Africa’s resource wealth could end illiteracy and build an educated middle class

A new report from the Africa Progress Panel shows that mineral wealth could transform education in Sub-Saharan Africa, building on the findings of the 2012 Education for All Global Monitoring Report, which showed that 17 resource-rich countries could put another 11 million children into school.

The Africa Progress Panel is a group of distinguished individuals, chaired by Kofi Annan, whose objective is to track and encourage progress in Africa and assess opportunities and threats to Africa’s development. A month ago, the Panel published the 2013 Africa Progress Report, Equity in Extractives: Stewarding Africa’s natural resources for all, which outlines the opportunities and challenges linked to the exploitation of Africa’s mineral resources.

While much of the media coverage of the report naturally focused on the losses to African economies from asset undervaluation, tax avoidance and shady deals, I think the opportunities Africa’s mineral wealth provide for the future are the really exciting finding of the report.

Over the past decade, Africa’s economies have been riding the crest of a global commodity wave. Extractive industries have emerged as a powerful engine of economic growth. Surging demand for natural resources in China and other emerging markets has pushed export prices to new highs – and the boom shows no sign of abating. Africa’s petroleum, gas and mineral resources have become a powerful magnet for foreign investment. And this is only the beginning. With new exploration revealing much larger reserves than were previously known, Africa stands to reap a natural resource windfall.

If managed well, what this resource wealth means is that African governments finally can build a budget based on substantial, predictable long-term income. While development assistance will continue to play an important role in many countries, the new resource-based income streams will better enable governments to set strategies and plan for the future.

In those plans, education will have to be a central element. New revenue streams can immediately be channeled into securing basic education for all those who still go without, or who drop out early, as the 2012 EFA Global Monitoring Report showed.

Yet, that is just the start. A central part of turning revenue from mineral exploitation into lasting progress and national wealth is to ensure that oil, gas and mineral operations are staffed by as many national staff as possible.  Another central element is to build secondary industries to supply exploration and production facilities and add value to the raw materials that are brought up from the ground.

Both of these tasks will demand large numbers of educated people. African countries must therefore look beyond primary education, with ambitious plans for providing skills training, management and engineering educations.

The EFA Global Monitoring Report team’s recent policy paper “Turning the ‘resource curse’ into a blessing for education”, outlines very well the opportunities and risks that the new resource wealth provides for improving education.

But like health, education often gets at the back of the queue when government budget priorities are set. This must therefore be the time for an extraordinary effort by education advocates to get the message through.

About Africa Progress Panel

The Africa Progress Panel connects the influence of our Panel members with cutting edge policy analysis to advocate for equitable and sustainable development in Africa, especially on those policy issues that are critical for Africa’s development and where the nature of our organisation means we bring significant comparative advantage. Our Panel members have unusual access to the highest level of policy makers in Africa and across the globe and can speak with an African voice.

visit: www.africaprogresspanel.org

Article first published on Education For All Global Monitoring Report blog, June 7, 2013.

Africa’s natural resources could dramatically improve the lives of millions

While natural resources may have fuelled a decade of rapid economic growth, most Africans have still not seen the benefits, report says

CAPE TOWN, South Africa, May 10 – Africa is standing on the edge of enormous opportunity, this year’s Africa Progress Report finds, and 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.

In many African countries, natural resource revenues are widening the gap between rich and poor. Although much has been achieved, a decade of highly impressive growth has not brought comparable improvements in health, education and nutrition.

The Africa Progress Panel is convinced that Africa can 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. 

However, 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. It urges all OECD countries to recognize the cost of inaction in this vital area. Africa loses twice as much in illicit financial outflows as it receives in international aid. The Africa Progress Panel finds it unconscionable that some companies, often supported by dishonest officials, are using unethical tax avoidance, transfer pricing and anonymous company ownership to maximize their profits, while millions of Africans go without adequate nutrition, health and education.

The report details five deals between 2010 and 2012, which cost the Democratic Republic of the Congo over US$1.3 billion in revenues through the undervaluation of assets and sale to foreign investors. This sum represents twice the annual health and education budgets of a country with one of the worst child mortality rates in the world and seven million pupils out of school.

Kofi Annan, former Secretary-General of the United Nations and Chair of the Africa Progress Panel, says: “Tax avoidance and evasion are global issues that affect us all. The impact for G8 governments is a loss of revenue. But in Africa, it has direct impact on the lives of mothers and children. Throughout the world, millions of citizens now need their leaders to step up to the mark and lead. Fortunately, momentum for change appears to be accelerating.”

Different partners have similar goals and their interests overlap, the report finds. Building trust is harder than changing policies – yet it is the ultimate condition for successful policy reform. This year’s report identifies a shared agenda for change:

• African governments must improve their governance and strengthen national capacity to manage extractive industries as part of a broader economic and developmental strategy
• African governments should put transparency and accountability at the heart of natural resource policies, secure a fair share of natural resource revenue for their citizens, and spread the benefits of this revenue via equitable public spending;
• The international community should build on the US Dodd-Frank Act and comparable EU legislation to develop a global standard for transparency and disclosure, develop a credible and effective multilateral response to tax evasion and avoidance, and tackle money laundering and anonymous shell companies;
• International business should follow best practices on transparency, help build national capacity, procure more products and services locally, and raise standards in all areas of corporate accountability and responsibility;
• Civil society should build capacity and continue to hold governments and companies to account.

Graça Machel, President of the Foundation for Community Development and Founder of the Graça Machel Trust and member of the Africa Progress Panel, says: “This report makes a critical contribution to debates on Africa’s natural resource wealth. If its recommendations are taken, Africa will accelerate progress towards the Millennium Development Goals. More kids will go to school, fewer women will die in child birth, more children will survive their childhood.”

Strive Masiyiwa, Chairman and Founder of Econet Wireless and member of the Africa Progress Panel says: “While some major companies show outstanding leadership on transparency, others show a disregard for ethics and human lives. By cheating the system, they make work harder for honest business.”

Linah Mohohlo, Governor of Botswana’s Central Bank and a member of the Africa Progress Panel, says: “Botswana’s key lesson has been that Africa’s natural resources belong to the people. In this way, diamonds became the country’s relative economic success.”

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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.

For further information, please contact:

Matt Gould – matthew.gould@portland-communications.com  

(mobile) +44 795 890 9078 and (direct line) +44 207 822 1721

Peter Kelley – peter.kelley@portland-communications.com

(mobile) +44 795 142 1247 and (direct line) +44 207 842 0147

Contact for media at WEF Africa:

Robert Watkinson – robert.watkinson@portland-communications.com

(mobile) +44 7984 433 486

www.africaprogresspanel.org and www.facebook.com/africaprogresspanel

@africaprogress and #APR2013

Source: Africa Progress Panel

Transparency Standard Raises the Bar, Requires 39 Countries to Release Data on Individual Oil, Gas and Mining Licenses

                                            

US, UK and France Joining Those Subject to New Rules

May 22, 2013, Sydney—The Extractive Industries Transparency Initiative (EITI) has approved a revised standard of performance requiring its 39 implementing countries to release wide-ranging new information about their oil, gas and mining industries.

Rather than merely disclosing revenue data, countries will now need to release information about production volumes, the companies holding licenses, license allocations, state-owned companies, corporate social responsibility payments and transfers from central to local governments to be considered in line with the EITI Standard.

“The EITI has finally recognized that, when it comes to complex industries, merely disclosing payments is not enough,” said Daniel Kaufmann, President of the Revenue Watch Institute.  “By including contracts and licenses, beneficial ownership, state-owned companies and production information, the new Standard could make EITI more effective in addressing the vast governance challenges facing resource-rich countries.”

Created in 2003, EITI previously required governments and companies to disclose payments deriving from oil, gas and mining activities. A body that includes government, company and civil society members must oversee the reporting process. To date, 39 governments have volunteered to participate in EITI, and 23 have achieved “EITI compliant” status. The United Kingdom and France announced today their intention to implement EITI, joining the United States, which made a commitment in 2011.

The new EITI Standard announced today results from over a year of negotiations between the governments, companies and non-governmental groups on the initiative’s International Board.

EITI countries will now have to provide detailed information about each oil, gas and mining license. First, they will need to maintain a public register that lists the company name, location and duration of each license, information currently missing in major producers like Kazakhstan and emerging producers like Mozambique. EITI reports will contain an explanation of how licenses were awarded or transferred during the year covered, and details on applicants and criteria used in any license auctions.

EITI now requires reporting of revenue data by each project, bringing EITI in line with this spreading international standard. The U.S. Securities and Exchange Commission requires project-level reporting by all U.S.-listed oil, gas and mining companies, and the European Union has committed to the same. By changing its rules, EITI keeps pace with this important development.

The new Standard asks for considerably more information from state-owned companies, including major industry players in nations like Azerbaijan, Iraq, Nigeria and the Democratic Republic of Congo.  When selling the state’s share of production, national oil companies will have to disclose the volumes sold and revenues received—an opaque area in many countries. Reporting on quasi-fiscal expenditures, the sale of state-owned assets and financial transfers with the state is also required.

EITI will now also include production data. EITI Reports will have to disclose total production volumes and the value of production by commodity, including by state and region when relevant, as well as total export volumes and the value of exports by commodity.

Finally, the new Standard encourages countries to act in two additional areas of transparency–the disclosure of contracts and beneficial ownership information. In the coming months, the multi-stakeholder group that oversees EITI country implementation will have to determine whether to include this information in their EITI process. Contracts determine the benefits the public receives for their sub-soil assets, and beneficial ownership disclosure reveals when licenses are allocated to politically  connected persons.

“The new Standard has opened the door for EITI to become much more relevant to meaningful policy reforms to improve resource governance,” said Erica Westenberg, EITI Policy Officer at Revenue Watch. “The challenge now is for the 39 countries to implement the Standard in a timely and thorough way.”

Source: Revenue Watch Institute

Revenue Watch promotes the transparent and accountable management of oil, gas and mineral resources for the public good. www.revenuewatch.org | @revenuewatch | www.facebook/revwatch

Contact: Carolyn Bielfeldt, Communications
646.236.5844 / 212.547.6961 / cbielfeldt@revenuewatch.org

Africa Progress Panel launches report on oil and gas, mining

Source: Africa Progress Panel [africaprogresspanel.org]

The Africa Progress Panel will tomorrow May 10 launch its report titled Equity in Extractives: Stewarding Africa's natural resources for all. The 2013 Africa Progress Report will be launched by Mr. Kofi Annan, former UN Secretary-General at the World Economic Forum on Africa, Cape Town, South Africa.

Follow updates on this report here.

How Ghana fared in the Hunger and Nutrition Commitment Index 2012

Hunger puts lives at greater risk

The Institute of Development Studies with funding from DFID and Irish Aid has released the Hunger and Nutrition Commitment Index (HANCI) for 2012. The index measures the political commitment to reduce hunger and undernutrition in developing countries. It also measures what governments achieve and where they fail in addressing hunger and undernutrition to help provide greater transparency and public accountability. The HANCI compares 45 developing countries for their performance on 22 indicators of political commitment to reduce hunger and undernutrition. It considers three basic areas of government action: policies and programmes, legal framework and public expenditures.

To me, the index has come at such a good time when global consultation on the post 2015 Development Agenda is still happening. Guatemala has set the pace as the country with the highest political commitment score (hunger and undernutrition) of 240 while Guinea Bissau with a score of 74 sits comfortably at the bottom with the least political commitment to fight hunger and undernutrition. 

The “State of Food Insecurity in the World” report[1] and the “Global Hunger Index”[2] make revelations on the perversity of hunger and under-nutrition. The “State of Food Insecurity in the World” report indicates that about 870 million people, or one in eight, were suffering from chronic undernourishment in 2010-2012. The vast majority of these, 852 million, live in developing countries, where the prevalence of undernourishment is estimated at 14.9 percent. The “Global Hunger Index” also reveals that world hunger though has declined somewhat since 1990 remains “extremely alarming” in sub-Saharan Africa and South Asia. According to the International Fund for Agriculture Development (IFAD), there are close to 1 billion people suffering from hunger.

These statistics reflect lack of a basic necessity in life, food. The lives of children are at risk. Hunger and undernutrition threatens progress and meaningful development especially to countries in Asia and sub-Saharan Africa.

How did Ghana fare in the HANCI? This is precisely my concern. A country with huge contribution from agriculture supporting GDP growth, hunger and undernutrition must not be tolerated in anyway. Ghana with the score of 198 ranks 10^th position with Burkina Faso. Though statistics indicates that Ghana is on track to achieving the Millennium Development Goal 1 of eradicating extreme poverty and hunger, the worry is that investment in agriculture has reduced [and is reducing] over the years.

Between 2003 and 2009, Ghana spent an average of 8.7% of the budget on agriculture. In 2011, however, GHC 84.2 million ($44.3 million), or 1.1% of total budget was spent on agriculture and food sector. Ghana has backtracked on its commitment to increase investments in agriculture it promised by signing the Maputo Declaration in the July 2003 African Union (AU) summit. Where is the promise to allocate 10% of national budget to agriculture? 

Ranking 10^th is not bad. But Ghana can do better. It is high time Ghana got its agriculture policies right. You cannot neglect investing in the agriculture sector and expect to develop. This is not possible. Agriculture is still substantial to contributing to the overall growth of the economy. Structural transformation of the economy must revolve around agriculture. This we should get right. Proper investment and growth in agriculture is needed to address the increasing threats of hunger and undernutrition. And we need of course investments that trickle down to benefit the majority smallholder farmers in the rural areas who feed the country.

The HANCI has emerged as a useful tool to press on reviving the ‘dull’ commitment of politicians in developing countries especially in sub-Saharan Africa. I think it should be made clear that the fight against poverty would make no meaning if there is still high prevalence of hunger and undernutrition. The political will of leaders in sub-Saharan Africa is needed! This is a rude awakening. LET’S FIGHT HUNGER AND UNDERNUTRITION.

Find more on the Hunger and Nutrition Commitment Index here.

By: Stephen Yeboah, Geneva, Switzerland [profstephenyeboah@gmail.com]

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[1] International Fund for Agriculture Development (IFAD), Food and Agriculture Organization (FAO) and World Food Programme (WFP)

[2] International Food Policy Research Institute (IFPRI)