Secret mining contracts haunt African economies

Post was last updated: November 8, 2018

By William Kumwembe in Hartbeespoort, South Africa:

Southern Africa Resource Watch, a pan- African research, policy capacity-building and advocacy institution, has said governments need political will and enabling policies to help openness in the mining and extractive industry.

Speaking during a panel discussion at the 2018 Sanlam Summer School for Financial Journalists in Hartbeespoort, South Africa, Southern Africa Resource Watch Executive Director, Claude Kabemba, said most economies in Africa continue losing revenue from its extractive and mining sectors.

He cited lack of open contracts between the governments and mining firms as a major contributing factor.

This comes as Malawi has raised K500 million from mining revenue within nine months—July 2017 and April 2018—through royalties, licence processing and ground fees.

This represents a 25 percent increase over the same period last year when K400 million was raised, according to figures published in the 2018 Malawi Government Annual Economic Report.

Before 2014, mining used to contribute about 10 percent to the gross domestic product (GDP) when the Kayelekera Uranium Mine in Karonga District was operational.

But since the mine was put on care and maintenance in February 2014 due to tumbling prices of uranium on the global market, the mining sector’s contribution to GDP has dropped to below one percent, according to the report.

Kabemba said open contracting would help African economies make the most of the extractive and mining industry.

Open contracting is ideal for every country. It would help hold mining companies accountable.

“When contracts are not open, the power lies with the company and rather not the state. The state does not have capacity to monitor”, Kabemba said.

The 2018 Sanlam Summer School is being held under the theme Sustainability Reporting as a Business Imperative.

It is advocating meeting present needs by businesses without compromising the ability of future generations to meet their own.

One of the training facilitators, John Capel, Executive Director of Bench Marks Foundation, said the role of government is setting boundaries and regulating businesses for sustainable development.

“Wherever there is an investment there is a cost. There is, therefore, a need for governments to closely monitor business operations that they should not be detrimental in any way to the future generations,” Capel said.

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