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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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