News / Africa

Survey Urges Improved Management of Resources

The Revenue Watch Institute study finds most countries surveyed need to improve the way they manage minerals and other natural resources (Revenue Watch Institute)
The Revenue Watch Institute study finds most countries surveyed need to improve the way they manage minerals and other natural resources (Revenue Watch Institute)
William Eagle
A new report says most of the world’s top oil, gas, and mineral producers are not managing their resources well.  The Resource Governance Index was issued by the Washington-based Revenue Watch Institute. It says its findings are significant because deficits are largest in the countries that depend most on these resources for revenue – countries with billions of the world’s poor. Those 58 countries also produce well over 80 percent of the world’s oil, diamonds, and copper.

No African countries received a satisfactory rating, although five were rated “partially” satisfactory -- Ghana, Liberia, Zambia, South Africa, and Morocco.
The study says only 11 of the 58 countries manage their natural resources with enough accountability and openness to be labeled “satisfactory.”  

At the top are Norway, followed by the United States, the United Kingdom, Australia, Brazil, Mexico, Canada, Chile, Columbia, Trinidad and Tobago, and Peru.

Fifteen countries received a grade of “partially” successful:  (OPT) India (12), Ghana (15), Liberia (16), Zambia (17), South Africa (21), Russia (22), and Morocco.

Sixteen countries received were rated as “weak” in their resource management.  Among them were:  Tanzania (27), Botswana (30), Gabon (32), Guinea (33), China (36), Sierra Leone (35), Nigeria (40), and Angola (41).

The remaining countries were rated as “failing.”  Among those with a failing grade are Vietnam (43), Democratic Republic of the Congo (44),  Cameroon (47), Saudi Arabia (48), South Sudan (50), Zimbabwe (51),  Qatar (54), Libya (55), and Equatorial Guinea (56).

As a basis for the Resource Governance Index, Revenue Watch used four criteria instrumental in guaranteeing good resource management:  a country’s legal framework; the degree to which governments and businesses disclose public information about their operations;  the presence of checks and balances to limit corruption; and last, the enabling environment  -- that is, transparent budgets, democratic institutions and the effectiveness of governance.

Institutional and legal environment

Juan Carlos Quiroz, a senior policy analyst with Revenue Watch, explained the importance of the first requirement to transparency -- the institutional and legal setting. 

"The practices we look for are whether a government has approved a freedom of information law that requires disclosure from the agencies, ministries and companies operating in the extractive sector," he says. "It’s also about an independent licensing process because when the state owned companies get involved in these, there is the risk of conflict of interest also. So we think an independent licensing process is more open and favors competition."

Seventeen countries scored a satisfactory rating, including Ghana, Liberia, and Zambia. Many of those with top rankings also have legal frameworks that encourage competition in their resource sectors, disclosure policies to curb corruption, and competitive bidding for mining licenses.

That’s not the case with Nigeria, which failed to get a satisfactory score. Dauda Garuba of  Revenue Watch in Abuja, explains why:
 
"The independent licensing process started in 2005 when Nigeria had open bids for oil and gas blocksl," he says.  "The last one we had was in 2007, which was rushed before the administration of President Olusegun Obasanjo came to an end. But since then everything seems to have gone into what is popularly referred to in Nigeria as “voice mail.”  

"So, we made progress with opening the licensing process from 2005 to 2007. [Since then] what we hear and read in the media is that discretion has become the order of the day in the issuance and award of oil block licenses, [so] we have regressed [especially against the transparency principles on which the Extractive Industries Transparency Initiative is based]."


Reporting practices

Quiroz says 13 countries gained top marks [“satisfactory”] in the second measurement of good resource governance – reporting practices by government ministries or regulatory agencies. No African countries rated “fully satisfactory” and many received failing marks -- including Nigeria, Mozambique, Equatorial Guinea, and Zimbabwe.

Something you find in a majority of countries in Africa is that the ministries of mines or petroleum tend to not publish information. The best reports that you find from Africa tend to come from the ministry of finance or in some cases some reports from the central banks. 

Ghana received a passing score, rated “partial” for its failure to provide information on contracts and many other keys aspects of the mining industry. But Dauda Garuba says it was found to provide adequate information in other sectors, including oil contracts, which are published online.

"About two months ago,"  he says, "I read the one-year report from Ghana’s Ministry of Finance with a detailed account on how many barrels of oil have been produced, how much money was generated from oil resources, how much [the government] has plowed into the country’s budget and investment. In Nigeria, we need this kind of information.

"But Nigeria, Angola, Equatorial Guinea do not publish in detail the revenues and where they go. Resource governance is not just about transparency in revenue collection, but also about how the money is spent."
 
In contrast to Ghana, Garuba says Nigeria received a failing grade in this category. The index found that its Petroleum Resources Ministry published little information on licenses, contracts or operational data, and no reports on revenues.

Safeguards and quality control

The third criteria in the Resource Governance Index are safeguards and oversight mechanisms.  They guard against mismanagement, conflicts of interest, and discretionary powers that allow the president or other officials to influence public contracts with no public scrutiny. 

The Index finds that 16 countries do just that, including South Africa, Ghana, Zambia, and Liberia.  Zimbabwe, Botswana, Nigeria, and Angola were judged to have weak controls, while Congo-Kinshasa, Mozambique, Cameroon and Equatorial Guinea failed.

The Index says Mozambique’s legislature does not review contracts and does not provide oversight over extractive industries. Government officials are not required to disclose potential conflicts of interest, and audit reports are not made public. The report criticized Angola for inadequate oversight of the budget and the country’s natural resource fund, but it recognized the government for introducing new policies requiring disclosure of conflict-of-interest and improvements in licensing.

"The safeguards and quality controls," he explains, "are the existence of audits by the supreme auditing institution of revenue and on parastatals and also requirements to disclose conflicts of interest or investments in the extractive sector for officials who are in charge of regulating the sector. [Safeguards also include] checks and balances from [the parliament] whether the legislature has power and acts to be the overseer of the extractive sector."

Silas Olang,  Revenue Watch’s regional associate for Africa in Dar Es Salaam, says Tanzania nearly made the “partially successful list” in the category of safeguards and control.  He says enough progress is being made that the country will likely be rated “satisfactory” in the future.

He says Tanzania is the only country in East or Southern Africa so far with a minerals audit agency to monitor the operational costs and tax revenues from mining, and a national audit office which examines government spending. He says the legislature is also strong:

"Tanzania through parliamentary committees has a very strong kind of financial or budget oversight.  So the committees are headed by the opposition parties and therefore they are very robust in terms of following government spending and the budget."

He says Tanzania may need to reform mining laws which he says give excessive powers to the ministry of energy and minerals and which impede disclosure of information to the public.  

Enabling Environment

In the fourth category -- enabling environment for investment -- the Index ranked countries according to overall good governance, such as rule of law and a government’s ability to enforce its policies. Only seven of the 58 countries surveyed score a satisfactory rating, including South Africa and Botswana – with Ghana ranked as “partially successful.” Most African countries, including Nigeria, failed.

"It’s troubling," he says, "to see the majority of countries are doing poorly, and it has to do with different things. In some cases, it’s coming out of long civil war or have gone through civil unrest, corruption or a lack of technical capacity in the government.  But it depends country by country."
 
Dauda Garuba of Revenue Watch in Abuja says Nigeria appears slow to introduce and implement laws guaranteeing transparency and curbing corruption. For example, the index says despite a policy of open bidding, the minister of petroleum resources has little oversight -- including by the legislature -- in awarding licenses.

As a result, he says some Western companies are reluctant to invest in Nigeria because they can now be punished in their home countries for any act of corruption committed there.  
 
"In Nigeria," he says, "you have the sense the government is dragging its feet to act. So you find companies that would be willing to go to Nigeria to do business but if they find [there’s no enabling environment], they will withhold investments in this country. South Africa and Botswana have moved well in these areas. We need to clean up the environment and make it a conducive one for business investment."

Silas Olang says Angola’s failure to create an enabling environment is due to a weak civil society and opposition, as well as a strong presidency with few checks and balances.

"There’s both a weak political opposition and weak civil society; and there’s little space for civil society to act more effectively in addressing those challenge," he says.  "That’s because it depends on how much space civil society has to engage in these issues.  [Civil society] is given powers to function legally but there are some controls on their actions, especially those advocacy organizations that try to challenge the status quo when it comes to social policy.  The government always tends to be aggressive against them. 

"It’s not like in Tanzania and Zambia where civil society has the freedom to criticize, challenge and engage in dialogue with government."
 
Olang says Zimbabwe also has a strong executive influence over licensing.  The Index says bids are often made in the “national interest” and are largely awarded to critics of Western sanctions, like China, Russia,  the United Arab Emirates, South Africa and India.  Government audit reports are not published.    Still, he says, there has been some oversight, though he is not sure it will continue.
 
"Zimbabwe has had a lot of challenges," he explains, "but there is a hope with the new constitution that governance might improve.  However, the other challenge is that during the [current] coalition government, there were checks and balances by the opposition especially with regard to government revenues.  So, after the next election we are not so sure those checks and balances will still be there.  If the coalition government is not there, I doubt that things will improve."

Revenue Watch officials say an updated report will be released in two years.  In the meantime, they say the current Resource Governance Index gives investors a snapshot of prospective business environments – both benefits and risks. 
It also provides a diagnostic tool that can help policymakers identify and improve weaknesses.

Listen to report on Resource Governance Index
Listen to report on Resource Governance Index i
|| 0:00:00
...    
🔇
X

You May Like

Video Protests Continue in Ferguson, Spread to Other US Cities

Missouri officials say deployment of more than 2,000 National Guard soldiers helps curb second night of rampant arson and looting in Midwestern town More

Video Ebola, Crackdown on Illegals Hit Business in Guangzhou

Chinese city has largest community of Africans in Asia More

Video Legendary Lebanese Actress, Singer Sabah Dies at 87

Music and film diva, affectionately called 'Sabbouha' by millions of her fans, performed at Carnegie Hall in New York, Royal Albert Hall in London, Olympia in Paris, Sydney Opera House in Sydney More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Aung San Suu Kyi: Myanmar Opposition to Keep Pushing for Constitutional Changei
X
November 24, 2014 10:09 PM
Myanmar opposition leader Aung San Suu Kyi says she and her supporters will continue pushing to amend a constitutional clause that bars her from running for president next year. VOA's Than Lwin Htun reports from the capital Naypyitaw in this report narrated by Colin Lovett.
Video

Video Aung San Suu Kyi: Myanmar Opposition to Keep Pushing for Constitutional Change

Myanmar opposition leader Aung San Suu Kyi says she and her supporters will continue pushing to amend a constitutional clause that bars her from running for president next year. VOA's Than Lwin Htun reports from the capital Naypyitaw in this report narrated by Colin Lovett.
Video

Video Mali Attempts to Shut Down Ebola Transmission Chain

Senegal and Nigeria were able to stop small Ebola outbreaks by closely monitoring those who had contact with the sick person and quickly isolating anyone with symptoms. Mali is now scrambling to do the same. VOA’s Anne Look reports from Mali on what the country is doing to shut down the chain of transmission.
Video

Video Ukraine Marks Anniversary of Deadly 1930s Famine

During a commemoration for millions who died of starvation in Ukraine in the early 1930s, President Petro Poroshenko lashed out at Soviet-era totalitarianism for causing the deaths and accused today’s Russian-backed rebels in the east of using similar tactics. VOA’s Daniel Shearf reports from Kyiv.
Video

Video Hong Kong Protests at a Crossroads

New public opinion polls in Hong Kong indicate declining support for pro-democracy demonstrations after weeks of street protests. VOA’s Bill Ide in Guangzhou and Pros Laput in Hong Kong spoke with protesters and observers about whether demonstrators have been too aggressive in pushing for change.
Video

Video US Immigration Relief Imminent for Mixed-Status Families

Tens of thousands of undocumented immigrants in the Washington, D.C., area may benefit from a controversial presidential order announced this week. It's not a path to citizenship, as some activists hoped. But it will allow more immigrants who arrived as children or who have citizen children, to avoid deportation and work legally. VOA's Victoria Macchi talks with one young man who benefited from an earlier presidential order, and whose parents may now benefit after years of living in fear.
Video

Video New Skateboard Defies Gravity

A futuristic dream only a couple of decades ago, the hoverboard – a skateboard that floats above the ground - has finally been made possible. While still not ready for mass production, it promises to become a cool mode of transport... at least over some surfaces. VOA’s George Putic reports.
Video

Video Falling Gas Prices Impact US Oil Extraction

With the price of oil now less than $80 a barrel, motorists throughout the United States are benefiting from gas prices below $3 a gallon. But as VOA’s Kane Farabaugh reports, the decreasing price of petroleum has a downside for the hydraulic fracturing industry in the United States.
Video

Video Tensions Build on Korean Peninsula Amid Military Drills

It has been another tense week on the Korean peninsula as Pyongyang threatened to again test nuclear weapons while the U.S. and South Korean forces held joint military exercises in a show of force. VOA’s Brian Padden reports from the Kunsan Air Base in South Korea.
Video

Video Mama Sarah Obama Honored at UN Women’s Entrepreneurship Day

President Barack Obama's step-grandmother is in the United States to raise money to build a $12 million school and hospital center in Kogelo, Kenya, the birthplace of the president's father, Barack Obama, Sr. She was honored for her decades of work to aid poor Kenyans at a Women's Entrepreneurship Day at the United Nations.
Video

Video Ebola Economic Toll Stirs W. Africa Food Security Concerns

The World Bank said Wednesday that it expects the economic impact of the Ebola outbreak on the sub-Saharan economy to cost somewhere betweenf $3 billion to $4 billion - well below a previously-outlined worst-case scenario of $32 billion. Some economists, however, paint a gloomier picture - warning that the disruption to regional markets and trading is considerable. Henry Ridgwell reports from London.
Video

Video Chaos, Abuse Defy Solution in Libya

The political and security crisis in Libya is deepening, with competing governments and, according to Amnesty International, widespread human rights violations committed with impunity. VOA’s Al Pessin reports from London.
Video

Video US Hosts Record 866,000 Foreign Students

Close to 900,000 international students are studying at American universities and colleges, more than ever before. About half of them come from Asia, mostly China. The United States hosts more foreign students than any other country in the world, and its foreign student population is steadily growing. Zlatica Hoke reports.

All About America

AppleAndroid