Reviewing selected African countries and how they perform in governing their mineral resources.
Ineffective governance frameworks continue to be a major roadblock in Africa’s solid minerals sector. A myriad of challenges is encountered, spanning areas such as policy and legal framework, stakeholder engagement, revenue management, transparency and accountability, and environmental risks. Addressing these challenges will promote a more sustainable mining community and facilitate comprehensive socio-economic development in the continent.
A thriving solid minerals sector will advocate and act on the foundation of responsible mining, which is defined as mutual involvement and respect for all stakeholders, conscious environmental impact awareness, and a fair operating revenue division system. Poor governance, however, remains a long-standing issue across African nations. Though Africa possesses a wealth of mineral resources, it faces the paradox of plenty, plagued by ineffective exploitation and management of its resources to reap benefits.
The Natural Resource Governance Institute (NRGI) is an independent non-profit organization that is responsible for conducting assessments on the performance of countries’ extractive industries and publishing the Resource Governance Index (RGI) reports. RGI critically assesses and ranks eighty-one resource-endowed countries on a score scale ranging from 0-100 and is based on how these countries govern resources in their extractive industry. It is a composite score calculated based on the scores of three key metrics.
The first metric, value realization, spans the quality of governance around exploration, production, environment conservation, collection of revenue, and state-owned enterprises (SOEs). The second metric – revenue management – assesses national budgets, subnational resource revenue sharing, and establishment of wealth funds. Lastly, the third metric – enabling environment – looks into accountability and effectiveness of government, rule of law, tackling of corruption, absence of violence, and political stability. A score of less than 30 is categorized as “failing”, scores from 30-44 are considered “poor”, a score in the 45-59 range falls in the “weak” category, and values from 60 to 74 are described as “satisfactory”. A score above 75 is “good”, and a country recording such will be seen as having effective laws and practices.
A 2017 RGI report revealed that African countries recorded low composite RGI scores and struggled to effectively govern their natural resources, most of them falling in the weak category. No African country received a “good” score and seven out of the ten identified weak RGI-scored countries were in Africa (Libya, Eritrea, Democratic Republic of Congo (DRC), Zimbabwe, Sudan, Equatorial Guinea, and Mauritania). Botswana was the only African country recording a “satisfactory” score.
Comparative analysis may be conducted on available RGI score data collated on the mining sector from the years 2017 and 2021 providing valuable insight into the performance of certain African countries. For the year 2017, Botswana received the highest composite RGI score of 61, deemed “satisfactory” amongst African countries. Ghana, Morocco, Tanzania and Tunisia all received weak scores of 56, 52, 49, and 46 respectively. Guinea and DRC received poor scores of 38 and 33 respectively. Mauritania, Zimbabwe, and Eritrea received failing scores of 29, 29, and 10 respectively.
For the year 2021, Botswana was unscored, while Ghana and Guinea improved their scores with satisfactory RGIs of 69 and 62 respectively. Morocco’s score decreased to 49, while Tanzania and Tunisia increased their scores to 58 and 50 respectively. DRC slightly improved its score by recording an RGI of 36, while Mauritania, Zimbabwe, and Eritrea were unscored in 2021.
Data on individual scores (mining) for the RGI three key metrics are available for Ghana, Morocco, and Tanzania for the years 2017 and 2021. Ghana’s assessment in 2017 was mainly focused on gold mining, given its 14 per cent contribution to mineral exports. Ghana received a “satisfactory” score of 70 for the metric, enabling environment. The assessment however revealed poor revenue management, with a “poor” rated score of 37.
A key finding was that revenue from oil and gas surpassed that of mining, most likely due to more focus being placed on hydrocarbons as more and more oil deposits were discovered. It also received a “satisfactory” score of 61 for value realization, owing to average performance in taxation and local impact management. Ghana improved its metric scores in 2021, recording 83, 54, and 71 for value realization, revenue management, and enabling environment respectively. Value realization was significantly higher in 2021 due to improved local impact management. Revenue management moved from the “poor” to the “weak” performance band due to the adoption and adherence to fiscal rules concerning national budgeting. The enabling environment metric showed no significant increase but was still in the “satisfactory” band.
Morocco’s 2017 evaluation recorded metric scores of 56, 35, and 64 for value realization, revenue management, and enabling environment respectively. With its “satisfactory” enabling environment score, the same could not be said for revenue management, which focused primarily on phosphate mining. SOEs are known to have sole control of the phosphate mining sector, which accounts for the average but “weak” value realization score.
In 2021, Morocco’s recorded values for value realization, revenue management, and enabling environment were 40, 40, and 68 respectively. The enabling environment metric showed slight improvement as a result of satisfactory corruption control and prioritizing open data for transparency and accountability. While Morocco’s SOEs remained dominant in the local economy, they failed mainly in the area of mining licensing, resulting in a significant decrease in value realization scores. Revenue management slightly improved, owing to consistent disclosure of the national budget and debt records. However, more work is to be done in terms of governance frameworks.
Tanzania recorded metric scores of 54, 40, and 53 for value realization, revenue management, and enabling environment respectively in the 2017 RGI assessment. The assessment highlighted a need for reform in corruption control and government effectiveness to improve the “satisfactory” score of the enabling environment metric. The non-existence of an external body to audit compliance with public finances and budget revenue may have resulted in the “poor” score rating for revenue management. Subcomponent scores also contribute to individual metric scores, with Tanzania, receiving a “weak” score for licensing and a “poor” score for the performance of SOEs. Taxation, however, received a “good” score contributing to the overall “satisfactory” score recorded for value realization.
For the 2021 RGI report, improvement was seen in value realization and revenue management, whereas enabling environment maintained its previous score, scores being 60, 60, and 53 respectively. Revenue management score improved primarily due to effective management of revenue income, which resulted from advancements made in national budget disclosure. Value realization was “satisfactory” but could have been improved with stronger local impact and SOE governance. Government ineffectiveness persisted, with no change recorded for the enabling environment metric.
In conclusion, Africa’s solid minerals sector has huge promise but the existence of weak or uncooperative governance frameworks poses a great hindrance. The RGI evaluates 81 countries based on the mining and oil and gas sectors. So far, reports expose Africa’s ongoing struggle in achieving and maintaining “good” scores. It must however be noted that data may only be available for countries where NRGI is operating, where there exists a significant extractive industry contributing to economic growth, or specifically for countries with a thriving mining industry driven especially by a special mineral directly impacting the economy. As a result, a comparative analysis may be limited to only a few countries meeting these criteria, reducing the scope of the evaluation.