (continue) • The manner in which the continent’s resources are managed and exploited is fundamental to their ability to enhance both state and human security while fostering inclusive, broad-based economic development. • Countries such as Ghana, Namibia, and Botswana are examples of countries where natural resources have been used for the betterment of the population, with varying degrees of success and under different conditions and challenges including constraints and shortcomings. • Meanwhile, countries such as Sierra Leone and Liberia are states where resource endowment has historically helped fuel civil conflicts and blamed for continued reliance on minerals, known as the “Dutch Disease” on the continent.

Changing Resource Landscape • The rise of emerging or re-emerging powers and their appetite for Africa’s natural resources. • The growing strength and vocal criticisms leveled at African governments by African civil society. • African governments’ re-negotiating of existing mining agreements, i. e Liberia and Sierra Leone. • The implementation of corporate legal requirements and restrictions, such as the Dodd-Frank Act in the US and the Kimberley Process in reviewing supply chains and eradicating trade in conflict minerals • The growing proliferation of transnational governance initiatives initiated by continental bodies, multilateral institutions and governments in Africa and elsewhere. • Pressure to move beyond Corporate Social Responsibility and the growing importance of developmental initiatives.

Transnational Governance Initiatives • The Natural Resource Charter (NRC) is a set of principles for governments and societies on how to best harness the opportunities created by extractive resources for development. The Charter is made up of 12 best practice principles, which cover the sequence of choices faced by governments in relation to resource extraction. These range from fiscal terms, contracts, institutions and regulations, to macroeconomic management and strategies for sustainable development. • African Mining Vision (AMV)- Policy framework adopted by African heads of states in 2009 aimed at maximizing the development outcomes of mineral resource exploitation. Under the African Union Action Plan, the pillars of the Vision will be implemented through nine program clusters, ranging from the promotion of good governance, to small scale mining aimed at improving rural livelihood to a diversified mineral industry through beneficiation and value addition and local content.

Developmental Initiatives • Recognition of the shortcomings of Corporate Social Responsibility (CSR), the ability and willingness of corporations self-regulate and comply with national and international norms. • Moving beyond CSR: Free Prior Consent Protocols (FPIC), Maendeleo Diamond Standards (MDS) and Community Development Agreements (CDA). • FPIC are specific rights that pertains to indigenous peoples and is recognized in the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP). It allows them to give or withhold consent to a project that may affect them or their territories. It is enrichened in the constitutions of several Latin American countries.

Developmental Initiatives (continue) • The Maendeleo Diamond Standards certification system is a unique effort to support artisanal diamond miners and their communities and to ensure their inclusion in the broader process of promoting responsible supply chains. • It is pioneered by the Diamond Development Initiative (DDI), a non- governmental organization headquartered in Canada but with operations in Africa. • Maendeleo Diamonds are diamonds that are artisanally mined in conflict- free zones and produced safely in consenting and engaged communities through violence-free operations with respect for human and worker rights using practices that promote environmental responsibility. DDI is implementing them in DRC and Sierra Leone.

Developmental Initiatives (continue) • CDAs are vital mechanisms for ensuring that local communities benefit from large-scale investment projects, such as mining. In formalizing agreements between an investor and a project-affected community, CDAs set out how the benefits of an investment project will be shared with local communities. • In some countries CDAs are required by domestic legislation, i. e Sierra Leone while others they are voluntary.

Questions • Prof. Hany Besada • hany. besada@ddiglobal. org / hbesada@uottawa. ca