The document discusses current approaches to promoting legal mineral trade in Africa and their limitations. It analyzes sanctions and embargoes, certification and assurance schemes, and transparency initiatives that aim to address issues like militarization, weak governance, and informalization associated with mineral trade. However, the document argues that these solutions have had limited effects. Specifically, sanctions are difficult to implement and harm local economies, while certification and transparency alone do not solve deeper problems like corruption. Alternative approaches are needed to better support legal mineral trade and development in Africa.

1. contact@rcsglobal.com
‘Promo1ng
legal
mineral
trade
in
Africa:
new
policy
approaches’
Interna(onal
Policy
Conference
–
Compe((veness
and
diversifica(on:
Strategic
challenges
in
a
petroleum-­‐rich
country
(Ghana
Ministry
of
Trade
and
Industry
&
UNIDO)
Accra,
14-­‐15
March
2011

2. 2
/18
RCS
Overview
• RCS
is
a
global
research,
advisory
and
evalua:on
consultancy.
• We
work
with
public
and
non-­‐profit
ins:tu:ons
and
the
private
sector
to
beCer
understand
risks
and
opportuni:es
in
the
natural
resources
and
agriculture
sectors.
• Much
of
our
work
has
looked
at
the
rela:onship
and
interplay
between
investment,
governance,
development
and
conflict
in
the
natural
resource
sectors
in
sub-­‐Saharan
Africa.

3. • We
believe
that
Africa’s
future
is
one
of
promise
• Mineral
trade
should
be
an
opportunity
for
development,
although
oJen
associated,
especially
in
the
Great
Lakes
region,
with:
– Militarisa:on
– Weak
governance
structures
– Informalisa:on
• Some
countries’
poor
management
of
natural
resources
has
too
oJen
contributed
to
the
‘resource
curse’
and
supported
poli:cal
elites
more
than
the
popula:on
3/18
Promo1ng
legal
mineral
trade
in
Africa

4. 1. Current
proposed
solu:ons
to
help
legal
mineral
trade
are
focused
on
mi:ga:on
of
nega:ve
rather
than
promo:on
of
posi:ve:
– Sanc:ons
and
embargoes
– Due
diligence
and
cer:fica:on
schemes
– Transparency
ini:a:ves
2. Why
and
how
are
current
proposed
solu:ons
limited?
What
else
is
required?
4/18
Structure
of
the
presenta1on

5. • Interna:onal
trade
restric:ons
and
individual
sanc:ons
are
oJen
iden:fied
by
the
interna:onal
community
as
means
to
demilitarise
mineral
trade.
• Examples:
– The
UN
Security
Council
sanc:ons
over
en::es
suppor:ng
armed
groups
in
the
DRC
through
their
mineral
purchase.
– The
general
NGO
support
of
sanc:ons
(e.g.
Global
Witness).
5/18
Proposed
solu1ons:
Sanc1ons
and
Embargoes

6. • Usually
designed
to
assure
the
origin
of
a
mineral
and
its
chain
of
custody.
• OJen
iden:fied
as
a
solu:on
to
prevent
military
groups
from
benefi:ng
from
mineral
resources
and
to
ensure
‘conflict-­‐
free’
mineral
trading
chains.
• Examples:
– The
Kimberley
Process
Cer:fica:on
Scheme
(KPCS)
– The
Cer:fied
Trading
Chains
(CTC)
ini:a:ve
6
of
18
Proposed
solu1ons:
Cer1fica1on
and
Assurance
Schemes

7. • Iden:fied
by
donors,
civil
society
and
policy-­‐makers
as
central
to
revenue
transparency
in
extrac:ve
sectors
• Revenue
transparency
seen
as:
– Helpful
for
accountability
which
is
helpful
for
good
governance
– The
first
step
to
ensuring
people
benefit
from
resource
wealth
– Helpful
for
investors
to
avoid
socio-­‐poli:cal
risks
• Examples:
– The
EITI
– The
Dodd-­‐Frank
Wall
Street
Reform
and
Consumer
Protec:on
Act
Sec:on
1504
7/18
Proposed
solu1ons:
Transparency
Ini1a1ves

8. • Individual
sanc:ons
are
ineffec:ve
because:
– The
informal
mineral
trade
is
oJen
big
enough
to
absorb
all
the
trade
– Operators
are
replaceable
– Na:onal
authori:es
do
not
implement
the
sanc:ons
• Bans
can
be
harmful
because
they:
– Create
direct
incen:ves
for
further
informalisa:on
of
trade
– Deprive
all
stakeholders
along
the
value
chain
• E.g.:
Ghana’s
Akwa:a
area
in
2006-­‐7
8
of
18
Limita1ons
to
sanc1ons
and
embargoes

9. • The
Kimberley
Process:
– It
aims
at
verifying
the
origins
of
diamonds
but
has
difficul:es
doing
so.
– Instead,
the
KPCS:
• Formalises
the
diamond
trade
at
the
point
of
export
• Imposes
control
mechanisms
that
are
not
adapted
to
the
reali:es
of
the
ASM
sector
9/18
Limita1ons
to
cer1fica1on
and
assurance
schemes

10. • The
EITI:
– Is
insufficient
by
itself:
it
needs
to
be
combined
with
other
governance
reforms
and
capacity-­‐building
ini:a:ves
– Focus
is
only
on
revenue
disclosure
and
ignores
the
expenditure
side
–
which
is
absolutely
crucial
to
ensuring
genera:onal
benefit
from
natural
resource
wealth
– Once
a
country
gets
valida:on,
it
has
a
certain
protec:on
over
corrup:on
cri:cisms
when
in
reality
EITI
only
address
a
small
part
of
the
corrup:on
problem
10/18
Limita1ons
to
transparency
ini1a1ves

11. • To
summarise,
all
three
proposed
approaches
have
had
limited
effects:
– Sanc:ons
are
impossible
to
implement
successfully
and
have
severe
effects
on
regional/local
economic
development
– Cer:fica:on
schemes
have
unproven
link
to
preven:ng
conflict
– Transparency
ini:a:ves
alone
do
not
solve
corrup:on
11/18
Limita1ons
to
proposed
solu1ons:
summary

12. • Proposed
solu:ons
have
oJen
been
designed
to
meet
Western
consumer-­‐driven
standards
without
always
taking
into
account
local
reali:es
and
needs
of
African
states
and
businesses.
• There
is
a
‘:ck
the
box’
danger,
as
if
joining
these
schemes
will
solve
problems
of
natural
resource
management.
In
reality,
natural
resource
management
must
be
a
na:onal
project
led
by
the
government
and
ci:zens
for
the
benefit
of
the
country.
12/18
Limita1ons
to
proposed
solu1ons:
conclusion

13. • Natural
resource
management
must
be
led
by
Africans.
While
there
are
some
very
qualified
people,
there
is
a
tangible
capacity
and
knowledge
gap
• Capacity
building
ini:a:ves
are
necessary
– E.g.:
World
Bank
Mining
Sector
Assistance
Projects
in
the
DRC,
Cameroon,
Uganda,
Mauretania,
Burkina
Faso,
Sierra
Leone
– E.g.:
PROMINES
project
in
DRC
13/18
What
else
is
required?

14. • Solu:ons
should
be
African
generated
and
ini:a:ves
should
be
mul:-­‐stakeholder
• Policies
developed
for
states
and
businesses
should:
– Be
informed
by
an
assessment
of
how
natural
resources
sectors
func:on
on
the
ground.
– Be
underpinned
by
an
assessment
of
key
stakeholders
and
the
ins:tu:onal
infrastructure
of
the
natural
resources
sectors.
– Take
into
account
what
is
feasible
in
the
light
of
local
reali:es
and
capaci:es
in
the
short
to
medium
term,
while
fixing
aspira:ons
on
interna:onal
standards
in
the
long
term.
14
of
18
What
else
is
required?

15. • What
is
it?
– A
framework
that
helps
assess
the
exis:ng
power
structures,
ins:tu:onal
capaci:es
and
the
interac:on
between
business
and
poli:cs
in
a
specific
sector
such
as
mining
• How
does
it
work?
– Examines
interac:ons
between
stakeholders
at
each
stage
of
the
natural
resource
value
chain
• Benefits
– Help
secure
investments
– Helps
assess
and
mi:gate
risks,
and
make
more
effec:ve
the
engagement
with
local
communi:es,
government,
non-­‐state
actors,
civil
society
and
other
stakeholders
in
a
mining-­‐investment
project
15/18
RCS
tools
Poli(cal
economy
analysis

16. • What
is
it?
– Examines
the
effects
of
a
mining
project
on
the
economy
of
the
host
country
and
its
intended/unintended
social
consequences.
• How
does
it
work?
– Measures
changes
in
economic
growth,
employment
and
income
– Iden:fies
customary
rights,
cultural,
gender
and
labour
prac:ces
• Benefits:
– Builds
a
local
knowledge
framework
consis:ng
of
concerns
of
locals
with
the
investment
– Helps
develop
strategies
to
meet
local
concerns
and
build
local
support
– Helps
mi:gate
risks
for
investors
16/18
RCS
tools
Socio-­‐economic
impact
assessment
(SEIA)

17. • Promo:ng
mineral
trade
is
an
opportunity
for
development
for
Africa.
• Ghana’s
oil
sector
is
an
opportunity
for
the
country
rather
than
a
curse.
17/18
Conclusion:
Relevance
to
Ghana

18. Thank
you
for
your
a,en.on!
18/18
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contact@rcsglobal.com