My interview with Mr. Ingram from NSI, published in 2012 The Rising Africa magazine
As
the North-South Institute prepares for the NSI Ottawa Forum on Governance of
Natural Resources for African Development, in May 2013, The Rising Africa talked to the former special representative of
the World Bank to the United Nations and the World Trade Organization, and the
current President of The North South Institute, the leading development think tank
in Canada, Mr. Joseph K. Ingram.
Our editor Marje Aksli visited Mr.
Ingram in his office in Ottawa, and asked what the biggest challenge in
Africa’s development is.
We
all know that Sub-Saharan African economies are growing at an exceptional rate,
and that the narrative of Africa is changing for the better. That is important,
and I am not going to repeat their successes here. Yet in spite of these
positive changes the biggest challenge in Africa remains its prevailing poverty
and growing inequality. Most public policy experts would say that the most
important factor in reducing inequality is providing meaningful employment
opportunities to a growing youth population. Africa has serious problems with
unemployment, even in the fast growing economies. Much of the unemployment is attributable
to a huge youth surge – 60 percent of the total population in Sub-Saharan Africa
is under the age of 30. This creates very high dependency ratios. South Africa,
for example, has extremely high youth unemployment even though they have a relatively
skilled labour force compared to other African countries.
How do you comment on some studies
which claim that the younger the population, the lower probability that the
country is democratic?
That
theory is inconsistent with the fact that the number of democracies in Africa has
risen from 8 to 23 in the last decade. Look at what has happened with the Arab
Spring! It is largely young people who have brought about democratic
change. For the moment, it may not
always be change that we like, but it is the first step towards an enduring
democratic system. A young population is
a source of economic growth – you can’t have growth without adding to the
labour force and increasing skill level of that labour. Also, history and
empirical evidence show that with increased education there is increased demand
for greater transparency and accountability, basic building blocks of
democratic development.
So what do we know about the youth
surge in Africa?
We
know that if you do not meet youth’s expectations, there are going to be
political problems, and a breakdown of social cohesion producing all kinds of
negative outcomes including social discontent, surge in migration patterns,
contestation over scare resources, extremism and religious fundamentalism. Groups
take advantage of these problems to create challenges to the state. We are
starting to see manifestations of that that fundamentalism in both the Maghreb,
Somalia and the Sahel: in northern Mali, and even in Nigeria where religious
violence has grown.
Is Africa’s challenge of jobless
growth unique in the global scene?
The
issue of jobless and job-poor growth is not unique to Africa: it is a problem
we share globally, though not with the same outcomes. The U.S. and Canada are
also experiencing the growing inequality and high levels of under and
unemployment But clearly its outcomes are more acute in Africa where
socio-economic conditions are much worse to begin with. Additionally, Africa
has relatively weak political institutions. That said, there are significant improvements
in the overall quality of governance. We
are talking about a continent with 54 countries. Yet as we all know, democracy is fragile, as
recent events in Mali have shown. Africa still has a legacy of corruption to
deal with, as revealed by the indexes produced annually by Transparency
International.
What research has NSI done in the area
of governance of natural resources?
For
almost a decade NSI has been doing field research on the subject of natural
resource governance primarily in areas inhabited by first nations people in
Canada and aboriginal communities in Latin America. Based on our findings we are
increasingly shifting the focus of our research to sub-Saharan Africa. Our goal
is to study the relationship between governance and the economic benefits of extractive
activities. Natural resources
exploitation is important for all countries, and the wealth generated is critical
to host governments, local communities and their populations. Such resources should be exploited in a way
which produces a win-win-win outcome: a win
for the host governments, for the local communities and for the mining
companies.
What research projects does NSI work
on?
We
work very closely with two global initiatives. One is driven largely by the African
Union and UN Economic Commission for Africa. Their African Mining Vision is an
attempt to create a framework – standard setting for how African governments and
investing companies should behave, and what the implications might be for home
governments like Canada. A second initiative we have been involved with is led
by one of the world’s leading development economists, Prof. Paul Collier of Oxford University This
initiative, the Natural Resource Charter, is also an attempt to create a set of
regulatory principles by which host governments and mining companies would
operate so that the exploitation of extractives as well as other natural
resources, is done in an economically, socially, and environmentally
responsible way producing the desired win-win-win outcome.
What should the companies do in a
field of CSR when the governance is weak and civil society is not strong yet?
Let
me start by explaining how we at NSI are planning to proceed in support of
these global initiatives. The research we are going to undertake has several
components, including the role of the private sector, the emerging powers, and
going beyond CSR. We are also concerned with the impact that Canadian
investments will have on long-term Canadian competitiveness and economic growth
and poverty reduction in Africa. We have an interest in Canada being
competitive as an investor in natural resources but at the same time we are
also interested in how best that investment can enhance higher and more
equitable growth outcomes.
In
this context, we are also looking at the role of corporate social
responsibility, including its limitations. African governments too are
increasingly conscious of the limitations of self-regulation and in the context
of the Africa Mining Vision are seeking to address them. Based on NSI’s past
research in Canada and Latin America our conclusion is that CSR is a necessary
but not sufficient set of principles when
it comes to ensuring the win-win-win outcome I referred to earlier. Indeed a growing body of research,
both empirical and academic, recognizes that there are serious limitations with
relying solely on principles of corporate social responsibility. Although in
general, Canadian companies have behaved well globally - often better than
their competitors – a handful have not. And this has hurt both the Canadian
brand and the sort of development outcomes we are all looking for from natural
resource exploitation.
How has the limited scope of CSR hurt
Canadian companies?
Companies
have tended to rely on Corporate Social Responsibility principles alone. But because CSR is a form of self-regulation, companies
are often not accountable for whether they behave in a socially or
environmentally responsible manner, especially in countries where local
legislation and enforcement capacity are weak.
Is
reliance on self-regulated CSR going to produce the win-win-win outcome? What
are the consequences if CSR fails to do so, especially in a context of high income
inequality and poor socio-economic conditions? We have seen one possible
outcome recently in the events at Marakana in South Africa where the violence
in one mine has escalated and spread more widely creating a serious constraint
on the country’s potential for economic growth. Incidences of violence have
increased in frequency not only in Sub-Saharan Africa but also in parts of Asia
and Latin America. While we recognise that CSR is necessary, we also need to
ask ourselves if principles based on self-regulation are sufficient. Or do we
need to look beyond CSR at more regulated forms of behaviour?
What direction is Africa moving in?
At
this point it would appear that the work of the African Union and African governments
is moving in the direction of stronger global standards and regulation. This
may be in part due to the demands of a growing civil society in Africa demanding
greater transparency and accountability.
The members of the African Union are cognisant of this important
development which comes with democratic governance.
Is this what the forum you organize
in May is about?
The
Forum we plan to host in May of 2013 is titled “The NSI Ottawa Forum on Governance of Natural
Resources for African Development” and
we plan to have academics, CSO representatives and senior policy makers from
Africa, Canada, Europe and the U.S. participating.
The
Forum will examine not only how governments can best mobilize financial
resources from natural resource exploitation but also how those governments can
best spend the resources so that they contribute to the development of the national
economy and their local communities.
This
is vital for the long term development and stability of the country. It is also
vital for the mining companies themselves and their long run competitiveness.
Their capacity to get contracts in the future will increasingly depend on how
they are perceived both by host governments but also by the local communities.
So, you say that ...
...
the more responsibly the companies behave, the more they consult with the local
communities, the more positive the outcome will be in terms of strengthening their
brand vis-a-vis their competitors.
But what if some investors buy up
mining sites putting cash on the table, exceeding three-four times the market value?
Certainly
this sort of thing happens but if that money is used for investment, to build
infrastructure locally or to invest in adding value through local processing - rather
than just shipping the raw minerals out – while creating more employment
locally, this is going to help. This is what Canadian companies need to be
doing with greater frequency, as well as talking to the local populations and
taking their views into account before making investment decisions.
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