When/Why do countries improve the management of their natural resources? New 4 country study

Now I love Oxfam dearly but (you were expecting a ‘but’, right?) both as producers and consumers, we suffer from weak link coverTL; DR syndrome (too long; didn’t read). Not only that but we don’t always make the most of executive summaries.

Which is a shame, because some real gems often go unnoticed as a result. So allow me to pan through a recent 71 page Oxfam research report on ‘The Weak Link: The Role of local institutions in accountable natural resource management in Peru, Senegal, Ghana, and Tanzania’ and see what diamonds I can uncover.

Unsurprisingly, the report finds ‘a host of concessions and exemptions that mean the sector remains attractive to extractive companies, and compromises the ability of governments to capture revenues.’ It puts this down to a perfect political and economic storm:

‘First the implementation of structural adjustment plans in the 1980s and 1990s, which were pushed by the International Financial Institutions and which resulted from the preceding economic crisis. Second the slump in commodity prices in the 1980s and 1990s—which happened to be the same time that these countries were restructuring their economies. Finally, these countries had only recently transitioned to liberal capitalism and felt the need to guarantee the terms of the contracts they signed with extractive companies.’

So countries locked themselves into a range of bad deals for their hydrocarbons and minerals. They got the investment, but not the full benefits.

The report then looks at the various recent attempts to turn this around and finds that it’s much easier to shift the terms of contracts for new finds than existing one (fewer entrenched interests, greater civil society interest in how to spend the ‘new’ oil and gas revenues), that it’s much easier to do so in a time of rising prices than the current slump (when several good initiatives have been abandoned). And of course, whatever the progress on paper, actual implementation is a whole other thing.

Peru
Peru

Oversight mechanisms are undermined by a distorted balance of power in which executives are dominant, while parliaments and judiciaries are weak and/or coopted. Not only that, but in Tanzania and Peru, the privatization processes of structural adjustment have led to a ‘fusion of interests among the political and economic elite’ that acts as a roadblock to reform.

So what, if anything, can civil society organizations do in these situations? Here’s where the report gets interesting, and sometimes surprising.

Overall it is pretty sceptical about the results of all those ‘follow the money’ campaigns in which CSOs try to track the flow of cash from company to government and all the way down to local schools and hospitals: ‘As a process it is fraught with difficulty, while at the same time it is highly resource-intensive. Success is capricious, and even when it is achieved it does not appear to be transformative.’

Paradoxically, success is often easier to achieve where the energy is not sucked out by the time-consuming processes of transparency and accountability mechanisms, budget tracking etc. There ‘the efforts of groups working in the most constrained and repressive spaces have been the most innovative’. In Senegal, for example:

‘CSOs have been able to leverage greater civilian participation in the local budget process through the creation of “race to the top” mechanisms—such as offering certification for municipalities that agree to promote citizen participation in the budget process, even though this is not legally mandated.’

The report draws five overall lessons from its case studies of successful reform:

  1. Structural economic factors matter. It was the mineral price boom, driven by structural features in the global
    Ghana
    Ghana

    economy, that led to effective calls for a review of the mining policy in Peru, and similar calls in Ghana and Tanzania

  2. General political appetite for reform is most frequently manifest at election times (and other critical junctures such as leadership successions or crises), and in their aftermath.
  3. Reforms of the sort described in this section can be promoted by both international and domestic civil society as well as by donors and other international institutions. From donor-driven changes in institutional rules in Tanzania, to the combined efforts of the International Budget Partnership and local civil society in Senegal, it is clear that different actors all constitute effective levers of change (especially when they work together).
  4. Accountability reforms that are initially disappointing can lay the basis for subsequent progress. In Ghana and Tanzania, outcomes of institutional reforms were initially thought to be disappointing, but went on to be strengthened as a result of further pressure from civil society. I’m picking this message up in lots of conversations – a simplistic division between ‘success’ and ‘failure’ is not that helpful, when one can morph into the other over time. How do we distinguish between a total, unmitigated failure, and one that may produce unexpected success in the future?
  5. Not all efforts at reforming accountability need to be focused on creating new institutions; in many instances, existing institutions can be effectively strengthened. i.e. activists often need to engage with the messy and uninspiring realities of existing bodies, rather than succumb to the lure of demanding shiny new institutions.
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