In this edition of the Echoes, we are addressing the issue of financial pillaging, especially vulture funds. Africa is suffering from the flight of capital caused in various ways, such as illicit trade flows caused by corporate practices. There is for example, transfer pricing, tax evasion and repatriation of profits in which tax havens often play a central role. In addition to this financial hemorrhage, vulture funds also play their part in the pillaging of Africa’s treasures.

Read more … 1612 Vulture Funds are Encircling Africa

International corporations have been important economic agents driving economic globalization as they trade goods and services across continents. This has led to a massive revenue increase for companies, some topping the GDP of several countries. Given their position in international trade and the sheer volume of goods and services traded they are likely to be creating externalities, for instance disrupting the socio-economic fabric of a country and the health of the planet. On several occasions irresponsible company behaviour has called into question the social, economic, environmental and human rights responsibilities of international corporations. In the field of business and human rights, there is a growing movement to control the human rights impact of businesses, principally through voluntary codes of conduct and more businesses are taking up a HR-due diligence approach.  However, there is also a movement to go beyond voluntary frameworks to create a legally binding instrument in the field of business and human rights. 

Read more … 1610 Human Rights, Business as usual?

Every year Africa loses a great amount of income through tax avoidance and illicit money outflows. Tax justice could ensure that Africa retains the economic value that is created on the continent, increase the resource base of African governments, allowing for more investments in education and infrastructure as well to process natural resources at home. In other words, these large amounts of revenue, if properly registered and fairly taxed, could enable the development of Africa and diminish the dependence of certain regions to donor countries.

Read more … 1606 Why the EU Transparency Directive does not do (Tax) Justice to Africa

The Sustainable Development Goals mention a path towards sustainable consumption and production; this will require a transformation of global value chains in which power is concentrated in the hands of corporate actors. Currently, transnational companies control about 80% of global trade through integrated value chains. Furthermore, throughout the world, multinational companies take advantage of loopholes in international laws to shift profits abroad while avoiding taxes. Current economic growth data are no measure for sustainability. The economic growth is achieved by extraction of resources and commodities, and concentrates the proceeds in a few hands while creating few decent jobs. If the SDGs are to be effective, it is imperative that they change economic power relations while ensuring that value can be created and retained in developing countries. For genuine sustainable development a paradigm shift is needed.

Read more … SDGs: AN INSTRUMENT TO TACKLE CORPORATE POWER?

In programs and policies of international development organizations, transparency and accountability, alongside with participation and inclusion have become widely accepted. Under international law, the right to access information of public authorities, such as the EIB, is considered a fundamental obligation. This right is an important tool to better achieving lending goals, to reduce corruption, to identify social, environmental and economic benefits and to avoid damaging communities and sensitive ecosystems. In its transparency policy the EIB commits to routinely publishing institutional information. It further commits to ensuring that the stakeholders are heard, engaged in projects and that “qualitative” transparency requires an ongoing dialogue between the Bank and stakeholders over information provision. On the other hand the Bank also withholds the right to ensure and safeguard sensitive information, which is tenable in some cases and is misused in others. 

To what length does the Bank uphold its own commitments for transparency and accountability? And can withholding information stand in the way of the EIB’s development mandate?

Read more … 1605 Transparency and Accountability at the European Investment Bank

The case study conducted at Koudiadiène, Senegal, known for its rich subsoil minerals, highlights the land acquisition process for mining and the impact of the activity on the population, the local economy, the land and the living environment of Koudiadiène. The activities of the mining companies installed in Koudiadiène and operating on the land around the neighbouring villages have a socio-economic impact that weakens the environmental and socio-economic rights of local people. These companies are owned by European groups specializing in the production of various forms of fertilizers and other chemicals. The phosphate mined in Koudiadiène is destined mainly for export to the European market where it will be processed and used as fertiliser and other chemicals.

Read more … AEFJN & CICODEV Afrique: Koudiadiène, a mining operation under scrutiny – evidence

The Dutch Presidency intends to conclude discussions on conflict minerals within its mandate. In May 2015, the European Parliament voted in favour of a binding mechanism for monitoring the supply chain of minerals from conflict zones. The proposal is ambitious because it requires not only importers of minerals, smelters and refineries to source responsibly but also manufacturers of semi-finished and finished  manufactured goods such as mobile phones, PCs and washing machines to ensure that the minerals in their products are not supplied to armed groups. However, Member States are in favour of a voluntary system throughout the supply chain and the European Commission wants to set itself up as a facilitator by suggesting a compromise: a binding settlement for importers of minerals and smelters. The three-way discussions probably resume in April, so stay tuned! 

Read more … Conflict Minerals: three-way discussions on the current state of affairs

CICODEV Africa and AEFJN have conducted a case study of the impact of land acquisition for phosphate rock mining on the community of Koudiadiène in Senegal. The study exposes the consequences for the local economy and the environment as well as for the livelihoods and food security of the villagers. The phosphate rock mining industry is concentrated in a few countries and is subject to geopolitical dynamics. The phosphate, derived from the phosphate rocks, is a key ingredient in chemical fertilizers used in industrial agriculture. Therefore the industry claims that securing a reliable supply of phosphate rock is essential to food security. However, our study demonstrates that phosphate rock extraction is instead creating food insecurity for local communities around the mining sites due to loss of land, livelihood and income.

Read more … 1507-1508 Phosphate Mining: an Unsustainable Business

AEFJN welcomes the vote of 20 May in the European Parliament, adopting mandatory requirements throughout the whole supply chain of products containing minerals and/or their derived metals from conflict areas. All companies sourcing tantalum, tungsten, tin and gold (3TGs) as raw material or in (semi-) finished products will henceforth be obliged to conduct due diligence to make sure that their products do not finance armed groups or contribute to human rights violations. For this purpose companies importing, transforming and commercializing these minerals and metals will have to report on measures taken to identify and remedy risks in their supply chains.

Read more … 1505 AEFJN Welcomes decision of the European Parliament on Conflict Minerals

In recent months the region and city of Béni have been the stage for massacres perpetuated by armed groups in North Kivu, but this has received very little media coverage. Béni is located in eastern Congo which has been plagued by violent conflict driven by land conflicts, identity issues and political struggle. Armed groups are financing themselves with proceeds from trading several goods such as charcoal, wild animals, palm oil, soap, consumer products and minerals. This allows the armed groups to pursue violently their political agenda relating to citizenship and identity; as such the proceeds from this trade perpetuate conflict in eastern Congo. Béni has many mines including gold on its territory near the Virunga Park, home to several armed groups. Driven especially by growing demand for new technologies, European firms use minerals from eastern Congo. However, these minerals risk to finance in one way or another armed groups in the east, while perpetuating the chronic instability of a region characterized by cruel violence, economic insecurity and human rights violations. Despite the fact that raw materials are not the only driver of the DRC conflict, they amount to a lucrative business for armed groups. Clearly, binding European legislation is needed to remove conflict minerals from chains of international businesses, not a voluntary framework as proposed by the European Commission. In addition, the activities of the rebels in Béni territory shows that they have more than one source of funding – illicit trade in minerals and in wild animals. Therefore a single focus on a few minerals will not be enough to break the dynamic of a war economy, as any natural resource can be used to build up funds for war. A comprehensive EU-approach is needed, that takes into account the contribution of artisanal mining to local livelihoods and the local economy as well as the complex root causes of conflict. Next to the due diligence demanded of companies sourcing minerals, the EU should undertake initiatives to support the formalisation of the local mining sector to comply with international standards.

Read more … 1503-1502 Trapped Between Natural Resources and Weapons : The People of Béni

The behaviour of extractive European companies (mining and oil) working in Africa is often criticized for the many abuses committed while exploiting the natural resources. These abuses range from secret negotiations between the companies and the African governments to violations of fundamental rights of workers and the affected populations. They also include the lack of control of minerals exported, limited taxes paid to host countries and the lack of accountability of the companies for environmental damage caused by the extractive industry. This article aims to show how transparency is important for the correct exploitation of mineral resources in Africa but not enough for a positive impact for the African population in general.  Transparency is the responsibility of all stakeholders in the process of extractive industries: the mineral-exporting countries, the home countries of extractive companies in the EU and the extractive companies themselves.

Read more … 1410 Transparency versus political will in Africa and Europe

The people of the village of Koudiadiene in Senegal are suffering from the effects of phosphate mining by European investors. The mines surround the village and the machinery churns up a toxic dust that is polluting the atmosphere and damaging the health of the village people. When their land was expropriated the villagers were not consulted, but were forced to hand over their land to companies with little compensation. Then the companies began to clear the land for phosphate extraction. The loss of their land and the pollution of what remained have increased hunger and malnutrition and poverty has made its home in the village. In addition, the Senegalese laws were not respected. For example according to the mining code, mines are located too close to the village. Moreover, companies contribute little to local development because they export almost the entire production and give work to very few local people.

Read more … 1406 Dust in Their Eyes

Tax avoidance is one of the main structural causes of poverty in the world as it involves a massive transfer of wealth from poor to rich countries and facilitates criminal and corrupt practices. In Africa, this practice has dramatic consequences for people living in poverty and for their societies whose governments have problems providing basic services such as health care and education for all the citizens. The most unfair method of tax avoidance occurs when big companies and donors push governments of developing countries to give tax incentives to foreign companies operating in their territory through the so-called tax incentives. Most tax incentives in Africa relate to the exploitation of natural resources and to agribusiness companies. These are negotiated behind closed doors and there are no public control mechanisms.

Read more … 1405 Tax Avoidance: not a Legal but an Attitude Problem

Created in 2000 by the UN, the Kimberley Process is responsible for ensuring that diamond sales do not finance conflicts as was the case in Liberia, Sierra Leone, Angola and the RDC in the 1990s (see film Blood Diamonds). When they met in Johannesburg in November 2013, the diamond producers refuse to move towards greater transparency in the Kimberley Process. In 2011, the organisation Global Witness had already denounced the lack of transparency regarding Zimbabwe. Indeed, in 2009, the Zimbabwean army had had brutally seized the diamond fields of Marangue, expelling the small producers, killing hundreds of miners and forcing several tens of thousands of people to move away.  

      Today, the diamond issue is affecting the crumbling Central African Republic (CAR) where, according to official statistics, a quarter of the population lives off the diamond industry which is the main source of income for the government. CAR is the 10^th most important diamond source in the world as far as quantity is concerned, and 4^th for the quality of its precious stones. The moral dilemmas raised by a diamond trade that lacks transparency are obvious. Antwerp, Singapore, India, China, Israel and New York have become the nerve centres of the trade.

Read more … 1401 AFRICA DIRTY'S DIAMONDS

Ghana is richly endowed with mineral resources. It is the second largest producer of cocoa in the world and one of the largest in gold. The gold industry contributes more than 90% of total mineral revenues; timber, tuna, bauxite, aluminium, manganese ore and diamonds are other important exports. Ghana has also extensive arable land, forests, fishing and hydroelectric potential. Ghana has maintained a fairly stable political atmosphere, the right and freedoms of individuals are respected as stipulated in the constitution. 

Read more … 130722 Oil Industries in Ghana

One of the main concerns about extractive sector governance is the role that transnational enterprises play in sourcing minerals from conflict-affected and high-risk areas. Do they act responsibly? Armed conflicts are often related to extraction of rare minerals, gas and oil.  Furthermore, the profits linked to the extractive industry, along with the revenues it provides to governments of countries exporting natural resources, require better control and transparency.  

Read more … The New Initiative on Extractive Sector and Challenges to the African Countries

The competition for scarce natural resources and the continued strong growth in global consumption make Africa an attractive continent for the EU and its transnational companies. Raw materials play a key role in industrial competitiveness, especially in new technologies. The EU has the worry of securing access of raw materials such as minerals, fuel and gas which are necessary for energy and to secure the production of goods and new technologies that are more respectful of the environment.

read more

Read more … Raw Materials and Global Consumption

In most African countries the rush for land has been well prepared by the World Bank Group, through its investment promotion agencies that focus on helping investors. They have played an essential role in facilitating land grabbing in developing countries. The World Bank advised in the drafting of bills that would allow investors greater investment mobility. With these benefits provided to foreign investors, it is no surprise that interest in African land markets has increased in recent years.

Read more … The World Bank - a major player in land grabbing

The global need of land and its resources like water, plants, timber or minerals is continually increasing. This leads governments and private investors to look for cheap resource-rich land close to infrastructure. The land is often taken from farmers who are the traditional users. Extractive industries are part of this phenomenon. Concessions are smaller but extraction activities cause ecological catastrophes in the surrounding area and accelerate climate change. As a result, the land seized from local users becomes unusable.

Read more … The exploitation of natural resources and land grabbing

Short animated film about the takeover of nature by financial markets and the real alternatives coming up from the civil society.

Read more … The financialisation of nature

The competition for Africa's natural resources is becoming fiercer. Many natural resources are scarce. Emerging economies such as China, India and Brazil have started rivaling with the EU for them, increasing the competition and having Africa losing out.

Read more … AEFJN Factsheet Natural Resources

According to estimates, every year US$ 1.26 trillion - 1.44 trillion disappears without a trace from developing countries, ending up in tax havens or rich countries. The main part of this is driven by multinational companies seeking to evade tax where they operate. The sum that leaves developing countries each year as unreported financial outflows, amounts to ten times the annual global aid flows and twice the amount of debt developing countries repay each year.

Read more … Capital Flight and its impact on Africa

The East of Congo is still plagued by armed violence caused by many rebel groups. They have succeeded in developing a parallel economic activity by smuggling minerals, including coltan which is in great demand on the global electronics market. The Dodd-Frank Act, requires U.S. companies buying ore from the DRC to establish whether their products contain conflict minerals by submitting their supply chain to careful scrutiny. This has led to a de-facto boycott of Congolese mining products. The EU is now considering if and to what extent it should follow the American example.

Read more … Blood minerals in the Congo: Should the EU follow American legislation?

Chad’s petroleum project stirred up so many hopes for the country’s development, but now, after 8 years in operation, it has become a nightmare. The exploitation of oil has destroyed the local farmers’ production system, depriving them of their living; it is polluting the water, soil and air; it is dividing the people and sowing despair.

From 2004 to 2011, the State’s budget increased from at least 300 billion CFA to more than 1,572,482 billion, but the advantages of this manna are not benefiting the people.  Neither the conditions of life of the 11 million Chadians nor the public services have improved.  The promises made by companies and by the government have not been kept and the World Bank left the country in 2008.

Read more … Oil exploitation in Chad and the local population

The environmental restoration of Ogoniland could prove to be the world's most wide-ranging and long term oil clean-up exercise ever undertake. A major new scientific assessment, carried out by the United Nations Environment Programme (UNEP), shows that pollution from over 50 years of oil operations in the region has penetrated further and deeper than many may have supposed. the report estimates that countering and cleaning up the pollution and catalyzing a sustainable recovery of Ogoniland could take 25 to 30 years.

Read more … Ogoniland Oil Spills clean up will take up to 30 years

Read more … The New Scramble for Africa

Read more … The Logbaba Gas Field in Douala and the concerns of the local residents

Read more … Companies' Tax Evasion in Africa

Read more … The Resource Curse

The EU and its member states are increasingly worried about securing access to raw materials for European companies. Therefore the EU wants to improve the security of supply through multilateral trade agreements at World Trade Organisation (WTO) level and bilateral trade agreements such as the Economic Partnership Agreements (EPAs). The objective is to use these trade agreements to remove obstacles - like export restrictions or limits on investments - which hinder Europe's access to raw materials in third countries.

Read more … EPAs and the European Raw Materials Initiative

Read more … Greenpeace video on Areva in Niger

Read more … Voluntary Initiatives to enhance Transparency in the Extractive Industries

Read more … The activities of Eni in Congo-Brazzaville

Read more … Oil - Black Gold or Curse?

Read more … The EIB's role in Africa

Read more … Rapport ACI sur l'exploitation minières au Katanga

Read more … Rapport ACI - D’une exploitation artisanale illicite à l’accord entre la RD Congo et le groupe nucléaire français AREVA