Extractive Industries and Human Rights in Africa

Josua Loots Centre for Human Rights

Structure of lecture

• Why extractive industries?

• Business and human rights

• Extractive industries and human rights

• Recurring human rights impacts of EIs

• Relevant developments

Why extractive industries?• African context:

• 10% of the global oil reserves;

• 40% of the global gold deposits;

• 90% of the global chromium and platinum group deposits.

• Resource driven country:

1. Resources more than 20% of exports;

2. Resources more than 20% of fiscal revenue;

3. Resource rents are more than 10% of GDP.

Extractive industries as a potential development driver

• McKinsey predicts a global investment of approximately $17 trillion (USD) in oil, gas and minerals by 2030;

• Yet, natural resource-driven countries under perform, with 80% of them having per capita income lower than global average;

• 69% of people in extreme poverty are in resource driven countries;

• 540 million people in resource driven countries could be lifted out of poverty by effective development and use of reserves;

• From 2002 - 2012 poverty often increased in countries experiencing strong economic growth.

Why the negative impacts?• Instability - unsupportive business environment, political

instability, infrastructure bottlenecks, inappropriate fiscal regimes;

• Benefit sharing - often leading to nationalisation of the sector with devastating effects, corruption, mismanagement of public funds;

• Lack of economic diversification - leave economy exposed to volatility of resource prices (for example, 98% of South Sudan GDP come from oil);

• Weak institutional development - flood of money (especially through one sector) may encourage conflict.

African countries performing well in the resources value chain

• Namibia - income from extractive industries spent on infrastructure development;

• Botswana - managed to develop an attractive fiscal policy and competitive environment for extractive industries;

• South Africa - use extractive industries for local content development;

• Botswana and South Africa - managed to convert windfall from extractive industries into long term development opportunities.

Role of the state• Several different roles for government to play in natural

resource governance:

A. No state ownership (only taxes and royalties);

B. Minority investor - state has minority stake, but no involvement in management;

C. Majority owned, with limited operatorship - majority stake, but less than 10% of company is managed by state;

D. Majority owned operator - fully or majority owned by state, with more than 10% of operations managed by state;

E. Government monopolist - fully owned by the state.

Role of the state (cont.)• Role of the state determined by the resource in question -

states tend to be more involved in oil and gas production than other resources

• No model/ level of involvement more successful than another - absolutely depends on the context

• Three guiding principles for successful state participation:

1. Stable regulatory regime with clear roles for each player;

2. Competitive pressure between SOEs and private sector competition;

3. State needs to play central role in attracting world-class talent into the sector (employing the right people).

State duty to protect human rights• In addition to the role of the state in natural resource

governance, there is a positive duty on the state to protect human rights

• Must protect against human rights abuse within territory or jurisdiction

• Must take the appropriate steps to prevent, investigate, punish and redress

• Do so through policies, legislation, regulations and adjudication • Summarily - the state must facilitate and manage

natural resources, while also protecting human rights

Corporate responsibility to respect human rights

• Avoid infringing on the human rights of others • Refers to internationally recognised human rights -

those expressed in the International Bill of Rights and the ILO Declaration on Fundamental Principles and Rights at Work

• Due diligence in place to identify, prevent, mitigate and account for human rights abuses • Summarily - companies operating in the

extractive industry sector must do so while RESPECTING human rights

Responsible natural resource governance

• Tools, init iatives and instruments around extractive industries and human rights: • African Mining Vision • UN Guiding Principles on Business and Human

Rights • Extractive Industry Transparency Initiative (EITI) • Voluntary Principles on Security and Human

Rights (VPSHR)

African Mining Vision• Developed by African states • Sets out short and long term goals • Goal is to inform policy decisions • Sets out how mining can be used to

drive development in Africa • Hosted by UNECA • Success?

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UN Guiding Principles on Business and Human Rights

• Also known to some as the ‘Ruggie principles’

• Based on 3 pillars: • State duty to protect human rights • Corporate responsibility to respect human

rights • Right to access to remedy for those

affected

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UNGPs (cont)• Developed by the Special representative

of the Secretary General, and adopted by all states at HRC

• Has been pushed by global North and companies alike

• Implemented through national action plans on business and human rights (NAPs)

• Push for NAPs to be developed according to UNGPs

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Extractive Industries Transparency Initiative (EITI)

• Functions as an international organisation • Global standard to promote openness and

accountable management of natural resources • Full disclosure of taxes and other payments

made to government - transparent auditing mechanism

• Mainly a imed to f ight cor rupt ion and mismanagement of funds

EITI (Cont)• Voluntary approach - countries sign on the the EITI

standards out of own free will • First step is to become an ‘EITI Candidate’ country • Ultimately want to become ‘EITI Compliant’ country • Implemented locally by inter ministerial bodies or

special departments in government, and often enacted in law

• Overseen by the international EITI board • Success?

Recent MSI Integrity report on EITI• Summary of key findings: • Low levels of compliance and shortcomings in

content • Doesn’t provide sufficient internal governance

guidance • Governance processes are failing to ensure

independence and effectiveness of civil society • Absence of interested groups’ participation - eg.

affected communities • Lack of gender representation within involved

groups

Voluntary principles on security and human rights (VPSHRs)

• Multi-stakeholder initiative focusing on security and human rights

• Aimed at extractive industry role-players • Signatories required to go through rigorous

screening process when employing security providers

• Require security providers to sign onto international standards (ICoC etc)

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Use of international instruments• Voluntary in nature and therefore not

enforceable at a judicial forum • Follows the ‘name and shame’ approach • H a s b e e n c r i t i c i s e d b y s o m e , a n d

commended by others - generally divided along 1st and 3rd world lines

• Big push globally for a binding instrument, that would encourage states to follow human rights responsible approach to governance

Treaty process• In 2014 the HRC adopted two resolutions

referring to a binding treaty on business and human rights

• Tabled by Ecuador and South Africa • Cal ls for the establ ishment of an

intergovernmental working group to elaborate the possibility of a binding treaty on business and human rights

Possible outcomes?• Still very early in the treaty process - IGWG

to be established in July 2015 • Support for the treaty will very much

determine on the content of the instrument

• Peoples’ treaty - process of creating groundswell, mustering support, and receiving mandate from communities

Polarisation of debate• Very clear that governance of natural

resources (and other industries/ sectors) in Africa does not adhere to human rights principles

• UNGPs - voluntary in nature, pushed by global North

• Treaty process - potentially binding, pushed by global South

• Q: Why is this problematic?

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Activity• Divide into groups and discuss the following: • What are common human rights related

issues in the extractive industry activities in your country?

• How does this relate to natural resource governance? (ie, what/ where are the gaps that cause these governance gaps?)

• How can the governance gaps be addressed?

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Common EI human rights impacts in Africa

• Community participation and representation • Right to Free, Prior and Informed Consent - indigenous

peoples’ dilemma • Private military and security providers • Benefit sharing • Environmental degradation and pollution • Restriction of movement • Large scale land grabbing • Labour related matters - minimum wages etc. • Lack of gender perspective in activity planning

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Conclusion• Current existing instruments to assist or support

governance of natural resources are voluntary in nature

• Focus on and reiterates existing legal obligations and frameworks

• Therefore requires political will to make things work at domestic level

• Can be supported by academics and civil society through strategic engagements and advocacy

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