There are a couple of things that are happening in Ghana right now – or at least appear to be happening – that have caught my attention. The first is the insistence of the government that small-scale miners be taxed. The second is the decision of AngloGold Ashanti, long one of the country’s chief operators, to release a 200 km2 section of its concession for subsequent re-demarcation, through the government, to licensed small-scale miners. Let me reflect on why we should view these announcements with some trepidation.
These are curious decisions to say the least for a country that has never really made much of an effort, beyond the rhetoric, implementing a licensing framework and launching the occasional support intervention, to formalize and assist small-scale mining. Prospective licensees have struggled to secure viable plots and make the costly payments needed to obtain the requisite permits in a country where most land is now in the hands of foreign multinational mining and mineral exploration companies. Rather than proactively prospecting and ‘blocking out’ suitable areas for (licensed) small-scale mining, the government has, for much of the past decade, elected to wait for prospecting large-scale prospecting licenses to expire before putting aside lands for this purpose. Moreover, as opposed to working closely with small-scale miners and helping them legalize their activities, the government – rather strangely – continues to do things such as assemble an Inter-Ministerial Taskforce Against Illegal Mining. Such moves suggest policymakers are completely oblivious to the fact that it is the very laws and frameworks which they have implemented and continue to endorse that have been responsible for fuelling the growth of informal small-scale mining activity in the country.
Why, then, should even the biggest sceptics be excited about the announcement to tax small-scale mining in Ghana? Largely because of everything that must be done before the government can be in a realistic position to do so, universally. At present, Ghana’s policymakers have little idea about where many miners operate and why, and possess minimal knowledge about the dynamics of the burgeoning and comprehensive informal networks these operators are a part of and ultimately nourish. To be in a position to send the tax man around to small-scale mines, therefore, would require the government to first do the following: 1) making available adequate land resources, a necessary first step for licensing; 2) kick-starting financial services for legalized operators; and 3) simplifying the registration process, decreasing the costs of licensing and helping to lift operators out of the informal economy. These announcements are a bit puzzling because these are changes that Ghana’s small-scale miners have been demanding for years. So why the sudden change of heart?
The policymakers I have interviewed over the years have consistently argued that any move to tax the country’s small-scale miners would be futile and met with resistance. This view, however, is simply baseless and, on the whole, ridiculous. A more significant question at this point, given the unsustainable development trajectory the industry now finds itself on, is: why wouldn’t a Ghanaian small-scale miner want to be taxed? Apart from benefitting from the above changes, these miners would – at least in theory – be able to hold their government more accountable. The argument that constantly surfaces in the resource curse literature is that taxation, being the foundation of accountability between the state and its citizens, has the potential to bolster the legitimacy of governments, stimulate institution-building and enhance democracy. Small-scale miners, therefore, would welcome being taxed if it enabled them to wield greater influence in Accra, and could explain why so many are demanding that the government make the move. We have already seen, in countries such as Guyana, how powerful and influential small-scale miners who are taxed and in regular contact with government can become.
But how does the government intend to proceed here? The country still lacks a mining policy, which would at least provide some reassurance as to where the policymakers intend to go with this. We must, therefore, still be wary. After all, this is a government that continues to be overwhelming pro large-scale mining; has a Minerals Commission which, despite experiencing a managerial overhaul in recent months, is still – in the words of one outgoing Minister I recently interviewed – largely dominated by a ‘treetop management’ that continues to cling to archaic ideas; and which has never gone out of its way to support ASM. So why the sudden change in attitude towards the sector? The obvious answer links to what is going on in the country’s large-scale mining industry: due to the recent decline in the gold price, companies have scaled down on exploration and, in the case of Obuasi, suspended production. A decrease in gold output obviously means less revenue in the form of taxes and royalties for government. Of course, Ghana would not have been in this situation had stabilization agreements not been signed with Newmont and AngloGold Ashanti in the early-2000s, when the gold price was a fraction of what it is today. Desperate to benefit from the recent windfall, the government did increase the royalty from 3 to 5%, in 2010, a move which seems to have alienated the few ‘unprotected’ companies operating in the country, notably Gold Fields, Kinross and Golden Star Resources. The only logical explanation behind any government’s decision to redistribute lands to small-scale miners, whether in at Obuasi or elsewhere, would be to compensate for lost revenue. With AngloGold Ashanti apparently suspending operations for at least two years, policymakers may be desperate enough to recoup some financial compensation from the idle site, even if it means formalizing resident ASM operators whose pleas for land, licenses and governmental assistance, we must not forget, predate Sam Jonah’s running of the company.
Thus, on the one hand, for Ghana, a move – even a suggestion – to tax small-scale mining, regardless of the motivation, must be considered progress. And, if the government is, indeed, serious about implementing this across the board, the changes that must be made for it to become a reality would mean many exciting times ahead for hitherto marginalized unlicensed small-scale operators. On the other hand, in a country without a mining policy, which recently assembled a taskforce to ‘eliminate’ all unlicensed activity and where there has been no interest shown, for the better part of 20 years, in devising innovative solutions to formalize artisanal and small-scale activities, any move to tax is likely a temporary fix. Officials at the Commission have already indicated that some small-scale miners ‘are in possession of heavy machinery’ and therefore ‘should be taxed’, which suggests that any move to collect revenue will not be a country-wide effort aimed at formalizing activities but rather selected taxation efforts. Will the government simply target the handful of licensees currently in operation for ‘quick cash’, and continue condemning those individuals who, for very legitimate reasons, remain in the informal economy?
Let us see how the Obuasi deal unfolds – if at all – and what comes from it. Maybe 40 years and ten large-scale mining operations too late, the Government of Ghana has finally recognized the importance of artisanal and small-scale activities.
Friday 19 December 2014
Monday 10 November 2014
The Minamata Convention: Exactly What Are We Doing?
If the rumours are correct, Ghana has finally signed the Minamata Convention. On 24 September 2014, at United Nations Headquarters in New York City, some of its high-ranking officials, along with representatives from 18 other countries, put pen to paper, pledging a commitment to protect human health and the environment from anthropogenic emissions and releases of mercury and mercuric compounds. The Convention, we are told, will only come into force when ratified by 50 countries, and although we are nowhere close to being in this position, you never really know with some of these policymakers, who do not really need a reason to sign a treaty, however ridiculous it may be. Despite being packaged as a general environmental agreement, this is really a move aimed at changing behaviour – specifically, eliminating amalgamation practices – in the artisanal and small-scale mining (ASM) sector, the world’s largest source of anthropogenic emissions of mercury. There are a number of reasons to be concerned about our approach to minimizing emissions of mercury at small-scale gold mines, the most recent highlight being the drafting of the Minamata Convention.
For starters, we continue to view and, by extension, tackle, mercury use in ASM – for lack of a better word – incorrectly. The fundamental difference with Minamata is that it has meant that these unfounded convictions we have of amalgamation have reached the international stage and ultimately wield influence over policy directives implemented at the global level. The point of contention – at least for me – is that this not an environmental problem, as is widely portrayed. It is, rather, a development problem with an environmental dimension. Why is this significant? Because the people inking these agreements rarely see how – or care to understand that – most of the people who use mercury in ASM are, in fact, poor, bonded to someone, and/or are in no position to pursue an alternative, even with all of the education in the world. These people depend on a steady supply of mercury for their survival. Whilst signatories’ pledges to ‘take steps to reduce, and where feasible eliminate, the use of mercury and mercury compounds in, and the emissions and releases to the environment of mercury from, such mining and processing’ (Act 7) are, indeed, commendable from an environmental standpoint, they are also, in many cases, inappropriate, given the dependency of the poor masses on mercury for their livelihoods. What do governments and donors intend on doing with (or for) these people after they remove mercury from the system? The implications of misclassifying this problem, therefore, are quite significant.
A second reason for concern is that, despite efforts to disseminate substitutes for amalgamation and mercury pollution control devices, few, if any, are capable of making much of a difference at this point. Millions of dollars have been spent over the years to develop and pilot viable alternatives to amalgamation alongside efforts to reduce emissions but have yielded mixed results because, well, they have, for the most part, been standalone interventions. Why has this been the case? Although the most important rural nonfarm activity in sub-Saharan Africa, ASM – quite inexplicitly – continues to receive very little attention on the region’s development agenda, a concern which I have discussed extensively, over the years, in this space. The sector is, rather strangely, seen as a threat to development, as opposed to what it truly is: an integral and rooted dimension of rural African society that has inseparable linkages to agriculture. Unless a much-needed ‘space’ for ASM is created in Africa development policy, efforts to, say, disseminate retorts, pilot magnetic sluice boxes and shaking tables, and distribute furnaces, will continue to yield disappointing results.
Why is this so important? Without any development traction, mercury use in ASM will continue to be analyzed in environmental terms. For the technical people signing the Minamata Convention, there is no anthropological or developmental dimension to this equation. The solution is simple: that it would be illogical to continue using a method of gold recovery that is detrimental to the environment and human health. But if development people who are familiar with the realities of African gold mining were brought on board, decision-makers would be provided with timely reminders of how nuanced the situation they are trying to ‘correct’ truly is. Accusations levelled at miners for not considering alternatives to amalgamation would elicit a response such as ‘Most operators do not possess the technical know-how to use, in an efficient and effective way, the majority of these technologies.’; accusations levelled at miners for showing no interest in using retorts would elicit a response such as ‘Time, for poverty-driven operators, is money and expending too much of it on unnecessary things could jeopardize their survival...this includes setting up and waiting for retorting processes’; and those promoting the Minamata Convention strictly on environmental grounds would be shouted at by people who will remind those in the room that a large share of the artisanal gold mining masses are not in any position to abandon mercury at this time because of the personal circumstances they face. In short, having the right development people on board and allowing them to engage in key discussions would recalibrate the debate for the better, in the process, spawning more appropriate solutions to what is clearly a more complex problem than has been diagnosed.
But in the absence of such discussions, a rather strange and highly-inappropriate agenda for ASM has emerged. We have become preoccupied with ‘mechanizing’ the sector or improving the efficiency of operations, to the point where we are putting the cart before the horse without even realizing it. This extends to the Convention itself, which calls for signatories to draft a National Action Plan to combat mercury pollution from and use in ASM, and in Annex C, identifies a number of areas which need to be covered in each. But it is the order that these areas are presented which is a concern – for me at least – because it epitomizes the current policy ‘mindset’ towards ASM. After calling for ‘Each party that is subject to the provisions of paragraph 3 of Article 7’ to identify ‘National objectives and reduction targets’ and ‘Actions to eliminate’, Appendix C calls for signatories to outline ‘Steps to facilitate the formalization or regulation of the artisanal and small-scale gold mining sector’. Should this not be the first step? Should we not be first looking for ways to create the necessary ‘space’ for operators – through formalization – to innovate, including thinking about adopting environmental technologies? The entire backward approach prescribed here is ironic: on the one hand, the reason why ASM has failed to gain much currency on the development agenda is because its operators continue to be viewed as entrepreneurs looking to ‘get rich quick’ but on the other hand, governments and donors are unwilling to provide these individuals with the necessary means – specifically, access to technology and microfinance – to succeed as businesspeople.
Is it a case of us expecting informal, unlicensed miners to pay close attention to new technologies, despite facing very difficult circumstances? The bottom line is that miners, whose priorities are, in no particular order, eating, feeding their families, sending their children to school and paying the chiefs, police and soldiers money to ‘allow’ them to continue working, are in no position to consider implementing improved technologies; nor have we done enough to put them in such a position to do so. In short: if someone is struggling to secure a license, or to pay an unscrupulous middleman, or to free himself/herself from the shackles of corrupt army and/or police officers looking for bribes, pursuing more environmentally-benign alternatives is probably the last things on their minds.
We are – rather strangely – in the midst of a continent-wide push to ‘mechanize’ ASM, further evidence of how little in tune some policymakers and donors are with the realities of this very dynamic sector. On the environmental front, in countries such as Tanzania, there are now processing licenses, holders of which are permitted to construct mini cyanidation facilities. These setups, however, cost tens of thousands of dollars. Most of Tanzania’s small-scale miners are in no position, financially, to make this leap. There are now discussions in Ghana about creating a ‘Medium-Scale’ category, largely in response to the mechanization and influx of foreigners its ASM sector has experienced in recent years. With most African governments not receiving any tax from ASM, the establishment of a ‘medium-scale’ category could quite easily be interpreted as a deliberate move to ‘rent-seek’, although in the case of Ghana, it seems that it is being made in direct response to its central government gold buying facility, PMMC, struggling to fulfil its quotas. The rationale behind the move is sound but as is the case in Tanzania, the vast majority of Ghana’s operators do not fall into the category of ‘Medium-Scale Miner’. Once again, we are back to where we started: the need to create adequate ‘space’ in policy to address the concerns of ASM.
Let me sum up by saying that the timing of the Minamata Convention is rather strange. I cannot help but think it is yet another move made to further marginalize ASM, an industry which, the architects of the Convention, along with African governments, sections of the NGO community and donors, seem to know very little about. It appears to be yet another deliberate effort to discredit ASM and to simultaneously ‘sell’ cyanide-using large-scale mining as the viable extractive industries development solution going forward. Many of those who condemn ASM are quick to bring up the more than 30 years of – largely-ineffective – mercury pollution abatement work that has been conducted but as mentioned, these efforts, the most comprehensive of which was the UNIDO Global Mercury Project, have been largely standalone, in no way connected to any international, national or local development agenda.
Perhaps the most curious oversight is the repeated failure to understand why mercury use in ASM has become the problem it has. As mentioned, we are in this situation because we continue to frame the issue in purely environmental terms when, as indicated, it is a development problem with an environmental dimension. Further analysis will show that the widespread mercury contamination that we now see at countless ASM sites across sub-Saharan Africa is simply an ‘expression’ of the sector’s informality. If formalized properly, and monitored and regulated, would this, along with other problems, not be adequately addressed?
These uncertainties bring to mind one question: why, exactly, has the Minamata Convention been drafted?
For starters, we continue to view and, by extension, tackle, mercury use in ASM – for lack of a better word – incorrectly. The fundamental difference with Minamata is that it has meant that these unfounded convictions we have of amalgamation have reached the international stage and ultimately wield influence over policy directives implemented at the global level. The point of contention – at least for me – is that this not an environmental problem, as is widely portrayed. It is, rather, a development problem with an environmental dimension. Why is this significant? Because the people inking these agreements rarely see how – or care to understand that – most of the people who use mercury in ASM are, in fact, poor, bonded to someone, and/or are in no position to pursue an alternative, even with all of the education in the world. These people depend on a steady supply of mercury for their survival. Whilst signatories’ pledges to ‘take steps to reduce, and where feasible eliminate, the use of mercury and mercury compounds in, and the emissions and releases to the environment of mercury from, such mining and processing’ (Act 7) are, indeed, commendable from an environmental standpoint, they are also, in many cases, inappropriate, given the dependency of the poor masses on mercury for their livelihoods. What do governments and donors intend on doing with (or for) these people after they remove mercury from the system? The implications of misclassifying this problem, therefore, are quite significant.
A second reason for concern is that, despite efforts to disseminate substitutes for amalgamation and mercury pollution control devices, few, if any, are capable of making much of a difference at this point. Millions of dollars have been spent over the years to develop and pilot viable alternatives to amalgamation alongside efforts to reduce emissions but have yielded mixed results because, well, they have, for the most part, been standalone interventions. Why has this been the case? Although the most important rural nonfarm activity in sub-Saharan Africa, ASM – quite inexplicitly – continues to receive very little attention on the region’s development agenda, a concern which I have discussed extensively, over the years, in this space. The sector is, rather strangely, seen as a threat to development, as opposed to what it truly is: an integral and rooted dimension of rural African society that has inseparable linkages to agriculture. Unless a much-needed ‘space’ for ASM is created in Africa development policy, efforts to, say, disseminate retorts, pilot magnetic sluice boxes and shaking tables, and distribute furnaces, will continue to yield disappointing results.
Why is this so important? Without any development traction, mercury use in ASM will continue to be analyzed in environmental terms. For the technical people signing the Minamata Convention, there is no anthropological or developmental dimension to this equation. The solution is simple: that it would be illogical to continue using a method of gold recovery that is detrimental to the environment and human health. But if development people who are familiar with the realities of African gold mining were brought on board, decision-makers would be provided with timely reminders of how nuanced the situation they are trying to ‘correct’ truly is. Accusations levelled at miners for not considering alternatives to amalgamation would elicit a response such as ‘Most operators do not possess the technical know-how to use, in an efficient and effective way, the majority of these technologies.’; accusations levelled at miners for showing no interest in using retorts would elicit a response such as ‘Time, for poverty-driven operators, is money and expending too much of it on unnecessary things could jeopardize their survival...this includes setting up and waiting for retorting processes’; and those promoting the Minamata Convention strictly on environmental grounds would be shouted at by people who will remind those in the room that a large share of the artisanal gold mining masses are not in any position to abandon mercury at this time because of the personal circumstances they face. In short, having the right development people on board and allowing them to engage in key discussions would recalibrate the debate for the better, in the process, spawning more appropriate solutions to what is clearly a more complex problem than has been diagnosed.
But in the absence of such discussions, a rather strange and highly-inappropriate agenda for ASM has emerged. We have become preoccupied with ‘mechanizing’ the sector or improving the efficiency of operations, to the point where we are putting the cart before the horse without even realizing it. This extends to the Convention itself, which calls for signatories to draft a National Action Plan to combat mercury pollution from and use in ASM, and in Annex C, identifies a number of areas which need to be covered in each. But it is the order that these areas are presented which is a concern – for me at least – because it epitomizes the current policy ‘mindset’ towards ASM. After calling for ‘Each party that is subject to the provisions of paragraph 3 of Article 7’ to identify ‘National objectives and reduction targets’ and ‘Actions to eliminate’, Appendix C calls for signatories to outline ‘Steps to facilitate the formalization or regulation of the artisanal and small-scale gold mining sector’. Should this not be the first step? Should we not be first looking for ways to create the necessary ‘space’ for operators – through formalization – to innovate, including thinking about adopting environmental technologies? The entire backward approach prescribed here is ironic: on the one hand, the reason why ASM has failed to gain much currency on the development agenda is because its operators continue to be viewed as entrepreneurs looking to ‘get rich quick’ but on the other hand, governments and donors are unwilling to provide these individuals with the necessary means – specifically, access to technology and microfinance – to succeed as businesspeople.
Is it a case of us expecting informal, unlicensed miners to pay close attention to new technologies, despite facing very difficult circumstances? The bottom line is that miners, whose priorities are, in no particular order, eating, feeding their families, sending their children to school and paying the chiefs, police and soldiers money to ‘allow’ them to continue working, are in no position to consider implementing improved technologies; nor have we done enough to put them in such a position to do so. In short: if someone is struggling to secure a license, or to pay an unscrupulous middleman, or to free himself/herself from the shackles of corrupt army and/or police officers looking for bribes, pursuing more environmentally-benign alternatives is probably the last things on their minds.
We are – rather strangely – in the midst of a continent-wide push to ‘mechanize’ ASM, further evidence of how little in tune some policymakers and donors are with the realities of this very dynamic sector. On the environmental front, in countries such as Tanzania, there are now processing licenses, holders of which are permitted to construct mini cyanidation facilities. These setups, however, cost tens of thousands of dollars. Most of Tanzania’s small-scale miners are in no position, financially, to make this leap. There are now discussions in Ghana about creating a ‘Medium-Scale’ category, largely in response to the mechanization and influx of foreigners its ASM sector has experienced in recent years. With most African governments not receiving any tax from ASM, the establishment of a ‘medium-scale’ category could quite easily be interpreted as a deliberate move to ‘rent-seek’, although in the case of Ghana, it seems that it is being made in direct response to its central government gold buying facility, PMMC, struggling to fulfil its quotas. The rationale behind the move is sound but as is the case in Tanzania, the vast majority of Ghana’s operators do not fall into the category of ‘Medium-Scale Miner’. Once again, we are back to where we started: the need to create adequate ‘space’ in policy to address the concerns of ASM.
Let me sum up by saying that the timing of the Minamata Convention is rather strange. I cannot help but think it is yet another move made to further marginalize ASM, an industry which, the architects of the Convention, along with African governments, sections of the NGO community and donors, seem to know very little about. It appears to be yet another deliberate effort to discredit ASM and to simultaneously ‘sell’ cyanide-using large-scale mining as the viable extractive industries development solution going forward. Many of those who condemn ASM are quick to bring up the more than 30 years of – largely-ineffective – mercury pollution abatement work that has been conducted but as mentioned, these efforts, the most comprehensive of which was the UNIDO Global Mercury Project, have been largely standalone, in no way connected to any international, national or local development agenda.
Perhaps the most curious oversight is the repeated failure to understand why mercury use in ASM has become the problem it has. As mentioned, we are in this situation because we continue to frame the issue in purely environmental terms when, as indicated, it is a development problem with an environmental dimension. Further analysis will show that the widespread mercury contamination that we now see at countless ASM sites across sub-Saharan Africa is simply an ‘expression’ of the sector’s informality. If formalized properly, and monitored and regulated, would this, along with other problems, not be adequately addressed?
These uncertainties bring to mind one question: why, exactly, has the Minamata Convention been drafted?
Tuesday 28 October 2014
A Minister in Disarray…
Is there anything more comical than a Minister from a developing country preparing to travel first class? At the announcement of ‘priority boarding’, the Minister – typically, an overweight middle-aged man, dressed in impressive attire and in possession of the latest mobile phone technology – quickly moves through burgeoning crowds of people in the only way that he can: by pushing and shoving. But as he approaches the front of the line, he is greeted by countless angry faces, and is forced to stop in his tracks. He is told by a number of these angry faces that they are also travelling first class, and, like him, are also waiting to board the plane first. But perhaps more to his astonishment is the other group of people: those in possession of priority cards, which are awarded to frequent travellers by most airlines these days – individuals who, despite wearing t-shirts and jeans, are also entitled to board first. ‘What are these “loyalty cards”, anyway?’ he asks himself. ‘Am I not this airline’s most loyal customer? And, do these simple people not have proper clothes to wear? Do they not know who I am?’
This is certainly alien territory for the well-dressed Minister. Accustomed to such privileges only extending to himself and a small group of other elites and ‘hand-picked’ individuals back home, he is reduced to feeling like a commoner for a few minutes. He is outraged, of course, because he feels that he is above these people, particularly those dressed in t-shirts and jeans. After all, was it not he and he alone who was sent to New York on connecting KLM flights to negotiate the deal with the multinational oil company, which will commence drilling offshore at home in less than a year? Was it not he and he alone who was dispatched to London aboard that British Airways flight last month to negotiate the royalty rate for the mining company that has been operating at home for five years now but which the president now believes should be paying some tax? And was it not he who was sent the month before, at the last minute aboard a United Airlines flight, to Washington DC to negotiate a country-level financial bailout package with the IMF?
This behaviour is the ‘Politics of the Belly’ at its finest. This is precisely the type of behaviour we have grown accustomed to seeing, time and time again, from high-ranking officials abroad. Would you expect anything less from the ‘faces’ of autocratic governments, or elites who are in complete control of private and public spaces in their own countries? We continue to feel sorry for the impoverished masses these individuals marginalize to stay in power. But perhaps the humbling – and, from his perspective, completely embarrassing – experience of this Minister is a bit of a consolation prize in an unforgiving environment, where there are so very few positives. The marginalized masses can surely gain some solace from what for them, is a rare ‘chuckle-worthy’ moment: where a corrupt high-ranking public official, who cannot be held accountable for his actions by the public, uses scarce foreign exchange from the government coffers, rides someone else’s jet first class and stays in a five-star hotel to negotiate deals that will net very little money for his country and local people, is made to feel ordinary.
This is certainly alien territory for the well-dressed Minister. Accustomed to such privileges only extending to himself and a small group of other elites and ‘hand-picked’ individuals back home, he is reduced to feeling like a commoner for a few minutes. He is outraged, of course, because he feels that he is above these people, particularly those dressed in t-shirts and jeans. After all, was it not he and he alone who was sent to New York on connecting KLM flights to negotiate the deal with the multinational oil company, which will commence drilling offshore at home in less than a year? Was it not he and he alone who was dispatched to London aboard that British Airways flight last month to negotiate the royalty rate for the mining company that has been operating at home for five years now but which the president now believes should be paying some tax? And was it not he who was sent the month before, at the last minute aboard a United Airlines flight, to Washington DC to negotiate a country-level financial bailout package with the IMF?
This behaviour is the ‘Politics of the Belly’ at its finest. This is precisely the type of behaviour we have grown accustomed to seeing, time and time again, from high-ranking officials abroad. Would you expect anything less from the ‘faces’ of autocratic governments, or elites who are in complete control of private and public spaces in their own countries? We continue to feel sorry for the impoverished masses these individuals marginalize to stay in power. But perhaps the humbling – and, from his perspective, completely embarrassing – experience of this Minister is a bit of a consolation prize in an unforgiving environment, where there are so very few positives. The marginalized masses can surely gain some solace from what for them, is a rare ‘chuckle-worthy’ moment: where a corrupt high-ranking public official, who cannot be held accountable for his actions by the public, uses scarce foreign exchange from the government coffers, rides someone else’s jet first class and stays in a five-star hotel to negotiate deals that will net very little money for his country and local people, is made to feel ordinary.
Tuesday 21 October 2014
The Response to Ebola = International Development Project
The more and more West Africa’s Ebola crisis rages on, unabated, the more and more it is taking the form of a typical international development exercise. What I mean by this is that, like all work conducted under the international development project, the activities being undertaken here in the name of humanity – most of which, at times, may seem quite bizarre and unexplainable to the curious onlooker – are, in reality, products or outcomes of complex global power dynamics and negotiations at work. It has nothing to do with what people are led to believe development to mean: that is, helping the poorest of the poor who are in the greatest of need of assistance. It is rather a case of those who can help only helping when it is in their interest to do so.
Thus far, the pattern of Western aid has been somewhat predictable: The United States has sent 4000 troops to its favourite bilateral partner, Liberia, to assist with the crisis; Britain has agreed to send 100 army medics to Sierra Leone, one of its most important bilateral partners in Africa; and France has done its best to look the part in Guinea, one of its former colonies, by setting up a military hospital staffed with doctors. Additional support has come from the likes of the United Nations, and, of course, the usual NGO suspects – principally, Doctors Without Borders – are now rooted in the region, its staff risking their lives to treat the infected.
But what has also been predictable is the timing of – or more fittingly, pedestrian response of – most Western assistance. People have condemned the United States, Britain and France for failing to act promptly and allowing the crisis to, well, morph into a crisis. Some (most recently, here http://opencanada.org/features/the-global-souths-fight-against-ebola-correcting-a-humanitarian-bias/) have also pointed out how parties in Africa, for the most part a recipient of and dependent on donor aid, has pledged more in assistance to tackle the deadly disease than we have in the West. Further criticism has been levelled at the World Health Organization for failing to contain the disease at its early stages. Efforts by the UN to mobilize donations of finances to its Ebola Trust Fund have come up short: as of a week ago, there was only US$100,000 in the coffers. Accusations have also been levelled at the World Health Organization but that its very existence and the vibrancy of its programs are contingent upon continuous receipt of annual contributions of UN members, its role in this context is more cosmetic than substance. The general arguments being voiced by a number of parties are that Sierra Leone, Liberia and Guinea cannot stop this crisis on their own: that they do not have the resources or expertise to bring it under control. This is why, it is argued, the West must pledge more assistance to tackle the deadly disease.
What is being lost in this discussion, however, is why Liberia, Sierra Leone and Guinea are ill-equipped to handle the crisis in the first place. In the former, accounting for close to three-quarters of GNI is the US$800 million received in aid monies each year, a large chunk of which is from USAID. Moreover, the UN had, up until a few years ago, spent in the range of US$300 million annually in Liberia on a peacekeeping force. Yet, prior to the crisis, the country had only 200 doctors and Bomi’s Liberia Government Hospital, located next to the Ebola site, has not had an operational X-ray machine since its one unit ‘blew up’ in 2012. In Sierra Leone, it is much of the same thing. Here, aid accounts for approximately 18% of GDP but for some reason, the country has only one health worker for every 5300 people. In Guinea, it is even worse: whilst close to 20% of national GDP comes from donors, according to the World Bank, in the country, there is roughly one physician per 10,000 people. Who has received donor aid in these countries, and what conditions have lenders attached to this aid?
The Ebola outbreak has exposed the realities and many nuances of the international development project. The sad reality is that it often takes a crisis like this to illustrate how inept it truly is…
Thus far, the pattern of Western aid has been somewhat predictable: The United States has sent 4000 troops to its favourite bilateral partner, Liberia, to assist with the crisis; Britain has agreed to send 100 army medics to Sierra Leone, one of its most important bilateral partners in Africa; and France has done its best to look the part in Guinea, one of its former colonies, by setting up a military hospital staffed with doctors. Additional support has come from the likes of the United Nations, and, of course, the usual NGO suspects – principally, Doctors Without Borders – are now rooted in the region, its staff risking their lives to treat the infected.
But what has also been predictable is the timing of – or more fittingly, pedestrian response of – most Western assistance. People have condemned the United States, Britain and France for failing to act promptly and allowing the crisis to, well, morph into a crisis. Some (most recently, here http://opencanada.org/features/the-global-souths-fight-against-ebola-correcting-a-humanitarian-bias/) have also pointed out how parties in Africa, for the most part a recipient of and dependent on donor aid, has pledged more in assistance to tackle the deadly disease than we have in the West. Further criticism has been levelled at the World Health Organization for failing to contain the disease at its early stages. Efforts by the UN to mobilize donations of finances to its Ebola Trust Fund have come up short: as of a week ago, there was only US$100,000 in the coffers. Accusations have also been levelled at the World Health Organization but that its very existence and the vibrancy of its programs are contingent upon continuous receipt of annual contributions of UN members, its role in this context is more cosmetic than substance. The general arguments being voiced by a number of parties are that Sierra Leone, Liberia and Guinea cannot stop this crisis on their own: that they do not have the resources or expertise to bring it under control. This is why, it is argued, the West must pledge more assistance to tackle the deadly disease.
What is being lost in this discussion, however, is why Liberia, Sierra Leone and Guinea are ill-equipped to handle the crisis in the first place. In the former, accounting for close to three-quarters of GNI is the US$800 million received in aid monies each year, a large chunk of which is from USAID. Moreover, the UN had, up until a few years ago, spent in the range of US$300 million annually in Liberia on a peacekeeping force. Yet, prior to the crisis, the country had only 200 doctors and Bomi’s Liberia Government Hospital, located next to the Ebola site, has not had an operational X-ray machine since its one unit ‘blew up’ in 2012. In Sierra Leone, it is much of the same thing. Here, aid accounts for approximately 18% of GDP but for some reason, the country has only one health worker for every 5300 people. In Guinea, it is even worse: whilst close to 20% of national GDP comes from donors, according to the World Bank, in the country, there is roughly one physician per 10,000 people. Who has received donor aid in these countries, and what conditions have lenders attached to this aid?
The Ebola outbreak has exposed the realities and many nuances of the international development project. The sad reality is that it often takes a crisis like this to illustrate how inept it truly is…
Sunday 10 August 2014
Dear President John Mahama: Can I Borrow a Generator, Please?
In urban Ghana, few things are more deflating than a sudden outage of power. When the lights go out, you can almost feel the life of the community you are in draining before your eyes, the air peppered with scores of grunts from people who sound like they are living their worst nightmare. Conversely, nothing seems to revitalize an urban Ghanaian community more so than the return of electricity following an extended blackout. It is almost as if the goats and chickens, ubiquitous in their occurrence, recognize the sudden shift in attitude of their owners, and contribute to the chorus of euphoric chants rising from their neighbourhoods.
Such was the scene yesterday in Tema where, following about 24 hours of being without electricity – having to live through an evening with windows open to collect what little breeze was circulating and consequently, enduring an onslaught of mosquitoes seemingly-immune to every insecticide manufactured to date – the lights suddenly went on. The signs of power returning to urban Ghana are always distinctive: the neighbours’ children suddenly singing unrecognizable songs; the air conditioner hums replacing the generator roars; and lights which were not turned off during the night peppering the landscape in the bright of day. Those cursing the government only moments earlier, when the electricity was off, suddenly forget how, in the matter of seconds, they are victimized daily by government ineptitude.
We keep asking ourselves how, in a country that is now producing and exporting oil, a fossil fuel energy source that could surely nourish hungry power facilities, this can be happening? Much of the answer lies in the question itself. Of the 88,000 barrels of oil or so that are being produced daily, 14,000 are being shipped to China as part of a ridiculous oil-for-infrastructure deal; this figure is likely to increase because the Chinese are demanding more. There was also the baseless projection made about future production in the Jubilee Field and adjoining fields some time back – about the area reaching a production capacity of 225,000 barrels a day by 2016 when, in fact, it has never exceeded more than 100,000 barrels to date and does not look to do so in the near-future. We were also told that Ghana could earn in excess of US$5 billion in profits from oil by 2015 when, for the period 2010-2012, the figure was more in the range of US$850 million. Yet, despite these disappointing returns, the country has still netted a substantial amount of money from oil, which begs the question: why are the lights still going out?
The first is a rather obvious reason: availability and cost. At present, hydroelectric generation supplies in the range of 70 percent of Ghana’s power, courtesy of the Akosombo Dam and newly-constructed Bui Dam. But a large percentage of this is exported (chiefly to neighbouring Ivory Coast), which, combined with the inconsistency of rainfall, often results in inconsistent supplies of power being available domestically. Added to this is the cost the government bears to deliver electricity. Successive regimes have flirted with privatizing electricity delivery, encouraging the construction of a wave of thermal natural gas and oil-powered facilities along the country’s coast. But because electricity is subsidized, every additional supplier and consumer ‘costs’ the government more money. Unable to meet the demand for power, these private producers regularly inform the government-run transmission company that they need blackouts of communities in order to prevent over-consumption and consequently, an outright collapse of the power grid. These issues are detailed further here http://re2peets.wordpress.com/2013/06/06/lights-out-power-in-ghana/.
The second reason is also rather obvious: there simply no revenue available in the country to improve the delivery of electricity. Thus, even if the current government were to suddenly morph into a forward-thinking unit, and recognize that the country needs to increase its electricity generation capacity in order to industrialize and appease the general populace, its options are limited because, well, it has no money. At the time of writing, the government was in the process of approaching the IMF for what is probably another ill-advised bailout in an effort to stem the huge slump in its currency, which has depreciated 40 percent against the US dollar in 2014. Why has this happened? By all accounts, the government has, quite bizarrely, pinned all of its hopes to oil, at the same time, neglecting other industrial sectors. The economy has taken a beating due to reckless government overspending, and an unexpected drop in output and profits from the gold mining sector, which has long been the country’s lifeblood. A lack of foreign exchange has had serious implications for budgeting and spending.
Finally, despite over-confidently pinned all of its hopes to oil, the government has done very little to maximize benefit from the steady stream of revenue it is receiving. It is a situation sort of analogous to the football coach (and no Ghana national football team pun intended here) who has an exceptionally talented player at his disposal but seems to have no clue on how to use him, and consequently, plays him out-of-position. Ghana was clearly not prepared for this oil revenue, and it has certainly shown this in so many ways. Few would dispute that thus far, the country’s oil project has been nothing short of a debacle. The exercise has been highlighted by opaque oil deals, a Petroleum Revenue Management Act implemented several months after production commenced, the passing of a Ghana Local Content and Local Participation Bill laden with unattainable goals, and repeated failure to bring online infrastructure capable of capturing precious reserves of natural gas that are being flared. Rather than using oil revenues in ways that can benefit the ordinary Ghanaian – such as increasing electricity capacity – the government has, quite strangely, devised a highly-complex budget in which development ‘priorities’ linked to oil are ‘debated’ in parliament every few years. The results thus far have been anything but promising: using oil monies as used as collateral to secure additional loans, for paving the occasional road and – apparently – for agricultural development.
Given the ridiculous – albeit, self-induced – quandary Ghana now finds itself in, my advice to anyone looking to become ‘blackout proof’ is this: to borrow a generator (and, of course, fuel) from President Mahama.
Such was the scene yesterday in Tema where, following about 24 hours of being without electricity – having to live through an evening with windows open to collect what little breeze was circulating and consequently, enduring an onslaught of mosquitoes seemingly-immune to every insecticide manufactured to date – the lights suddenly went on. The signs of power returning to urban Ghana are always distinctive: the neighbours’ children suddenly singing unrecognizable songs; the air conditioner hums replacing the generator roars; and lights which were not turned off during the night peppering the landscape in the bright of day. Those cursing the government only moments earlier, when the electricity was off, suddenly forget how, in the matter of seconds, they are victimized daily by government ineptitude.
We keep asking ourselves how, in a country that is now producing and exporting oil, a fossil fuel energy source that could surely nourish hungry power facilities, this can be happening? Much of the answer lies in the question itself. Of the 88,000 barrels of oil or so that are being produced daily, 14,000 are being shipped to China as part of a ridiculous oil-for-infrastructure deal; this figure is likely to increase because the Chinese are demanding more. There was also the baseless projection made about future production in the Jubilee Field and adjoining fields some time back – about the area reaching a production capacity of 225,000 barrels a day by 2016 when, in fact, it has never exceeded more than 100,000 barrels to date and does not look to do so in the near-future. We were also told that Ghana could earn in excess of US$5 billion in profits from oil by 2015 when, for the period 2010-2012, the figure was more in the range of US$850 million. Yet, despite these disappointing returns, the country has still netted a substantial amount of money from oil, which begs the question: why are the lights still going out?
The first is a rather obvious reason: availability and cost. At present, hydroelectric generation supplies in the range of 70 percent of Ghana’s power, courtesy of the Akosombo Dam and newly-constructed Bui Dam. But a large percentage of this is exported (chiefly to neighbouring Ivory Coast), which, combined with the inconsistency of rainfall, often results in inconsistent supplies of power being available domestically. Added to this is the cost the government bears to deliver electricity. Successive regimes have flirted with privatizing electricity delivery, encouraging the construction of a wave of thermal natural gas and oil-powered facilities along the country’s coast. But because electricity is subsidized, every additional supplier and consumer ‘costs’ the government more money. Unable to meet the demand for power, these private producers regularly inform the government-run transmission company that they need blackouts of communities in order to prevent over-consumption and consequently, an outright collapse of the power grid. These issues are detailed further here http://re2peets.wordpress.com/2013/06/06/lights-out-power-in-ghana/.
The second reason is also rather obvious: there simply no revenue available in the country to improve the delivery of electricity. Thus, even if the current government were to suddenly morph into a forward-thinking unit, and recognize that the country needs to increase its electricity generation capacity in order to industrialize and appease the general populace, its options are limited because, well, it has no money. At the time of writing, the government was in the process of approaching the IMF for what is probably another ill-advised bailout in an effort to stem the huge slump in its currency, which has depreciated 40 percent against the US dollar in 2014. Why has this happened? By all accounts, the government has, quite bizarrely, pinned all of its hopes to oil, at the same time, neglecting other industrial sectors. The economy has taken a beating due to reckless government overspending, and an unexpected drop in output and profits from the gold mining sector, which has long been the country’s lifeblood. A lack of foreign exchange has had serious implications for budgeting and spending.
Finally, despite over-confidently pinned all of its hopes to oil, the government has done very little to maximize benefit from the steady stream of revenue it is receiving. It is a situation sort of analogous to the football coach (and no Ghana national football team pun intended here) who has an exceptionally talented player at his disposal but seems to have no clue on how to use him, and consequently, plays him out-of-position. Ghana was clearly not prepared for this oil revenue, and it has certainly shown this in so many ways. Few would dispute that thus far, the country’s oil project has been nothing short of a debacle. The exercise has been highlighted by opaque oil deals, a Petroleum Revenue Management Act implemented several months after production commenced, the passing of a Ghana Local Content and Local Participation Bill laden with unattainable goals, and repeated failure to bring online infrastructure capable of capturing precious reserves of natural gas that are being flared. Rather than using oil revenues in ways that can benefit the ordinary Ghanaian – such as increasing electricity capacity – the government has, quite strangely, devised a highly-complex budget in which development ‘priorities’ linked to oil are ‘debated’ in parliament every few years. The results thus far have been anything but promising: using oil monies as used as collateral to secure additional loans, for paving the occasional road and – apparently – for agricultural development.
Given the ridiculous – albeit, self-induced – quandary Ghana now finds itself in, my advice to anyone looking to become ‘blackout proof’ is this: to borrow a generator (and, of course, fuel) from President Mahama.
Sunday 9 February 2014
The Oil Rich Nation and the Petrol Station
Oil has been a curse for Ghana. There is no doubt in my mind. There just does not seem to be anything right going on here – at least at the moment. Everything has gone a bit pear shaped since the start of the drilling of oil just a few years ago.
Let us revisit, briefly, the background arguments here. On the one hand, proponents of the resource curse are quick to draw attention to the circumstantial evidence, that is the things which seem to scream that natural resource extraction – in this case, oil – is causing more harm than good. On the other hand, there are those who contest that such outcomes are by no means inevitable as implied, and that the underperforming resource economy that tends to come to fruition is product of a number of things.
But whether coincidental or not, a lot of strange things have happened in Ghana since the drilling of its first oil. These ‘things’ can be grouped into two broad categories. There are, first and foremost, a series of rather odd phenomena which I believe could have been prevented but have surfaced solely because Ghana’s authorities have been enamoured with the country’s new-found oil wealth, turning what seems to be a blind eye to everything else economic. Problems have escalated but officials seem unphased. There is the rapidly-depreciating cedi which has long enjoyed relative stability, buoyed by what was a substantial amount of gold in the coffers. In less than a month, the cedi has lost 3.1% against the US dollar and at the time of writing, there were four cedis to the British pound. Then there is the rather bizarre recent change in attitude towards large-scale miners – specifically, an increased royalty payment from 3 to 5% of profits and, until the recent crash in the gold price, repeated threats of a windfall tax. I am all for African nations deriving more from their extractive industries but why did it take the better part of 25 years for the government to realize that its taxation scheme was highly-inappropriate? The move has, of course, had a significant impact on gold exploration, which is in danger of drying up completely. These concerns extend to the cocoa sector, long the trademark of Ghana and, until the explosion of gold mining in the 1990s, the country’s greatest source of export earnings. Prolonged neglect has led to the country plummeting to the embarrassing title of the world’s third-largest producer, behind Indonesia and war-torn Ivory Coast. Finally, there is the recent proliferation of Chinese in illegal mining, which has been really bizarre. You travel into some of Ghana’s rural areas and if you did not know it, you would think you were somewhere in China. It seems like every aspect of the economy is worsening and nothing is being done about it.
Then there is the second category of ‘things’, which concern the oil monies themselves, specifically, their misuse. There are the rather obvious ‘things’: the failure to institute any meaningful oil community fund, overlooking the needs of affected communities, the environmental impacts of drilling, reneging on promises of gas flaring, and the squandering of funds. But the biggest concern is this: where, exactly, is the oil money going? No one seems to no. I have heard several interesting – and at times, funny – stories over the years concerning this minister doing that and this MP doing this but nothing has really captured my interest. That is, until now.
Over the past year or so, I have heard several rumours about MPs and ministers constructing petrol stations and stockpiling them with natural gas and refined product originating from the Jubilee Field. It has been said that unmarked trucks would appear in both the middle of the night and broad daylight to replenish depleted supply. Is there any truth to these rumours? I had dismissed them until yesterday, when I travelled down the Accra Kumasi Road, along which it seemed as if there was a ‘Brand X’ petrol station every half mile, even in absolutely remote stretches. Yes, there is the occasional ‘Shell’ and ‘Total’ and Ghana’s own ‘Goil’ and ‘Glory Oil’ but these are sandwiched amongst a proliferation of stations with names you have not heard of. Some of these stations are still under construction but have operational pumps.
They say that Ghana is spending its oil money faster than it is earning it. It may be a case of the country’s politicians not really caring about concealing exactly how this is happening…
Let us revisit, briefly, the background arguments here. On the one hand, proponents of the resource curse are quick to draw attention to the circumstantial evidence, that is the things which seem to scream that natural resource extraction – in this case, oil – is causing more harm than good. On the other hand, there are those who contest that such outcomes are by no means inevitable as implied, and that the underperforming resource economy that tends to come to fruition is product of a number of things.
But whether coincidental or not, a lot of strange things have happened in Ghana since the drilling of its first oil. These ‘things’ can be grouped into two broad categories. There are, first and foremost, a series of rather odd phenomena which I believe could have been prevented but have surfaced solely because Ghana’s authorities have been enamoured with the country’s new-found oil wealth, turning what seems to be a blind eye to everything else economic. Problems have escalated but officials seem unphased. There is the rapidly-depreciating cedi which has long enjoyed relative stability, buoyed by what was a substantial amount of gold in the coffers. In less than a month, the cedi has lost 3.1% against the US dollar and at the time of writing, there were four cedis to the British pound. Then there is the rather bizarre recent change in attitude towards large-scale miners – specifically, an increased royalty payment from 3 to 5% of profits and, until the recent crash in the gold price, repeated threats of a windfall tax. I am all for African nations deriving more from their extractive industries but why did it take the better part of 25 years for the government to realize that its taxation scheme was highly-inappropriate? The move has, of course, had a significant impact on gold exploration, which is in danger of drying up completely. These concerns extend to the cocoa sector, long the trademark of Ghana and, until the explosion of gold mining in the 1990s, the country’s greatest source of export earnings. Prolonged neglect has led to the country plummeting to the embarrassing title of the world’s third-largest producer, behind Indonesia and war-torn Ivory Coast. Finally, there is the recent proliferation of Chinese in illegal mining, which has been really bizarre. You travel into some of Ghana’s rural areas and if you did not know it, you would think you were somewhere in China. It seems like every aspect of the economy is worsening and nothing is being done about it.
Then there is the second category of ‘things’, which concern the oil monies themselves, specifically, their misuse. There are the rather obvious ‘things’: the failure to institute any meaningful oil community fund, overlooking the needs of affected communities, the environmental impacts of drilling, reneging on promises of gas flaring, and the squandering of funds. But the biggest concern is this: where, exactly, is the oil money going? No one seems to no. I have heard several interesting – and at times, funny – stories over the years concerning this minister doing that and this MP doing this but nothing has really captured my interest. That is, until now.
Over the past year or so, I have heard several rumours about MPs and ministers constructing petrol stations and stockpiling them with natural gas and refined product originating from the Jubilee Field. It has been said that unmarked trucks would appear in both the middle of the night and broad daylight to replenish depleted supply. Is there any truth to these rumours? I had dismissed them until yesterday, when I travelled down the Accra Kumasi Road, along which it seemed as if there was a ‘Brand X’ petrol station every half mile, even in absolutely remote stretches. Yes, there is the occasional ‘Shell’ and ‘Total’ and Ghana’s own ‘Goil’ and ‘Glory Oil’ but these are sandwiched amongst a proliferation of stations with names you have not heard of. Some of these stations are still under construction but have operational pumps.
They say that Ghana is spending its oil money faster than it is earning it. It may be a case of the country’s politicians not really caring about concealing exactly how this is happening…
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