Managing Africa's Natural Resources

Capacities for Development

K. Hanson, C. D'Alessandro, F. Owusu, K. Hanson, C. D'Alessandro, F. Owusu

• Publisher: Palgrave Macmillan
• Year: 2014
• ISBN:
  9781137365613
• Topic: Politics & International Relations
• Subtopic: African Politics
• Index: Politics & International Relations

The authors investigate well-known concerns in natural resource management in Africa while focusing on the capacity dimension of the problems. They examine dynamics of leadership, governance, criminality, structural transformation, as well as emerging issues such as green growth.

1

Toward a Coordinated Approach to Natural Resource Management in Africa

Kobena T. Hanson, Francis Owusu, and Cristina D’Alessandro

Introduction

Natural resource endowments can spur development in African countries, if managed appropriately. That said, resource exploitation does not automatically translate into meaningful development. Indeed, poor growth rates, high inequality, social exclusion, impoverishment, poor governance, environmental concerns, social tensions, and civil strife characterize many resource-rich countries across Africa and in the developing world (Collier 2007). These challenges have led to predictions of “natural resource curse” or “paradox of plenty” (Humphreys et al. 2007; Barma et al. 2012). Yet, while challenges to the effective management of natural resources—the so-called resource curse—are widely known, there exist critiques, theories, and models, some of which are subsets to, or overlap with, the resource curse while others are separate theories altogether (Humphreys et al. 2007; Obi 2010; Arthur 2012) that question the validity and accuracy of resource curse theorists. Humphreys et al. (2007) question the resource curse argument, because for them there is considerable room for human agency to correct the risks posed by the “paradox of plenty.” For Africa more specifically, it has been demonstrated that the resource curse paradigm hides the larger question of how institutions and their transformation affect growth (Jones 2008). Other authors also insist that contextual variables encompassing the national level must be taken into account in explaining why natural resources are sometimes detrimental to the development of a country (Basedau 2005).

Such criticisms against the resource curse theorists have led to a shift away from the initial debates over the “greed versus grievance” binary. Hence, today, focus is mainly on issues related to capacities (individual, institutional, and enabling environment), leadership, and governance as the key drivers to negotiate the previously well-documented challenges of the natural resource sector (African Capacity Building Foundation (ACBF) 2013). As Barma et al. (2012: 4) argue, negotiating the so-called curse is “inherently a governance challenge: the credibility, quality, transparency, and accountability of policy-making processes, public institutions, the legal and regulatory climate, and sector governance are major determinants of how successfully countries can channel their resource wealth into sustainable development.”

Toward a coordinated approach to resource management

In today’s post-bipolar era, the mix of fragile/failed states (ACBF 2011), proliferating “global” issues, and pressures for democratization has generated some innovative forms of “transnational” (Brown 2011) or “private” (Dingwerth 2008) governance systems, symbolized by the Ottawa and Kimberley Processes, now augmented by the Programme for the Endorsement of Forest Certification (PEFC)/United Nations Collaborative Programme on Reducing (REDD) and Extractive Industries Transparency Initiative (EITI). Together with other anticorruption efforts and environmental concerns, these developments are changing the natural resource governance landscape (Shaw and Fanta 2013). They have served to encourage interstate international law toward the recognition of varieties of international governance, which may reflect varieties of sources of pressures. The need for Africa to advance capacity for strategic thinking and transformative leadership as the EU economies, and more broadly the Organisation for Economic Co-operation and Development (OECD), seek to reinvent themselves is apparent (Hanson et al. 2012). This capacity need is also justified by the emerging new BRICS model, by reshaping global governance, and by a landscape of more frequent crises and increased economic competition, in which African countries have to position themselves.

Africa can benefit from a strategy that, among others, depoliticizes the use of natural resource revenues by vesting their disposal in a sovereign authority set up along the lines of an independent yet accountable central bank, judiciary, and supervisory authority (Gylfason 2011). For this to happen and function properly, this volume emphasizes the need for a coordinated approach to natural resource management (NRM) in Africa.

The volume juxtaposes a set of “dynamic” relations—civil societies, value chains, green growth, leadership and sustainability, criminality, transboundary resource management, environmental governance, and structural transformation—with fluid interpretations of natural resource governance. The capacity-leadership-governance trichotomy represents the “axis of transformation” for the natural resource sector, especially the extractives, across resource-rich African states.

Drawing on the work of Alao (2007: 16), the volume conceptualizes natural resources to include “all non-artificial products situated on or beneath the soil, which can be extracted, harvested, or used, and whose extraction, harvest, or usage generates income or serves other functional purposes in benefiting mankind.” We also view NRM from a technocratic perspective, and regard natural resource governance as a more comprehensive political process, involving myriad stakeholders. Accordingly, natural resource governance encompasses the framework of rules, institutions, and practices regulating the natural resource value chain and the extent to which key principles of transparency, openness, accountability, fairness, and environmental sustainability are observed in the extraction of, movement of, and receipts from natural resources. Environmental governance, employed in this volume specifically to the “management” of oil and gas industry (Chapter 7) with respect to the environment, rests on three key pillars: transparency and economic responsibility, environmental sustainability, and responsible community development (World Bank 2010).

Capacity, on the other hand, refers to

the ability of people, organizations, and society as a whole to manage their affairs successfully; and that is the process by which people, organizations, and society as a whole unleash, strengthen, create, adapt, and maintain capacity over time. Capacity for individuals, organizations, and societies to set goals and achieve them; to budget resources and use them for agreed purposes; and to manage the complex processes and interactions that typify a working political and economic system. Capacity is most tangibly and effectively developed in the context of specific development objectives such as delivering services to poor people; instituting education, public service, and health care reform; improving the investment climate for small and medium enterprises; empowering local communities to better participate in public decision making processes; and promoting peace and resolving conflict.

(ACBF 2011: 30–31; ACBF 2013)

Despite the multiple meanings of leadership, in developing contexts, it “is the process of organizing or mobilizing people and resources in pursuit of particular ends or goals, in given institutional contexts of authority, legitimacy and power (often of a hybrid kind)” (Lyne de Ver 2009: 9). Kaufmann, Kraay, and Mastruzzi (2008: 7) define governance as

the traditions and institutions by which authority in a country is exercised. This includes the process by which governments are selected, monitored and replaced; the capacity of the government to effectively formulate and implement sound policies; and the respect of citizens and the state for the institutions that govern economic and social interactions among them.

If the transformation going through capacity, leadership, and governance is still a challenge for resource-rich African countries, affecting individuals, institutions, and organizations, some positive changes are already taking place across the African continent, and natural resources certainly play a role in these dynamics.

New dispensation in NRM in Africa

A wave of new optimism is sweeping across Africa—gross domestic product (GDP) is rising, consumer spending is increasing, and returns on investments are higher than global averages (McKinsey Global Institute 2010). Recent publications such as the 2013 Africa Capacity Indicators Report (ACBF 2013), Economic Report on Africa (ECA/AU 2013), Africa Progress Report 2013 (Africa Progress Panel 2013), and the 2014 Resource Governance Index (RWI 2013) all highlight the evolving natural resource landscape in Africa. RWI (2013), for instance, notes that Ghana, Guinea, Liberia, South Sudan, and Zambia have all recently reformed their oil or mining legislation to include some principles of open government. Similarly, the growing exposure of the problem of “missing revenues” and growth of corporate social responsibility programs, extensive and participatory discussions of value chains and jobs, development of trust funds/sovereign wealth funds (SWFs), the increasing mobilization of community interests, and community-based NRM are all images of this evolving landscape (ACBF 2013). Another manifestation of the changing landscape is the Africa Mining Vision (AMV), which was adopted by African Heads of States and Governments in February 2009 (ECA/AU 2013). The AMV is perceived as a “driver for a fundamental and structural transformation of African economies, based on establishing and harnessing linkages between different economic sectors and regions” (Africa-Canada Forum 2013: 3).

Even as initiatives such as the EITI, Publish What You Pay (PWYP), and the Kimberley Process Certification Scheme (KPCS) continue to monitor resource extraction activities, the United Nations Environment Programme (UNEP) International Resource Panel (IRP) is steadily building up an understanding of global resource flows and why economic growth needs to be decoupled from rates of resource extraction (Swilling 2012). However, for the aforementioned initiatives, and others such as the Natural Resource Charter (NRC) (www.naturalresourcecharter.org) and AMV to really benefit Africans as a whole, there is the “need for greater ownership and buy-in by African citizens . . . and greater policy space for [countries] to regulate and monitor resource extraction for the benefit of their populations” (Africa-Canada Forum 2013: 10).

The negative situation of resource-rich economies in Africa is not immutable (Obi 2010; Arthur 2012; ACBF 2013). Many agree that better governance, transparency, and accountability are central to good resource management (NRC 2010), and can help enhance the potential value of natural resource endowments (Collier 2010). Studies suggest that the legacy of the “old” NRM landscape—characterized by asymmetries of weak states versus strong external actors multinational corporations (MNCs), consumer countries); low and often erratic commodity prices; unfair terms of trade; low technological and managerial capacity; insufficient and ineffective legal frameworks and policies; weak bargaining capacity and systems of taxation; lack of transparency and accountability across the value chain; windfall rents, when realized, extracted for the benefit of only the elite; lack of economic diversification and shared growth; unmitigated environmental damage caused by the extraction process; and the sociocultural displacement of affected communities—is giving way to an evolving positive landscape (Arthur 2012; Barma et al. 2012; ACBF 2013).

Today, internal and external pressures have resulted in a growing state coherence with strong policy frameworks and increased regional and subregional integration and linkages. This, coupled with high, if still erratic, commodity prices on Africa’s extractives—driven by a strong demand from BRICS; advancements in technical skills (law, science, management); a recognition of need for training programs; extensive discussion of value chains and jobs; development of trust funds/SWFs; the promotion of green growth, REDD+, and national and international nongovernmental organizations’ (NGOs’) environmental advocacy; a proliferation of civil society organizations (CSOs) with increased capacity and international linkages; and new configurations of dialogue (among public sector, private sector, NGOs, and local communities)— have contributed to the increased rejection of blood diamonds, conflict timber, and abuses of MNC oil and gas extraction, even as national governments advance initiatives such as the African Peer Review Mechanism (APRM), AMV, African Minerals Development Centre (AMDC), and the African Development Bank’s (AfDB) African Legal Support Facility (ACBF 2013). Each of these governance processes includes African regional programs to which ACBF relates with other African networks, including diasporas.

The entire portfolio of stakeholders is subject to a new normative environment, as evidenced by the strong NRM policy environment emerging across Africa (RWI 2013). Policies frame the sphere of potential constructive action, as this volume’s chapters note; there are now new spaces for agency. The ongoing increases in the global prices of extractives, coupled with the expansion of new discoveries, and a growing demand from emerging economies represent an unparalleled opportunity for Africa’s resource-rich states to bolster transformation within the ongoing evolving landscape. Enhancing the investment climate is one of the central steps to advancing international competitiveness in Africa’s resourcerich economies (Page 2008). Countries need to advance and entrench policies that acknowledge the realities of their national contexts, that can bring about rapid results in a context of urgent need, and that allow for incremental improvements to their governance processes (Marcel 2013: 2).

So, while the ongoing developments are in the right direction, resource-rich African states need to embrace policies and initiatives that aim to sustain the current momentum. As Page (2008: 2) points out, much of Africa’s post-1995 growth acceleration has been primarily driven by “avoiding the policy mistakes that led sharp economic contractions in the past and by a strong surge in growth in the resource-rich economies” (see also Arbache and Page 2007). To sustain and enhance the gains already achieved, resource-rich African states must also seek creative ways to overcome the knowledge asymmetries that they face in negotiations with foreign stakeholders, even as they develop appropriate tax structures, and invest in advancing capacity in all sectors along the entire natural resources value chain (Hanson and Léautier 2011; ACBF 2013; ECA/AU 2013; Marcel 2013; RWI 2013).

As Marcel (2013: 9) further argues, “instead of encouraging [African countries] to pursue ‘best practice’ standards, it may be more helpful to advise them to aim for ‘more appropriate practice’, which acknowledges the realities of the national context; ‘more effective practice’, which seeks to bring about rapid results in the context or urgent needs, or ‘better practice’, which aims at incremental improvements of governance processes through aspirational, but achievable, milestones.” Marcel, thus, concurs with Barma et al. (2012), and this volume’s editors, who all call for a “good-fit” approach to NRM (see Chapter 10 by Owusu, D’Alessandro, and Hanson, in this volume).

Viewpoints and reflections

The need for Africa to develop critical capacity at the individual, institutional, and enabling environment levels for NRM that ensures transformation is apparent. Mitigating the so-called African paradox of plenty is a leadership, governance, and capacity challenge: effective auditing, monitoring, regulating, and improving resource exploitation regimes and developing resource sector linkages into diversified domestic economy; advancing capacity of the legislature to act as a countervailing force over the executive; enhancing budgeting and expenditure management; improving procurement practices and grants of natural resources concessions; establishing effective mechanisms to curb corruption; and supporting central institutions of government (Barma et al. 2012; ACBF 2013). Africa thus needs to work toward advancing knowledge sharing and enhancing transformative leadership and institutions that further its development agenda and goal of good governance, reducing poverty and inequalities, and improving the quality of life of African populations through natural resources. It is in this light that this volume’s collection of essays seeks to assist Africa claim the 21st century.

The volume synthesizes viewpoints and reflections by drawing on the extant literature on NRM and incorporating rich empirical material and case studies from a host of countries to reflect the African experience in its complexity and diversity. The chapters of this book provide snapshots of the several emerging “worlds” of NRM, and policy responses to a set of new global issues and coalitions. They identify salient capacity development strands for the myriad stakeholde...

Table of contents

• Cover
• Title Page
• Copyright
• Contents
• List of Tables, Figures, and Maps
• Acknowledgments
• Notes on Contributors
• List of Acronyms
• 1. Toward a Coordinated Approach to Natural ResourceManagement in Africa
• 2. The Status of Natural Resource Management in Africa:Capacity Development Challenges and Opportunities
• 3. Governance of Natural Resource Management in Africa: Contemporary Perspectives
• 4. Criminality in the Natural Resource Management Value/Supply Chain
• 5. Structured Transformation and Natural Resources Management in Africa
• 6. Strategic Capacity-Building Imperatives Vital for Transboundary Water Cooperation in Africa
• 7. The Gas and Oil Sector in Ghana: The Role of Civil Society and the Capacity Needs for Effective Environmental Governance
• 8. The Capacity Question, Leadership, and Strategic Choices: Environmental Sustainability and Natural Resources Management in Africa
• 9. Debating Critical Issues of Green Growth and Energy in Africa: Thinking beyond Our Lifetimes
• 10. Moving Africa beyond the Resource Curse: Defining the “Good-Fit” Approach Imperative in Natural Resource Management and Identifying the Capacity Needs
• Afterword: Natural Resource Governance Post-2015: What Implications for Analysis and Policy?
• Index