AfDB, World Bank Raise Eye-brows on Bogus Concessions and Contracts

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AfDB President Adesina and WBG President Kim.jpg

The continental African Development Bank (AfDB) and the World Bank (WB) have raised concerns about losses countries in Africa receive from bogus concession companies and contracts thus causing fragility in the affected countries.

At a recently held High-Level Panel session in Washington, D.C., that brought together experts from diverse backgrounds, the two financial institutions observed that transparency and accountability are lacking in many concession agreements and contracts signed by most governments.

Consequently, AfDB and WB noted that peoples of countries where natural resources are exploited are left poor without quality education, good healthcare systems and better infrastructure.

The High-Level Panel Session was a part of the World Bank’s Fragility, Conflict and Violence Forum that studies and discusses root causes of these social issues to find solutions to resolving them in affected countries.

According to a dispatch from Washington, D.C., AfDB and WBG observed that natural resources contribute more than 20% of Gross Domestic Product (GDP) in 22 resource-rich countries in Africa; however, they noted that fragility remains a major constraint on the extent to which the resources are contributing to equitable and sustainable development on the continent.

Considering the natural resource curse on the continent as a result of bogus concession contracts, the African Development Bank during the panel session reaffirmed its commitment through its 2014-2019 Strategy for Addressing Fragility and Building Resilience in Africa to move toward a more sustainable and inclusive development trajectory.

The objective of the High-Level Panel was to explore ways and means by which an improvement in the governance framework and improved capacity of governments to negotiate contracts and concessions in the natural resources sector could contribute to higher economic growth, sustainable development as well as stability and resilience in Africa.

On this note, Ed Garcia, President and Managing Director of Firestone Liberia, explained roles played by his company in Liberia which he believes can serve as examples to making people of natural resources countries feel the impact of their God’s gift resources.

Mr. Garcia recalled that his company played a key role in helping to curb the Ebola disease that affected Liberia in 2014. He did not state what the company contributed; however, Firestone, like other institutions and companies operating in Liberia, provided funds and materials needed to fight the disease.

He also mentioned strides his company is making in education and health of its employees and the communities around Firestone’s operational areas. Firestone at present has come under spotlight for having a well equipped library and science laboratory for students.

He said Firestone has also provided scholarships for Science students attending the University of Liberia and to a larger extent improved facilities for workers on the plantation.

In spite of the dubious activities surrounding concessions and contracts in Africa, Winnie Byanyima, Head of Oxfam International, noted that civil society organizations have in the recent past scored successes in their demands for transparency in the operations of investors in the natural resource sector.

She said the United States and Sweden, for instance, now have legislations that require companies registered in their jurisdictions to be more transparent, although the regulations to guide this process have been slow to be produced.

Concession and licensing agreements play an important role in determining the revenues that countries receive for their natural resource wealth. Africa loses double the amount it receives in Official Development Assistance (ODA) through illicit financial outflows, including in the natural resource sector.

In this vein, Liberia is on record for signing 67 concession agreements during sitting of the 52nd Legislature with about 60 of them termed as bogus.

According to the two major financial institutions, there is need to stem these losses, but it will require concerted effort to build the capacity of governments to understand the complex structure of multinational corporations and how that affects the design and structuring of natural resource investments.

Among the important issues to explore, the dispatch said, are the implications of complex company structures, registered in multiple jurisdictions and how this could impact tax compliance and potential revenue earnings.

The High-Level Panel referenced Botswana as one country in Africa that has transformed its socioeconomic situation and employed standards that have made that country the least corrupt in Africa.

However, Linah Mohohlo, Governor of the Bank of Botswana, said while it is true her country has made many gains in transforming the socio-economic lives of citizens, there are still pitfalls and challenges facing the good intent of the government.

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