How does an INGO like Oxfam help Africa get a good deal from its Natural Resources?

June 26, 2019

     By Duncan Green     

I recently caught up with Gilbert Makore, Oxfam’s Extractive Industries Adviser in East Africa recently. You can listen to the 25m podcast for more nuance, but here are some extracts:

The East African moment: ‘The region sits at a very exciting point – it’s one of the emerging oil and gas producers in the world, with significant gas resources in Uganda, Tanzania and to a lesser extent, Kenya.

That gives us the opportunity to get it right. Normally we are coming in decades after production has started, so you’re trying to correct things that were not done well at the beginning – environmental and social impact and so on. But none of the East African countries has yet shipped its first barrel of oil, so there’s an opportunity to put in place the right legal framework, to ensure that communities are fully consulted and that governments get their full and fair share. But that’s not to say it’s easy.

Local Level work: our work straddles two ends: the revenue side – how do you secure the revenue that governments and hopefully citizens get? The other side is the social and environmental side. Companies tell us they’re not worried about the technical aspects of mining, that’s what they’ve done all across the world. What they struggle with is things like consultation – they have no experience in that.

So at community level how do you ensure that environmental and social impact assessments are not just box-ticking exercises; that broader human rights are assured, for example on water? Where communities live in areas that are already quite dry, and the companies need a lot of water to pump the oil out, how do you manage that potential conflict, get the best deal for the community. [For more on that see Gilbert’s moving account of his recent visit to a drought-ravaged, gas rich area of Northern Kenya].

Best practice is now that companies sign agreements with communities setting out the benefits they will deliver. But communities often lack legal advice and support – that’s where we come in.

Finally Free Prior and Informed Consent (FPIC) is an emerging standard and pretty much best practice for the oil majors. International banks accept that you need the consent of the community before you come in, and that needs a free, genuine process, free of bribery or coercion or so on.

Do I trust the companies to do this? It’s messy. One of the issues is representation – who speaks on behalf of the community. Most African communities have some structure, but best practice is that even if you talk to community leaders, you still have a responsibility to ensure broader consultation. You need to make sure that whatever you are telling a community elder reaches others, even if local political dynamics means it’s not easy. If the community is divided, you have to go with the majority. I have never seen a community split 50/50; more often you have dissenting voices but the majority sits on one side of the fence.

Even if the process is difficult and lengthy, it unpacks a very complex sector for the community – mining companies call it the ‘social license to operate’.

What is Oxfam’s role? It varies. The big companies, (some of them), recognize the value of the work we do.

These are the things they struggle with. They may disagree with some of our strategies, but the big listed companies are increasingly open to dialogue and learning. There is some gravitas that comes with being an international organization, with a well-known brand and decades of experience on this issue. It’s easier for us to get a meeting with a Tullow or a Total – we open up opportunities for access for local organizations. Most of the big companies are registered in Europe or North America so it helps being able to engage with their HQs in France or Canada.

Chinese oil companies: it’s a tough one. It’s easier for oil and gas, because you normally have joint ventures with non-Chinese companies, and that gives you a way in. But there’s a huge sector of Chinese mining companies. There we’ve seen some success going through the Chamber of Mines, both in the country or the global Chinese Chamber. But often the points of leverage are just not there, eg mandatory disclosure, where European companies are required to make payments to local governments. Any actor really has to be politically smart, use different tactics for different companies, do more community organizing in one case, in another find entry points within national governments. Sometimes we say governments are completely aligned with Chinese interests, but governments are not monoliths. You need to have your ear on the ground and do smart advocacy.

The other way is to look at international initiatives such as the Kimberly process (diamonds) or the EITI. They can give you points of leverage with Chinese companies.

Climate Change: should Africa leave it in the ground? Some of the assets will be ‘stranded assets’ – they will not be developed. But for projects that are already on stream, it would be very difficult to make the argument politically for most African countries that we should leave those resources in the ground. They say ‘we haven’t caused the problem and now we’re being asked to pay. We have a resource, we need to pay for schools and hospitals’.

It’s very difficult to argue against that unless you have another development alternative, and renewables won’t generate the big windfall revenues that a new oil find will. But renewables also need minerals (eg rare earths for batteries), so the extractive sector will stay play a key role even in a clean energy future.