Africa demands a larger slice from mining revenues

Despite an abundance of mineral resources, many African countries do not see the benefits filter down to the indigenous communities and now they are looking for a greater proportion of income from their natural resources.

BLANTYRE - 

It is ironic that Africa, with its vast mineral resources, remains one of the poorest continents in the world. In a bid to reverse the trend, most Africa countries are pressing for more revenues from their minerals. However this alone cannot end poverty in Africa. Corruption has hindered the trickling of revenue from central governments to local communities and this is one area the continent has to tackle if it is to rake in benefits from its rich mineral resources.

Between them, West and Central African countries lead the world in exports of bauxite, uranium and diamonds but despite surging mineral prices on the international market, there is very little countries from this region can show for their mineral riches. Now in a bid to reverse the trend and benefit more from their mineral resources, West and Central African countries are pressing mining companies for a larger slice of mineral revenues.

A meeting organized by the World Bank and other donors in Guinea's capital, Conakry with a view to help African countries manage mining revenues, buoyed countries to demand more after it transpired that mining companies were ripping off poor African countries of mining revenues. World Bank Manager Paolo Desea told participants to the meeting that most African governments do not know the value of their countries' natural resources.

"We are in somewhat of an asymmetric situation where one of the sides of the negotiation has control of key information and other side does not and does not even know what is essential or crucial," Voice of America (VOA) quotes Desea as highlighting the major problem affecting African countries to realize more from their resources.

VOA quotes findings of the African Union that the African continent loses a total of US$150 billion each year through foreign companies avoiding taxes. Tanzania recently announced that it lost US$207 million in 2007 due to miners' under-declaration of profits while in 2005, it had lost US$1.045 billion due to the same reason.

But not only does Africa lose out on revenue through avoidance of taxes by miners, its complicated taxregimes also contribute to the problem. In addition countries lose out because companies shun buying goods from the local market even when the goods are found locally.

It is yet to be seen, though, whether a bigger share of revenue collected from mining companies by
governments can trickle down to local communities. The World Bank says another problem dogging the mining industry in Africa is ensuring that mining revenue gets to impoverished local communities which in most cases lack even basic amenities like potable water despite being home to rich minerals.

Guinea, for instance is the world's largest exporter of bauxite, the raw material used to make aluminium, yet it remains one of the world's poorest countries with citizens lacking piped water, good health facilities and electricity

Desea hints that despite some mining companies shortchanging African countries on revenue, the widespread poverty in mineral-rich countries is not only the fault of foreign companies, but rather the lack of clear laws for national governments to distribute wealth.

"We work with the governments to try to change finance laws to make transfers to local communities easier and transparent. In many countries, the bridge that links the two is not built yet, but it is under construction," VOA quotes Desea as saying.

The demand for more from mining revenues is sweeping across the entire African continent with countries like Zambia already hiking taxes. But companies there have rejected the new taxes and are threatening to seek international arbitration to end the impasse.

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