Converting promise to prosperity in Guinea’s mining sector

I have the honor to be invited next week to Conakry, where the Guinean government will convene a national roundtable on responsible mineral development. The objective of this initiative is to foster a dialogue between mining companies, government institutions and Guinean citizens and communities around possible approaches to sustainable acceleration of mineral-based development.

Guinea is endowed with considerable natural resources, including iron ore, bauxite, gold and diamonds. Mining generated 279 million USD in government revenue in 2014, is responsible for 80 percent of Guinea’s exports, the direct employment of 10,000 people in the formal sector and more than 200,000 in small scale mining. However, Guinea is one of the world’s poorest countries. It ranks 182nd of 188 states on UNDP’s Human Development Index and the annual national income per capita is under USD 500.

This paradoxical coincidence of bountiful natural assets and stagnant economic growth is commonly referred to as the “resource curse.” It is most often the consequence of weak, opaque institutions and inefficient policy-making that allows a small elite to benefit from a country’s subsoil assets. But it is not a fait accompli. There are solutions and examples of sound management of natural resources, including in my own native Chile. At this stage of its political and development process, Guinea has an opportunity to break away from its past and use its mineral resources to sustain economic growth.

In the 2000s, Guinea faced daunting national governance challenges, with governance, in the categories of voice and accountability, rule of law, and corruption, deteriorating through the decade, as shown in the Worldwide Governance Indicators chart below. 

Much work remains, but in recent years the country has taken an encouraging direction. Key dimensions of governance have improved, including civil liberties since 2011 as measured by the Freedom House score. Guinea has taken steps to ensure a safer space for debate and citizen engagement (even as some major powers in the world are taking a different route).


And important strides have taken place in the management and governance of natural resources as well. The government set a high bar when it passed a progressive mining code in 2013; committed to the transparent management of the country’s minerals; and took important steps to level the playing field between investors through a systematic contract review process, cancelling mining rights in cases of corruption or poor performance. The government has taken a more strategic approach in developing the sector, sharing rail and port infrastructure between mining companies, and attracting investors. The ministry of mines is now developing a long-term strategy based on a shared mining vision between the state, operators, local communities and civil society organizations.

Setting an ambitious agenda for transparency and accountability does pay off, as my colleagues and I have witnessed around the world in recent years, from Mexico to Tunisia: it increases civic participation and trust in public institutions, and it helps to make better policies. But it also means that citizens and the international community have higher expectations, and thus commitments require follow-through lest this newborn trust be broken.

Based on what our experts at NRGI have observed in other countries, here are some key considerations for Guineans aiming to realize the ambitious promises of recent legal reforms and public commitments to transparency:

The mining code needs detailed regulations and consistent enforcement to have positive impacts. Guinea’s mining code contains many progressive provisions, including disclosure of contracts and conflicts of interests, and other measures such as a mandatory code of good conduct and anticorruption plans for mining companies. But what good are these measures if not implemented? The Resource Governance Index shows that Guinea has a very good score on de jure components—the legal provisions themselves—but not on the de facto components that measure implementation.

A one-time contract disclosure does not count as transparency. True contract transparency is a process by which the nature of mining rights and their allocation to investors is explained to the public in real time. Guinea was a global leader in 2013 when it published all mining contracts signed under previous codes. The mining ministry published more contracts in 2016—but not all. The final contracts reviewed and amended in the contract review process, which ended almost a year ago, have not yet been published. In the meantime, other countries have made progress: more than 30 countries now publish petroleum or mining contracts, including Sierra Leone, Tunisia and the Philippines. If the government of Guinea wants to remain a leader, officials should incorporate contract and license disclosure into regular administrative practice.

Thanks to EITI, Guinea can seize the opportunity for transparency reforms. The Extractive Industries Transparency Initiative (EITI) is a global initiative through which 51 country members have committed to improving transparency and accountability in the natural resource sector. EITI has a key role to play in transforming one-off transparency commitments into functioning government processes—not only with respect to mining contracts and licenses but also revenue collection, subnational revenue sharing, state-owned company management and public investments. As a member of the international board of EITI I often see countries missing an opportunity by considering the EITI process as a separate box-ticking exercise rather than an instrument for reform. Advances under the new global EITI framework offer the government of Guinea additional opportunities and tools to pursue its reforms in the mining sector, if it can just energize its relations with civil society and the private sector, and empower its own national EITI secretariat.

Next week’s event represents a great opportunity for Guinean citizens and their government to address these challenges in collaboration with supportive investors, and find the political momentum necessary for further governance progress in Guinea’s mining sector.

 

Daniel Kaufmann is the president and CEO of the Natural Resource Governance Institute and a non-resident senior fellow at the Brookings Institution. 

Find out more about Guinea at eiti.org/guinea

Image credit: Maarten van der Bent, 12 July 2013, 11:18, Conakry. Wikimedia Creative commons