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MALI: Country must work to avoid the "resource curse"

Reuters
February 2nd, 2007

Sambala Macalou, mayor of Sadiola village in western Mali where the South African gold mining company AngloGold Ashanti operates, thinks the company is short-changing the community and ignoring its needs.

"We have many problems - the new site for the village is not good. It needs to be better equipped, more people need jobs, but the mining company doesn't listen to us," he said.

Other Malian nongovernmental organisations have accused the company of overstating production costs, an essential factor in determining how much profit goes to the company, and how much to the national and local governments.

But Madani Diallo, AngloGold's country manager, disagrees. He told IRIN the company is "trying its best" to improve the communities and the country it works in.

"We are doing things," said Diallo.

He cited a radio station for villagers set up near AngloGold's mines, the company's collaboration with international development agencies, and the publishing of data about AngloGold's revenue streams in Mali as examples.

While admitting the company "might not be perfect", Diallo said it does everything the Malian government requests, and that it cannot be held responsible for what happens to the revenue after it's paid.

"We pay our taxes and whatever else is asked of us. We are not the only responsible party here - communities and the government have to play their part, and right now we are the only ones doing anything," Diallo said.

The disagreement over who's to blame for Sadiola's problems strikes at the heart of what the NGO Oxfam (America) believes is wrong with the way Mali's government is currently managing its revenues from the country's billion-dollar gold mining industry.

In a report on Mali's gold mining industry released in the Malian capital, Bamako on Thursday, Oxfam says there is little accurate data on revenues or the original agreements drawn up between the Malian government and mining companies that would explain what local communities are entitled to or allow oversight of how payments match up to commitments.

The report 'Hidden treasure: in search of Mali's gold mining revenues' concluded that: "There is not sufficient disclosure in an understandable form for citizens or civic groups to determine whether they are indeed benefiting as they should according to current law in Mali."

Raising the stakes

Mali's problems are not just confined to villages around gold mines.

According to the United Nations Development Programme (UNDP) Human Development Index, which ranks counties according to per capita income but also life expectancy, and access to health and education, roughly 70 percent of Malians live below the extreme poverty threshold of US$1 income per day.

Just 27 percent of men in the landlocked, semi-arid country can read and write, and less than 12 percent of women. Ranked as a "highly indebted poor country" by international financial institutions, Mali will need millions of dollars in international aid in 2007 to keep its struggling population afloat, according to the UN's 2007 West Africa funding appeal.

While Mali's development indicators have stagnated, rising global commodity prices mean the country's revenues from gold have risen at a fast clip, surging from 2.9 percent of GDP in 2002 to 12.7 percent by 2004, the last time data was available, according to Oxfam.

Gold already accounts for 65 percent of Mali's exports, dwarfing its former economic bedrock cotton, which declined from 61 percent to 22 percent in the same period because of subsidies in America and Europe and inefficiencies. Some 64 mining companies have active mining and exploration projects in Mali.

And raising the stakes for understanding what the government does with its cut of revenues, oil exploration companies from Australia, China and Algeria are currently scouring Mali for an oil seam that geologists say could potentially rival the 1 billion barrel oil field in Doha, southern Chad. That oil will earn $2.5 billion for Chad and neighbouring Cameroon over the next 25 years, according to the World Bank.

If a significant petroleum discovery is found in Mali, analysts say a pipeline stretching across the vast Sahara desert to link the field to Europe could be a possibility. Oil has already been discovered in neighbouring Mauritania, while Senegal and Guinea to the south are also in the exploratory phase.

Obstacles to come

Mali has received a relatively clean bill of health for corruption, media and political freedom, reflected in its being selected to receive US $460m dollars from the US government's Millennium Challenge Corporation (MCC) development fund.

The missing link between revenues and development, according to Oxfam, is a strong civil society to interpret and monitor the data, and hold national and local decision makers accountable for meeting the country's needs.

"Even if the information is made available, many people here cannot read and most don't know their rights under the mining code," explained Mamadou Biteye, Oxfam America's West Africa regional director. "NGOs need to sensitise people, bring information into communities, and then take people's concerns to decision makers."

Without that advancement, Biteye told IRIN he is sanguine about the chances for Mali's natural wealth to translate into improvements in the short-term. "We do not deny the potential of mining, but think that to make it work to improve people's lives, the money has to be managed in a responsible way," he said.

"That means taking people's concerns into account when negotiating contracts, making those contracts public for people to monitor, holding mining companies accountable for their impact on the environment, and making revenue and management processes transparent to be sure people are able to participate in decision making," Biteye said.

Government receptive

In his opening address at the Oxfam report's launch on Thursday, Mali's minister of Mines, Energy and Hydraulics said: "Information must not just exist, it must be available, distributed and interpreted. Transparency is fundamental."

With massive national wealth perhaps just around the corner, the minister said he accepts the premise of the Oxfam report and the need for better information sharing about what the government is doing with the country's money.

Transparency analysts at Oxfam say Malian officials have indicated the country will announce its intention to join the global Extractive Industries Transparency Initiative (EITI) later in February.

The EITI is a global standard for reporting revenues from mining, oil and gas exploration in developing countries. It requires the full publication and verification of company payments and government revenues to improve transparency and accountability. British Prime Minister Tony Blair launched the initiative at the World Summit on Sustainable Development in September 2002.

But Ian Gary, Oxfam America's extractive industries analyst, told IRIN that while the EITI is a step in the right direction, joining it is only half the battle.

Pointing to Nigeria and Gabon, both major oil producers which have signed up to the EITI but continue to languish among the least developed countries in Africa, Gary cautioned that "transparency risks becoming a fad if people simplify that notion, or use it as a silver bullet to solve development problems".

"If transparency initiatives are not accompanied by rule of law, a system where journalists can publish information and civil society can act on it, transparency becomes a sterile initiative. It's not something that can fuel good governance on its own," he said.



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