Resource Management of Serious Concern in Kigali

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Guinean Minister of Economic Affairs, Ms. Daphne Mashile-Nkosi_web.jpg

A session of the ongoing African Development Bank 49th Annual Meeting in Kigali, Rwanda, addressed another serious issue of Resource Management on May 20, 2014, leaving two African officials including SEM Kerfalla Yasane, Minister of Economic & Geology of Guinea, and Mrs. Daphne Mashile-Nkosi, Chief Executive Officer of Kaladadi Manganese of South Africa to recommend community and national interests in resources governance.

The two African officials observe that Africa has a wealth that attract investors and they (investors) are moving in for it; however, they claim that proceeds from the investment only benefit investors and a few in government and not communities from where the resources are taken.

Ms Mashile-Nkosi who was very vocal in the panel discussion noted, “Africa should look at a new contracting philosophy.  Africans should prioritize themselves in signing contracting with mining and other super companies taking resources in Africa.”

Discussing under the topic, “From inherited to created wealth:  Natural Resources Management,” Ms Mashile-Nkosi stressed that African leaders should establish a system that locals will have greater role in the mining and extractive business with incoming foreign companies, asserting that it will allow the locals to be conscious of what is going out and what’s remaining, and what benefit it will leave with the dwellers.

According to her, this will help to protect the interest of the local communities from where the resources are taken, and will prevent more harm when the company draws back for any financial or other reason.

She observes that companies coming to Africa to investment in mining have left local communities damaged with no infrastructure or tangible benefits for dwellers to point at, noting that investors take more from them while environmental hazard remains as a symbol of their (investors) presence.

“It is important that if you mine the mineral resources, you leave something for the community,” Ms Mashile-Nkosi noted.

Referring to it as social investment, the outspoken South African CEO argued that something must be left in the community where big holes are dug while extracting mineral because at the end of the day the community and people will remain while company goes away.

Minister SEM Kerfalla Yasane for his part acknowledged that his country Guinea has a great potential of minerals including Bauxite and Iron Ore.

According to him, a big iron ore project had been launched in the country, but the outcome is frustration because the people who are the chief custodians of the resources continue to live in abject poverty as though they do not have such wealth.

He said the current Guinean Government having realized the frustration encountered by citizens in the management of their own resources, has adopted a new policy based on transparency and accountability.

He said the government has therefore decided to review all mining contracts in Guinea to ensure that benefits of the resources impact the citizens as well.

He disclosed that there are 18 mining contracts currently signed by the Guinean Government, adding, “The contracts were also given the United Nations Development Program (UNDP) and the African Development Bank to evaluate.”

For citizens of the country to build trust in government and companies coming in, Minister Yasane said the new mining code of Guinea takes into account local content priority and a tax system that will make Guinea competitive as the companies extract.

In addition to these, the Minister said they are also trying to set up a team that will implement public policy on behalf of government to create more local investors who will work side by side with foreign companies.

He was also cautious to note that mining investment is a capital intensive project that takes billions of dollars to construct facilities that will enhance extraction.

He said because of the huge task associated with mining, it takes a long time to do since major constructions including railway have to be completed before a company begins.

Another panelist, Sir Paul Collier, Director of Center for the Study of African Economics at Oxford University sharing his expert opinion said, what comes from the ground is an asset, and getting it out is depleting that asset.

To have a sustainable return from the asset leaving the community, Sir Collier said government needs to use revenues from the asset to build tangible things that will remain in the community from where the asset is taken.

He said if income from the revenue is consumed, it means that government is burning its asset.

Jonathan Oppenheimer, one of the panelists whose family has been engaged in investment in the mineral sector for years in Africa also said both parties involved with the mineral investment have to create the opportunity for a sustainable investment return and benefit for the community wherein the mineral exists.

Mr. Oppenheimer stressed that creating a regulatory system that is transparent to allow investors have a long term investment is important because if they do not invest, the resources are not extracted to yield the benefits needed for either parties.

He observed that the regulatory system over the last twenty years has had a short-term investment outlook, which according to him has left investors with the option to seek their own interest since they need returns on their investment.

He said as a result of this short-term investment outlook, more junior investors (locally oriented) that do not have the capital have emerged.

“There is a real need to examine what state needs from its resources and have a transparent regulatory system that will provide an enabling environment for investors who want to invest.

Meanwhile, views from the audience showed that African countries that have resources share the same curse as investors take more and leave little or nothing for the communities.

This according to the African nationals, results from bad governance on the part of their leaders who they say sign contracts with the aim to bring benefits to them and not to community members that are chief custodians of the resources.

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