Africans need to see the benefits of the extractive sector, Report Says

Addis Ababa, 28 May 2013 (ECA) - Africa’s natural resources could dramatically improve the lives of millions - but while natural resources may have fuelled a decade of rapid economic growth on the continent, most Africans have still not seen the benefits, according to this year’s Africa Progress Report presented to African leaders and policy-makers during the AU summit in Addis Ababa, Ethiopia.

A panel session on the recently launched 2013 Africa Progress Report said African policy makers have critical choices to make: they can either invest their natural resource revenue in people to generate jobs and opportunities for millions in present and future generations. Or they can squander this opportunity, allowing jobless growth and inequality to take root.  

“It is very important that this self-confidence that we are seeing emerging is going to be put to good use,” said Carlos Lopes, Executive Secretary, UN Economic Commission for Africa (ECA). “And in order for it to be put to good use, we need very concrete rather than rhetorical questions to be addressed – and I think that is where the report becomes very timely not only because it can influence the G8 discussions, but also because it can influence the African discussions, including the shaping the agenda of 2063 which is the agenda that now the AU has put in front of us.”

He noted that Africa's leaders have adopted the Africa Mining Vision to try and clean up the industry and that an ongoing study by the ECA on illicit financial flows out of Africa shows the need for transparency and accountability. “It is a two-way street -we have to improve across the board,” he said.

President Johnson-Sirleaf, whose country Liberia exports iron and diamonds, said the 'resource rich vs poor human condition' paradox has long been exemplified by her country but that this changing. “Our experience in Liberia shows that we need to go an extra mile to improve extraction process audits,” she said.

“Africa, like the rest of the world, is suffering tremendous losses from the illicit and unwarranted outflow of wealth through tax avoidance, shell companies, tax havens, transfer pricing and others, that in a way leads them to avoid their fair share of taxes,” said Johnson-Sirleaf.  

“This report shows very clearly that such outflows exceed the total amount of development assistance which the African continent receives ever year. This problem can only be resolved if all nations can work together, and the ball is in the court of our partners to close tax loopholes in the extractive sector,” she said.

International tax avoidance and evasion, corruption, and weak governance represent major challenges. The report therefore welcomes the commitment from the current G8 presidency, the United Kingdom, and other governments to put tax and transparency at the heart of this year’s dialogue. International tax avoidance and evasion, corruption, and weak governance represent major challenges. The report therefore welcomes the commitment from the current G8 presidency, the United Kingdom, and other governments to put tax and transparency at the heart of this year’s dialogue.

“This year we've seen enormous impact, and enormous interest from a wide range of people, it's incredible," says Caroline Kende-Robb, the Africa Progress Panel's Executive Director. “But I think it's because it's a global issue, and people care: people care that resources are not being made use of to the best that they should be; they care that in Africa, human development outcomes should be much better, considering the amount of wealth that's in Africa. And it can be done; many African countries are making good use of the wealth from natural resources. But this issue of tax avoidance, tax evasion, it affects people in Africa but it affects people in Europe and it affects people in the United States, so we see almost a global movement linked to the issues that we've raised in this report this year.”

According to estimates, Africa holds 30% of the world's mineral reserves, and its economies are growing faster than any other region of the world except for East Asia - growth in Sub-Saharan Africa has remained robust at over 5% per year for the past ten years.

But the report also suggests that Africa needs to better manage its vast natural resource wealth to improve the lives of the region’s people by setting out bold national agendas for strengthening transparency and accountability.  

Civil Society representative, Yao Graham from the Third World Network said Africa should focus on adding value to its commodities as it would be more beneficial. “Adding value reduces resource intensification, which is less burdensome on the environment and communities living in mining regions. He also said that public institutions in charge of regulations need to reverse their tardy responses to the community complaints resulting from mining. Managing impact could also help to change perceptions.

Some oil companies are also increasingly aiming to adhere to industry “best practice” standards, which include mitigating the environmental impact of their activity and investing in social projects to improve living standards in areas where they operate.

The session panelists included Executive Director of the Africa Progress Panel, Caroline Kende-Robb, the head of the UN Economic Commission for Africa, Carlos Lopes, Liberian President Ellen Johnson-Sirleaf and the head of Third World Network-Africa, Yao Graham.

Note to editors:
Chaired by Kofi Annan, former Secretary-General of the United Nations, the ten-member Africa Progress Panel advocates at the highest levels for equitable and sustainable development in Africa. The Panel releases its flagship publication, the Africa Progress Report, every year in May.


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