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.
Sunday, 10 August 2014
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…
Sunday, 24 November 2013
Lagos Traffic
Is there anything more infuriating than being caught in Lagos traffic? Accounts of voyages which should not take more than ten minutes having taken many hours may seem laughable to those who have never experienced the wrath of the Lagos traffic jam. But having endured two in less than 24 hours, I can say this: these accounts are no exaggeration in the slightest. One of the most bizarre things about Lagos traffic, though, is how it creeps up with no explanation whatsoever. As a passenger in distress, frustrated about being in a logjam which prevents you from attending an event on time being hosted no further than a few blocks away, you suddenly become intrigued as to how it happened in the first place. Your taxi turns a corner, smooth sailing, and then all of a sudden you are swarmed by vehicles which are dodging pedestrians and being stopped by police for no logical reason whatsoever.
Lagos road congestion has become the topic of legend. Known locally as ‘go-slows’, Lagos traffic jams have become more frequent in recent years, as its road network, which has not been updated in decades, has been forced to cope with an ever-increasing number of passenger vehicles, trucks and automobiles. The reality is that Lagos, with a population now exceeding 21 million, is set to become Africa’s largest city by 2015. Fuel subsidies have made purchasing a car a relatively inexpensive undertaking, and the main reason why the number of registered vehicles on Lagos roads increased nearly 1000% between 1995 and 2010, from 27,000 to 230,000. Needless to say, the ‘go-slow’ is now a part of everyday life in Nigeria’s commercial capital.
What is perhaps most intriguing about Lagos traffic, however, is how ordinary residents respond to it. Numerous visitors and writers, including the famous Ryszard Kapuściński, have, over the years, marveled at how Nigerians have coped with the country’s lack of infrastructure and problems. But you can only appreciate how when you are caught in a ‘go-slow’ yourself: the small, mini-taxis, whizzing down backstreets which you thought never existed; vendors galvanizing en masse around the traffic, sandwiched within the contours of parked vehicles, selling every product imaginable; and drivers jockeying for the four car lengths of space afforded by the slightest vehicular movement every ten minutes or so during the perpetual traffic jam, unphased by the circumstances. Alongside this, of course, and beyond the traffic jam itself, each resident is forced to acquire and run his/her own generator because of the inconsistency in the supply of electricity.
There is certainly something admirable about the way in which Lagos residents cope with and adapt to perpetual traffic. It is a telling sign of their resilience. But it is also a sign that people have conceded defeat, no longer in possession of the zeal, passion and energy needed to facilitate change. For as long as people continue to tolerate ridiculousness such as the Lagos traffic jam, unchallenged, corrupt African governments will continue to neglect infrastructural needs. Has the African citizenry given up?
Lagos road congestion has become the topic of legend. Known locally as ‘go-slows’, Lagos traffic jams have become more frequent in recent years, as its road network, which has not been updated in decades, has been forced to cope with an ever-increasing number of passenger vehicles, trucks and automobiles. The reality is that Lagos, with a population now exceeding 21 million, is set to become Africa’s largest city by 2015. Fuel subsidies have made purchasing a car a relatively inexpensive undertaking, and the main reason why the number of registered vehicles on Lagos roads increased nearly 1000% between 1995 and 2010, from 27,000 to 230,000. Needless to say, the ‘go-slow’ is now a part of everyday life in Nigeria’s commercial capital.
What is perhaps most intriguing about Lagos traffic, however, is how ordinary residents respond to it. Numerous visitors and writers, including the famous Ryszard Kapuściński, have, over the years, marveled at how Nigerians have coped with the country’s lack of infrastructure and problems. But you can only appreciate how when you are caught in a ‘go-slow’ yourself: the small, mini-taxis, whizzing down backstreets which you thought never existed; vendors galvanizing en masse around the traffic, sandwiched within the contours of parked vehicles, selling every product imaginable; and drivers jockeying for the four car lengths of space afforded by the slightest vehicular movement every ten minutes or so during the perpetual traffic jam, unphased by the circumstances. Alongside this, of course, and beyond the traffic jam itself, each resident is forced to acquire and run his/her own generator because of the inconsistency in the supply of electricity.
There is certainly something admirable about the way in which Lagos residents cope with and adapt to perpetual traffic. It is a telling sign of their resilience. But it is also a sign that people have conceded defeat, no longer in possession of the zeal, passion and energy needed to facilitate change. For as long as people continue to tolerate ridiculousness such as the Lagos traffic jam, unchallenged, corrupt African governments will continue to neglect infrastructural needs. Has the African citizenry given up?
Tuesday, 12 November 2013
Are Ghana's Chiefs Coming or Going?
So the Okyenhene has called on the US Government to assist with mining reclamation (‘Okyenhene Lobbies US Government to Support Reclamation’ http://www.ghanaweb.com/GhanaHomePage/NewsArchive/artikel.php?ID=291594). A self-proclaimed environmentalist, the Okyenhene, the paramount chief of the Akyem Abuakwa State in Ghana and one of the country’s most powerful traditional leaders, has long lobbied the government to double its efforts to eradicate illegal mining. He has drawn particular attention to the environmental impact of galamsey (unlicensed gold mining) activities in his jurisdiction, pleading for policymakers in attendance at meetings held at the regional and national levels to remove galamsey operators from ‘his’ land. These would be reasonable requests if there were not excavators and other mining equipment on the front lawn of the Okyenhene’s palace. But when the Okyenhene went international with the issue, making an appeal for assistance in a meeting held at the US State Department in Washington DC, everything changed. It more importantly begs the question: what do Ghana’s chiefs want?
Although it is sin to talk about Ghana’s traditional leaders negatively in public forums, is it really in the interest of Ghana’s citizens for the government to continue circumnavigate the chieftaincy institution in policymaking exercises, avoiding upsetting traditional leaders, and failing to hold them to account in cases where it is warranted? It has become public knowledge that chiefs are involved in some capacity with small-scale mining. This is not to say that the Okyenhene himself is bankrolling small-scale miners directly but for him to play ignorant when questioned about galamsey, implying that he has no knowledge of why illegal gold mining activity is increasing, and specifically how traditional leaders are fuelling this growth. The reality is that many of Ghana’s chiefs simply want more resource rents, and will do anything to deflect discussion and criticism away from their actions. Whilst the US State Department is unlikely to get involved with mine reclamation in Ghana, the fact that the Okyenhene feels he has the right to even initiate, on his own, dialogue with an international partner, and telling a story which barely captures the truth about a phenomenon – the proliferation of unlicensed artisanal mining – in an effort to mobilize assistance, is mind-boggling.
More significantly, it raises the question of why the Government of Ghana insists on continuing to involve chiefs in, and at times making them the centrepiece of, local economic development. Specifically, if Ghana’s traditional leaders have no intention of using resource revenues for the benefit of communities, as evidence pointing to the hoarding of timber and mine royalties suggests, and have openly declared that ‘their’ share of allocated revenue should not have to be filtered down to their jurisdictions (‘Chiefs should not lead development projects’ http://www.ghanaweb.com/GhanaHomePage/blogs/blog.article.php?blog=1995&ID=1000006128), why are they increasingly being featured in revenue decentralization and community development exercises? The EITI has even called for chiefs to be held accountable (‘Ghana: Hold Chiefs Accountable’ http://allafrica.com/stories/201004160833.html), so why can government not act? It seems that many of Ghana’s chiefs have one foot in the modern era and the other in the sixteenth century, when perhaps they were considered de facto land owners, shuffling back and forth when it is convenient for them.
It is a bit ironic that the ‘problem’ which the Okyenhene has asked American government officials to help him resolve is largely his own doing. The view here is that the failure of paramount chiefs such as the Okyenhene and the Asantehene to properly decentralize royalties earned from large-scale mining activities has mobilized ‘lesser’ chiefs based at the grassroots. Desperate for money, these chiefs have turned to local galamsey operators, whom they have sponsored and from whom they now generate significant amounts of cash. It could very well be a case of the Okyenhene wanting a piece of the action as well but that his centralized paramount position inhibits effective infiltration of existing sponsorship/ore-sharing arrangements between ‘lesser’ chiefs and galamsey operators. He, much like his colleagues, is forced to rely on ‘palace gangs’, who, equally disconnected from the realities on the ground, have not really put the Okyenhene in a better position to benefit from the galamsey activity burgeoning in his jurisdiction right before his eyes.
There is an important ‘takeaway’ message here: When is the Government of Ghana going to realize that the country’s chiefs are not vanguards of development. Any responsibility assigned to chiefs in the context of development, in particular, revenue sharing, should, therefore, be reconsidered.
Although it is sin to talk about Ghana’s traditional leaders negatively in public forums, is it really in the interest of Ghana’s citizens for the government to continue circumnavigate the chieftaincy institution in policymaking exercises, avoiding upsetting traditional leaders, and failing to hold them to account in cases where it is warranted? It has become public knowledge that chiefs are involved in some capacity with small-scale mining. This is not to say that the Okyenhene himself is bankrolling small-scale miners directly but for him to play ignorant when questioned about galamsey, implying that he has no knowledge of why illegal gold mining activity is increasing, and specifically how traditional leaders are fuelling this growth. The reality is that many of Ghana’s chiefs simply want more resource rents, and will do anything to deflect discussion and criticism away from their actions. Whilst the US State Department is unlikely to get involved with mine reclamation in Ghana, the fact that the Okyenhene feels he has the right to even initiate, on his own, dialogue with an international partner, and telling a story which barely captures the truth about a phenomenon – the proliferation of unlicensed artisanal mining – in an effort to mobilize assistance, is mind-boggling.
More significantly, it raises the question of why the Government of Ghana insists on continuing to involve chiefs in, and at times making them the centrepiece of, local economic development. Specifically, if Ghana’s traditional leaders have no intention of using resource revenues for the benefit of communities, as evidence pointing to the hoarding of timber and mine royalties suggests, and have openly declared that ‘their’ share of allocated revenue should not have to be filtered down to their jurisdictions (‘Chiefs should not lead development projects’ http://www.ghanaweb.com/GhanaHomePage/blogs/blog.article.php?blog=1995&ID=1000006128), why are they increasingly being featured in revenue decentralization and community development exercises? The EITI has even called for chiefs to be held accountable (‘Ghana: Hold Chiefs Accountable’ http://allafrica.com/stories/201004160833.html), so why can government not act? It seems that many of Ghana’s chiefs have one foot in the modern era and the other in the sixteenth century, when perhaps they were considered de facto land owners, shuffling back and forth when it is convenient for them.
It is a bit ironic that the ‘problem’ which the Okyenhene has asked American government officials to help him resolve is largely his own doing. The view here is that the failure of paramount chiefs such as the Okyenhene and the Asantehene to properly decentralize royalties earned from large-scale mining activities has mobilized ‘lesser’ chiefs based at the grassroots. Desperate for money, these chiefs have turned to local galamsey operators, whom they have sponsored and from whom they now generate significant amounts of cash. It could very well be a case of the Okyenhene wanting a piece of the action as well but that his centralized paramount position inhibits effective infiltration of existing sponsorship/ore-sharing arrangements between ‘lesser’ chiefs and galamsey operators. He, much like his colleagues, is forced to rely on ‘palace gangs’, who, equally disconnected from the realities on the ground, have not really put the Okyenhene in a better position to benefit from the galamsey activity burgeoning in his jurisdiction right before his eyes.
There is an important ‘takeaway’ message here: When is the Government of Ghana going to realize that the country’s chiefs are not vanguards of development. Any responsibility assigned to chiefs in the context of development, in particular, revenue sharing, should, therefore, be reconsidered.
Saturday, 2 November 2013
The Meaning of a Meeting in Rewind
It never ceases to amaze me how little people know about small-scale mining. How is it, after more than 40 years after surfacing in the international development lexicon, that we are still reviewing the most basic of questions? I am talking about questions such as: What is small-scale mining? Why is it such a problem? and How can we formalize the industry’s operators? I find myself shaking my head as these, and similar, questions are being asked in the middle of yet another workshop that is rapidly morphing into a discussion focused on the theme ‘What, exactly, are we dealing with?’.
At this particular event, there are some of the usual suspects – myself included – who eat and breathe small-scale mining, publishing papers on a range of the industry’s many interesting but poorly understood nuances in an attempt, in the short-term, to raise its profile, and in the long-term, to secure it the donor support it rightly deserves. But it seems that, every 2 years or so, a new crop of people from the donor, policymaking and NGO communities, each with a peripheral interest in the sector but who are intrigued nonetheless, emerge on to the scene. And so, we must again revisit the basic questions that were posed at the beginning of this exercise four decades ago: What is small-scale mining? Why is it such a problem? and How do we formalize its operators?
The only logical conclusion I can come up with as to why we constantly press the reboot button and start over again is that no one is interested, apart from the handful of people committed to doing research on the subject, in bringing ASM into core international development policies and programs. This is why, time and time again, we host workshops on ASM which take us back to the Stone Age. This is why, time and time again, we invite disinterested and disconnected African ministers to these workshops, where they proceed to deliver presentations, which always run over the allocated time, and talk about mundane points that they believe they have acquired a sound knowledge of from the confines of their air-conditioned officers. This is why, time and time again, we host workshops on ASM which yield the same unproductive conclusions which, if implemented, would not advance the agenda one iota. The same messages we have relayed over the past 20 years, such as ‘We need more transparency in this sector’ and ‘More miners need to be licensed’, were resonating at this particular event.
It is hard not to have a preconceived idea of what to expect at this events. What gets me through most, however, is the exuberance and naivety of the new crop of peripherals. In response to my criticisms, which I do a poor job of hiding, I am told things like ‘This is a new direction for development, so be patient’ and ‘The World Bank is here, so it must be serious’. One delegate told me, in what seemed like an effort to reassure me that things are improving, that ‘We are even lucky that small-scale mining got on the agenda…this is the 10th year of these meetings and it was only a last minute decision that led to its inclusion’. It was as if I was supposed to be grateful that we are having some dialogue about small-scale mining, despite being one of the most important development issues today. But if not for this enthusiasm, the energy and excitement expressed by people who seem to have discovered something new, I think I would be more cynical than I am which, at this point, seems impossible. One cannot help but get excited when others come on board, presenting new ideas about ‘directions we should go’, ‘what donors must do’ and ‘where we should carry out work’. One delegate even said to me, half-excitedly, that ‘we need to build on this, to do some work on small-scale mining so by the next meeting, we have some valuable experiences to share’.
I only hope that this materializes: that we will be reconnecting with this same seemingly-passionate group next time. Or will we be pressing the reset button yet again, welcoming another curious but intrigued support cast?
At this particular event, there are some of the usual suspects – myself included – who eat and breathe small-scale mining, publishing papers on a range of the industry’s many interesting but poorly understood nuances in an attempt, in the short-term, to raise its profile, and in the long-term, to secure it the donor support it rightly deserves. But it seems that, every 2 years or so, a new crop of people from the donor, policymaking and NGO communities, each with a peripheral interest in the sector but who are intrigued nonetheless, emerge on to the scene. And so, we must again revisit the basic questions that were posed at the beginning of this exercise four decades ago: What is small-scale mining? Why is it such a problem? and How do we formalize its operators?
The only logical conclusion I can come up with as to why we constantly press the reboot button and start over again is that no one is interested, apart from the handful of people committed to doing research on the subject, in bringing ASM into core international development policies and programs. This is why, time and time again, we host workshops on ASM which take us back to the Stone Age. This is why, time and time again, we invite disinterested and disconnected African ministers to these workshops, where they proceed to deliver presentations, which always run over the allocated time, and talk about mundane points that they believe they have acquired a sound knowledge of from the confines of their air-conditioned officers. This is why, time and time again, we host workshops on ASM which yield the same unproductive conclusions which, if implemented, would not advance the agenda one iota. The same messages we have relayed over the past 20 years, such as ‘We need more transparency in this sector’ and ‘More miners need to be licensed’, were resonating at this particular event.
It is hard not to have a preconceived idea of what to expect at this events. What gets me through most, however, is the exuberance and naivety of the new crop of peripherals. In response to my criticisms, which I do a poor job of hiding, I am told things like ‘This is a new direction for development, so be patient’ and ‘The World Bank is here, so it must be serious’. One delegate told me, in what seemed like an effort to reassure me that things are improving, that ‘We are even lucky that small-scale mining got on the agenda…this is the 10th year of these meetings and it was only a last minute decision that led to its inclusion’. It was as if I was supposed to be grateful that we are having some dialogue about small-scale mining, despite being one of the most important development issues today. But if not for this enthusiasm, the energy and excitement expressed by people who seem to have discovered something new, I think I would be more cynical than I am which, at this point, seems impossible. One cannot help but get excited when others come on board, presenting new ideas about ‘directions we should go’, ‘what donors must do’ and ‘where we should carry out work’. One delegate even said to me, half-excitedly, that ‘we need to build on this, to do some work on small-scale mining so by the next meeting, we have some valuable experiences to share’.
I only hope that this materializes: that we will be reconnecting with this same seemingly-passionate group next time. Or will we be pressing the reset button yet again, welcoming another curious but intrigued support cast?
Wednesday, 30 October 2013
A Unique Resource Curse…Or Is It?
It seems quite strange to speak about a resource curse in Guyana. After all, the debates on this topic have focused almost exclusively on the performance and impact of large multinational mining and oil and gas companies, none of which are operating on or off of Guyana’s shores at present (the days of Omai seem like a distant memory). But as we have come to learn over the years, nothing is as straightforward as it seems in this vastly under-populated country: its identity crisis, specifically, how, despite being situated squarely in South America, its people appear as Caribbean in their mannerisms and attitudes as the ‘islanders’; how its Low Carbon Development Strategy (LCDS), which was supposed to become a centrepiece of national development and a ‘quick-fix’ poverty-alleviation strategy, has quickly become a debacle; and its regressive democracy and politics, underpinned by racial tensions, themselves relicts of the colonial period. The dynamics of its resource curse ‘epidemic’ are no exception.
Guyana’s resource curse has been particularly distressing for me. Unlike most mineral economies in sub-Saharan Africa, Asia and elsewhere in Latin America, the country’s gold mining industry is comprised entirely of indigenous and Brazilian small and medium-scale operators. I have dedicated my career to raising awareness of, and creating a ‘space’ for, these operators, the economic contributions of whom have been – rather strangely – neglected by donors and governments across the developing world for decades. In Guyana, however, successive governments have done just this: reserve land for their own small and medium operators, and not succumb to the pressures of international donors that have lobbied for the allocation of mineralized territories to foreign multinationals. As a result of these efforts, gold mining, backed almost exclusively by indigenous wealth, now generates over US$700 million in revenue annually in Guyana, making it by far the country’s largest industry.
The ‘results’ of this policy approach, however, appear little different to those of the developing countries that have fast become to focus of our lengthy tirades on the resource curse, few of which have much to show from the booming and sprawling large-scale mining industries that now populate vast sections of their landscapes. Although the anatomy of Guyana’s gold mining economy differs markedly to that of, say, Ghana or Tanzania, its salient developmental features do not, the most significant being what I often refer to as the ‘laziness’ of its institutions. The steady stream of revenues provided by gold miners seems to have made the government complacent. It appears to have shied away from supporting other sectors of its economy, the resulting Dutch Disease now most noticeable in the country’s sugar and rice trades, which have long been important sectors of the national economy. The former has suffered tremendously in recent years from a skills shortage and a change in global trade policies, which have resulted in a decline in exports to the European Union; the sustainability of the latter is precarious, at best, given how exports are determined heavily by an oil-for-rice agreement forged with neighbouring Venezuela, a country which experiencing a resource curse of its own.
There are a number of other disturbing similarities between Guyana’s own resource curse and the ‘epidemics’ of those which now engulf countries where foreign large-scale mining industries dominate the economy. The first is the inappropriate – or rather cavalier – attitude of its government officials toward economic diversification. Much like the policymakers I have encountered over the years in countries where foreign-controlled large-scale mining activities are now rooted, Guyana’s politicians seem to be in denial about the resource curse and therefore, unwilling to take proactive measures to avert it or prevent it from intensifying. This was quite evident during a conversation with the country’s Minister of Finance, in response to my comment about there being ‘no other industries apart from gold mining in Guyana’, responded, quite animatedly: ‘what are you talking about?...we [Guyana] have a burgeoning sugar industry and flourishing rice trade’, seemingly oblivious to the aforementioned problems plaguing both of those sectors. How can a problem be fixed if it is not acknowledged by senior-ranking officials?
A second similarity is the concentration of ownership and finance. Critics often draw attention to how, in the likes of Ghana, Tanzania and Peru, gold mining activities are controlled by a small group of multinational corporations which, as a result, wield a considerable amount of influence over the economy and local politics. But a similar dynamic persists in Guyana, the key difference, of course, being that the gold mining economy is controlled by a handful of indigenous elites, multimillionaires with lavish houses and cars, and who have made countless investments abroad. A final point relates to where revenues are going – or more specifically, where they are not going. The criticism of the large-scale mining multinationals operating in the developing world is that they repatriate most of their profits, and take advantage of lax regulations and policies to import equipment and supplies without having to pay duties and invest locally. The same problem, however, persists in Guyana, the difference being, of course, that it is the group of elite small-scale miners who are taking millions of dollars of gold out of villages such as Mahdia and reinvesting very little in the community. These miners certainly flaunt their wealth by erecting large houses and hotels but elect not to contribute to developing domestic value-added industries such as agriculture and manufacturing, which would certainly provide greater economic benefit to the country than the fancy cars they import from abroad; the capital flight is enormous.
Thus, whilst Guyana’s mining experience has the look of being more favourable for domestic growth, the outcomes are very much the same and challenges very real. It goes to show that it does not matter whose hands the extractive industry are in: if there is little policy recognition of the implications of being one-dimensional economically, the resource curse will quickly become a reality.
Guyana’s resource curse has been particularly distressing for me. Unlike most mineral economies in sub-Saharan Africa, Asia and elsewhere in Latin America, the country’s gold mining industry is comprised entirely of indigenous and Brazilian small and medium-scale operators. I have dedicated my career to raising awareness of, and creating a ‘space’ for, these operators, the economic contributions of whom have been – rather strangely – neglected by donors and governments across the developing world for decades. In Guyana, however, successive governments have done just this: reserve land for their own small and medium operators, and not succumb to the pressures of international donors that have lobbied for the allocation of mineralized territories to foreign multinationals. As a result of these efforts, gold mining, backed almost exclusively by indigenous wealth, now generates over US$700 million in revenue annually in Guyana, making it by far the country’s largest industry.
The ‘results’ of this policy approach, however, appear little different to those of the developing countries that have fast become to focus of our lengthy tirades on the resource curse, few of which have much to show from the booming and sprawling large-scale mining industries that now populate vast sections of their landscapes. Although the anatomy of Guyana’s gold mining economy differs markedly to that of, say, Ghana or Tanzania, its salient developmental features do not, the most significant being what I often refer to as the ‘laziness’ of its institutions. The steady stream of revenues provided by gold miners seems to have made the government complacent. It appears to have shied away from supporting other sectors of its economy, the resulting Dutch Disease now most noticeable in the country’s sugar and rice trades, which have long been important sectors of the national economy. The former has suffered tremendously in recent years from a skills shortage and a change in global trade policies, which have resulted in a decline in exports to the European Union; the sustainability of the latter is precarious, at best, given how exports are determined heavily by an oil-for-rice agreement forged with neighbouring Venezuela, a country which experiencing a resource curse of its own.
There are a number of other disturbing similarities between Guyana’s own resource curse and the ‘epidemics’ of those which now engulf countries where foreign large-scale mining industries dominate the economy. The first is the inappropriate – or rather cavalier – attitude of its government officials toward economic diversification. Much like the policymakers I have encountered over the years in countries where foreign-controlled large-scale mining activities are now rooted, Guyana’s politicians seem to be in denial about the resource curse and therefore, unwilling to take proactive measures to avert it or prevent it from intensifying. This was quite evident during a conversation with the country’s Minister of Finance, in response to my comment about there being ‘no other industries apart from gold mining in Guyana’, responded, quite animatedly: ‘what are you talking about?...we [Guyana] have a burgeoning sugar industry and flourishing rice trade’, seemingly oblivious to the aforementioned problems plaguing both of those sectors. How can a problem be fixed if it is not acknowledged by senior-ranking officials?
A second similarity is the concentration of ownership and finance. Critics often draw attention to how, in the likes of Ghana, Tanzania and Peru, gold mining activities are controlled by a small group of multinational corporations which, as a result, wield a considerable amount of influence over the economy and local politics. But a similar dynamic persists in Guyana, the key difference, of course, being that the gold mining economy is controlled by a handful of indigenous elites, multimillionaires with lavish houses and cars, and who have made countless investments abroad. A final point relates to where revenues are going – or more specifically, where they are not going. The criticism of the large-scale mining multinationals operating in the developing world is that they repatriate most of their profits, and take advantage of lax regulations and policies to import equipment and supplies without having to pay duties and invest locally. The same problem, however, persists in Guyana, the difference being, of course, that it is the group of elite small-scale miners who are taking millions of dollars of gold out of villages such as Mahdia and reinvesting very little in the community. These miners certainly flaunt their wealth by erecting large houses and hotels but elect not to contribute to developing domestic value-added industries such as agriculture and manufacturing, which would certainly provide greater economic benefit to the country than the fancy cars they import from abroad; the capital flight is enormous.
Thus, whilst Guyana’s mining experience has the look of being more favourable for domestic growth, the outcomes are very much the same and challenges very real. It goes to show that it does not matter whose hands the extractive industry are in: if there is little policy recognition of the implications of being one-dimensional economically, the resource curse will quickly become a reality.
Wednesday, 10 October 2012
Stirring up the Mining Wok
It has been a while since I have made an entry here but the truth is, I thought I had covered mostly everything out there about artisanal mining. I thought I had seen it all in Ghanaian galamsey communities: child labour, mercury pollution, land degradation, crime. That is, of course, until I stumbled across something rather peculiar quite recently: a Chinese galamsey miner – no, wait ten, eleven…100 Chinese galamsey miners, working illegally in the community of Japa in the Western Region.
This is something that has been talked about quite extensively in the Ghana press for much of the past year. All over the country, Chinese, covered in dirt and armed to the teeth, can now be found digging for gold. Often, they are working with excavators and other heavy equipment, right in front of policemen and local government officers. They have even brought to a standstill Jeffery Sach’s Millennium Village in Bonsaaso, long portrayed by his much-beloved Earth Institute as an idyllic farming community, overtaking people’s plots and almost overnight establishing massive small-scale mining enclaves. Though the village was likely destined for failure anyway because of a flawed design and unrealistic aims and objectives (pushing people in a locality in the heart of a wider area built on nearly 300 years of gold mining into exclusively farming), the fact that the Chinese have had no qualms about overtaking an UN-funded project is indeed grounds for concern. After all, they are mining illegally.
Perhaps even more worrying than the lack of action being taken by the Ghanaian Government to address the growing Chinese presence in the country’s galamsey economy is the shortage of answers concerning how these foreigners have managed to set up shop in this context altogether. The basic questions we all have on our minds seem to be the least answerable at this stage: namely, how did they get here? and why are they flourishing? There are, of course, several rumours about, none of which is verifiable. The most believable is that Chinese were initially registering as mine service companies and, once securing the requisite documents, ‘entered the wild’ so to speak, picking up shovels and pickaxes en route to becoming the latest additions to the galamsey economy. This, however, does not explain why there continues to be a steady influx of Chinese into the country’s mining communities because Ghana has since cracked down on this, prohibiting Chinese from registering as service companies. It is now, allegedly because of this loophole, even reviewing its procurement law.
A colleague of mine who rarely does any meaningful research on the ground and, rather unjustifiably, seems to have something negative to say about everyone who has, claims that it is the politicians who are behind everything. It is probably the only logical thing he has said in his lifetime. He went on to state that the growing Chinese presence in the sector is ‘stirring up the mining wok’ (which I presumed at the time, given the laughs that followed, was some poor attempt at village level humour, using Chinese cooking and specifically a reference to what he claims is ‘the only good service they provide in Ghana’ – cooking food – as some kind of bizarre metaphor to underscore how the dynamics have changed in the mining sector as a result of their growing presence). But on this issue, my colleague, who knows next-to-nothing about small-scale mining in Ghana, seems to be spot on. How does a daily flight, direct from Abu Dhabi, ¾ filled with Chinese citizens connecting from Beijing or Shanghai, not raise any suspicion amongst policymakers? Possibly because they, and perhaps some corrupt officials in immigration, are facilitating their entry into Ghana.
This leads to a second question: how have the Chinese been able to stay for such lengthy periods in Ghana? There are obviously parties which are housing and supporting the Chinese in the rural areas where they are now working. All signs point to the country’s traditional leaders and certainly, on more than one occasion, contingents of Chinese miners have been seen sleeping and being fed lavishly in a paramount chief’s palace for extended periods. Ghana’s chieftaincy institution, which had long been a shell of its former corrupt and powerful self, stripped of lands by Nkrumah and its local authority heavily undermined by the decentralization project and District Assemblies implemented by Jerry Rawlings, have seen its power restore rapidly in an era of mining sector reform. Chiefs have emerged as crucial community liaisons, often brokering mining rights with parties of all shapes and sizes, the Chinese included. Their power in rural areas remains highly uncontested, which has likely led to situations where Chinese miners, in exchange for a share of output, are provided maximum protection by chiefs.
The growing presence of illicit Chinese mining activity is reducing opportunities for Ghanaian miners and causing significant community-level friction in farming areas. But why is nothing being done about this? There are whispers that a US$2.4 billion dollar development loan awarded by China to Ghana is forcing the government to turn a blind eye – that too many arrests of illegal Chinese operators could affect this lending and jeopardize donor relations between the countries in the future. This could explain why, quite regularly, scores of Chinese can be seen shopping at Shoprite, in the Accra Mall, shamelessly wearing nametags belonging to ‘Hansol Mining’, a company which is allegedly engaged in significant illegal activity in districts such as Amansie West.
The number of illegal Chinese-backed mining activities is increasingly rapidly in Ghana. But the next few months, a time when swift and immediate action will be needed to tackle this problem, will be a protracted period of inaction. Not wanting to lose any of what little popularity it has left in Ghana, the incumbent NDC Government, desperate to hold on to votes, will not risk upsetting any local-level community dynamics.
Who knows what Ghana’s galamsey economy will look like when – dare I say – Nana Akufo Ado is sworn in as the country’s next president in December.
This is something that has been talked about quite extensively in the Ghana press for much of the past year. All over the country, Chinese, covered in dirt and armed to the teeth, can now be found digging for gold. Often, they are working with excavators and other heavy equipment, right in front of policemen and local government officers. They have even brought to a standstill Jeffery Sach’s Millennium Village in Bonsaaso, long portrayed by his much-beloved Earth Institute as an idyllic farming community, overtaking people’s plots and almost overnight establishing massive small-scale mining enclaves. Though the village was likely destined for failure anyway because of a flawed design and unrealistic aims and objectives (pushing people in a locality in the heart of a wider area built on nearly 300 years of gold mining into exclusively farming), the fact that the Chinese have had no qualms about overtaking an UN-funded project is indeed grounds for concern. After all, they are mining illegally.
Perhaps even more worrying than the lack of action being taken by the Ghanaian Government to address the growing Chinese presence in the country’s galamsey economy is the shortage of answers concerning how these foreigners have managed to set up shop in this context altogether. The basic questions we all have on our minds seem to be the least answerable at this stage: namely, how did they get here? and why are they flourishing? There are, of course, several rumours about, none of which is verifiable. The most believable is that Chinese were initially registering as mine service companies and, once securing the requisite documents, ‘entered the wild’ so to speak, picking up shovels and pickaxes en route to becoming the latest additions to the galamsey economy. This, however, does not explain why there continues to be a steady influx of Chinese into the country’s mining communities because Ghana has since cracked down on this, prohibiting Chinese from registering as service companies. It is now, allegedly because of this loophole, even reviewing its procurement law.
A colleague of mine who rarely does any meaningful research on the ground and, rather unjustifiably, seems to have something negative to say about everyone who has, claims that it is the politicians who are behind everything. It is probably the only logical thing he has said in his lifetime. He went on to state that the growing Chinese presence in the sector is ‘stirring up the mining wok’ (which I presumed at the time, given the laughs that followed, was some poor attempt at village level humour, using Chinese cooking and specifically a reference to what he claims is ‘the only good service they provide in Ghana’ – cooking food – as some kind of bizarre metaphor to underscore how the dynamics have changed in the mining sector as a result of their growing presence). But on this issue, my colleague, who knows next-to-nothing about small-scale mining in Ghana, seems to be spot on. How does a daily flight, direct from Abu Dhabi, ¾ filled with Chinese citizens connecting from Beijing or Shanghai, not raise any suspicion amongst policymakers? Possibly because they, and perhaps some corrupt officials in immigration, are facilitating their entry into Ghana.
This leads to a second question: how have the Chinese been able to stay for such lengthy periods in Ghana? There are obviously parties which are housing and supporting the Chinese in the rural areas where they are now working. All signs point to the country’s traditional leaders and certainly, on more than one occasion, contingents of Chinese miners have been seen sleeping and being fed lavishly in a paramount chief’s palace for extended periods. Ghana’s chieftaincy institution, which had long been a shell of its former corrupt and powerful self, stripped of lands by Nkrumah and its local authority heavily undermined by the decentralization project and District Assemblies implemented by Jerry Rawlings, have seen its power restore rapidly in an era of mining sector reform. Chiefs have emerged as crucial community liaisons, often brokering mining rights with parties of all shapes and sizes, the Chinese included. Their power in rural areas remains highly uncontested, which has likely led to situations where Chinese miners, in exchange for a share of output, are provided maximum protection by chiefs.
The growing presence of illicit Chinese mining activity is reducing opportunities for Ghanaian miners and causing significant community-level friction in farming areas. But why is nothing being done about this? There are whispers that a US$2.4 billion dollar development loan awarded by China to Ghana is forcing the government to turn a blind eye – that too many arrests of illegal Chinese operators could affect this lending and jeopardize donor relations between the countries in the future. This could explain why, quite regularly, scores of Chinese can be seen shopping at Shoprite, in the Accra Mall, shamelessly wearing nametags belonging to ‘Hansol Mining’, a company which is allegedly engaged in significant illegal activity in districts such as Amansie West.
The number of illegal Chinese-backed mining activities is increasingly rapidly in Ghana. But the next few months, a time when swift and immediate action will be needed to tackle this problem, will be a protracted period of inaction. Not wanting to lose any of what little popularity it has left in Ghana, the incumbent NDC Government, desperate to hold on to votes, will not risk upsetting any local-level community dynamics.
Who knows what Ghana’s galamsey economy will look like when – dare I say – Nana Akufo Ado is sworn in as the country’s next president in December.
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