“Good Governance” and the Extractive Industries in sub-Saharan Africa

“Good Governance” and the Extractive Industries in sub-Saharan Africa

Gavin Hilson; Roy Maconachie Mineral Processing and Extractive Metallurgy Review, Vol. 30, Issue 1, pp. 52-100 | January 1, 2009
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This article critically examines the challenges that come with implementing the Extractive Industries Transparency Initiative (EITI)—a policy mechanism marketed by donors and Western governments as a key to facilitating economic improvement in resource-rich developing countries—in sub-Saharan Africa. The forces behind the EITI contest that impoverished institutions, the embezzlement of petroleum and/or mineral revenues, and a lack of transparency are the chief reasons why resource-rich sub-Saharan Africa is under-performing economically, and that implementation of the EITI, with its foundation of “good governance,” will help address these problems. The position here, however, is that the task is by no means straightforward: that the EITI is not necessarily a blueprint for facilitating good governance in the region's resource-rich countries. It is concluded that the EITI is a policy mechanism that could prove to be effective with significant institutional change in host African countries but, on its own, it is incapable of reducing corruption and mobilizing citizens to hold government officials accountable for hoarding profits from extractive industry operations.

"In September 2002, at the World Summit on Sustainable Development in Johannesburg, South Africa, former British Prime Minister Tony Blair launched the Extractive Industries Transparency Initiative (EITI), a policy intervention that has been touted by developed world governments, bilateral donors, and international organizations as the key to resurrecting the stagnating economies of natural resource-rich Africa, Asia, and Latin America. The EITI is marketed in Western policymaking circles as a mechanism for facilitating prudent management of mineral payments ‘‘through the verification and full publication of company payments and government revenues from oil, gas and mining’’ (EITI 2007). Such transparency, proponents argue, is the key ‘‘to improv[ing] a country’s credibility among foreign investors and the international banking community ... [and] improv[ing] its potential for future development’’ (EITI 2006, p. 23). The revenues derived from oil, gas, and mining operations are vital for economic growth in more than 60 developing countries, including Ghana, Zambia, Uganda, and Chad; however, of the combined 3.5 billion citizens residing in these countries, an estimated 1.5 billion subsist on less than US $2 daily. Today, six of the world’s most oil-dependent states and 12 of its most mineral-dependent states are ‘Heavily Indebted Poor Countries,’ characterized by low levels of human development (Hussain and Gunter 2005). The EITI is being increasingly advertised by its conceivers as a panacea for this impoverishment..."

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