After suspension of oil and gas exploration licences in Malawi what happens now?

Anglo American Corporation was founded in Johannesburg in 1917 with £1 million (what today would have been £75 million, adjusting for inflation according to one inflation calculator).

AngloAmerican

It has since grown into a publicly traded behemoth with a market capitalisation of £31.2 billion and revenues of £29.3 billion (2013). It’s headquarters is now in London and the company is now known as Anglo American Plc, the fourth largest mining company in the world.

Although a net ‘loss’ of $961 million was declared in 2013, Anglo American is undoubtedly one of the big boys in the industry. To give you a scale of just how big they are, Anglo American Plc owns 85% of Luxembourg registered De Beers Investments, the holding company of De Beers, another prominent mining giant which is well-known in Southern Africa. But if that’s not convincing enough then how about this: Anglo American recently walked away from a gold interest worth $300 billion, after investing over $541 million it it. Apparently, the withdrawal is related to environmental risks, in particular the threat the Pebble Mine would pose to Alaskan Salmon (there’s even a campaign), although Anglo’s chief executive claimed the withdrawal was in fact a way of prioritizing “.. capital to projects with the highest value and lowest risks.”

Both Anglo American and De Beers have been criticised over their practices in Africa, including price-fixing, low wages (for Anglo American recently in Chile here) and lack of transparency. In particular, according to a Wikipedia entry:

In 1977, the company [Anglo American] demanded that the paper it owned, Rand Daily Mail, tone down its equal-rights support after exposing the murder of South African activist Steve Biko amid the subsequent government backlash. [words in parenthesis for clarity]

Further, a British charity, War on Want, published a report in August 2007 that accused Anglo American of profiting from the abuse of people in the developing countries in which the mining giant operates. According to War on Want:

“in the Philippines and South Africa, local communities threatened with Anglo American mines have faced severe repression in their fight to stay on their land, while in Ghana and Mali, local communities see little of the huge profits being made by AngloGold Ashanti but suffer from fear and intimidation and from the damaging impact of its mines on their environment, health and livelihoods”

In response, the company subsequently published a report defending itself and disclosing its finances.

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Malawi’s first president Dr Hastings Kamuzu Banda could have begun a state owned mining company in Malawi in the late 1960’s. He could have hired specialists from abroad, bought equipment from Britain or the US, begun prospecting for minerals, and by 1970 laid a foundation for a functional mining industry. The technology was available, and when Malawians had been travelling to South Africa in their thousands to work in the mines, labour would not have been a problem.

Banda didn’t begin a mining company. Instead he focussed on agriculture, which traditionally does not reap large profits as the sort which mining companies the likes of De Beers and Anglo American have been known to reap.

That decision could be a contributory factor further explaining Malawi’s economic woes today. While others were investing in assets and initiatives having huge long-term yields, Malawians were dabbling with agriculture and tobacco.

But to give him credit, while Dr Banda could have thought mining was not a priority to the newly independent country, he must have known that Malawi didn’t have enough capital resources to waste on ambitious projects whose very returns were unknown if not a gamble?

Further, having just broken away from the Federation of Rhodesia and Nyasaland, it’s understandable that while Britain could have been willing to extend Malawi a line of credit, as single-minded as Banda was known to have been, it’s inconceivable to think that he would have wanted to be constrained by such kind of favours from the very same people he so vehemently denounced. As he once declared: “We have no minerals. The soil is our gold mine”. In any case, what did a medical doctor who barely 10 years previously had been running a clinic in London know about the mining industry of the 1950’s and 60’s.

Having said this, would Dr Banda have started a state-owned mining company if he knew what treasures lay beneath the surface of Malawi’s geology? If he knew the value of such treasures on the international market?

Especially since there was information available as early as 1966 as to the Mineral deposits and mining potential of Malawi, according to a research paper titled MINERAL RESOURCES OF MALAWI AND MINING POTENTIAL by Rodney Mshali (The Society of Malawi Journal Vol. 62, No. 2 (2009), pp. 27-35 published by: Society of Malawi – Historical and Scientific ). Banda could have decided to take the risk if he wanted to.

Mineral Deposits

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Whichever way, it’s not my place to make a determination on Dr Banda’s judgement at this time.

But what does all this have to do with the current mining landscape in Malawi?

Well, as can be seen in the following links in Zambia, Chile, South Africa and Ethiopia , some mining companies have been known to be a menace to the countries they operate in. Issues of ownership, corruption, tax evasion in the form of profit shifting, low pay and poor working conditions, and of environmental degradation are often always lingering. In Malawi, recently, it has emerged that Paladin was considering to discharge ‘contaminated’ sludge kept in a dam near its Kayelekera mine into Malawi’s rivers systems for fear that if they did not do so, the rain season would cause their dam to overflow.

Thus, when news broke just under two weeks ago that the government of Malawi had suspended all oil and gas exploration licenses on Lake Malawi, so as to allow government to scrutinise and review each Licence that was issued or signed, I didn’t really know what to make of it. After all,  Malawi has had its fair share of sorry episodes of bad contracts married with irresponsible management, with the Paladin saga at Kayelekera. Although appearing diligent, uncovering any such lax agreements will just remind us all how deep in muck the country really is. It will not be a cause for celebration.

So then, what will the government do?

If they plan to review the oil exploration licenses in all good faith, and if necessary use legal mechanisms to resolve any indications of foul play -including unfair or prejudicial contract terms that do not benefit Malawians; if they plan to bring the miscreants to justice, then the suspension is a noble move.

In addition, the government of Malawi could work with charities [such as SHERPA (France), the Center for Trade Policy and Development (Zambia), the Berne Declaration (Switzerland), l’Entraide Missionnaire (Canada) and Mining Watch (Canada) ] which in 2011 filed complaints against mining companies Glencore International AG and First Quantum Minerals Ltd, to the Swiss and Canadian National Contact Points (NCP) for violating the OECD guidelines for multinational enterprises including for Tax avoidance in Zambia.

However, if the suspension of oil and gas exploration in Malawi is a veiled attempt at ‘rent-seeking’, as is rumoured to have taken place not only during Bingu Wa Mutharika’s regime, but also during the People’s Party administration, then it would be unfortunate because the government would have lost an opportunity to harness the resources that Malawi has. DPP would have lost a chance to show transparency.

One more thing; how can Peter Mutharika be sure that the value of assets or mineral resources declared by Oil companies interested in prospecting, or already prospecting is accurate, and not under-declared/under-valued ? For example, if the actual value (or near estimate) of viable crude oil deposits under the basin of Lake Malawi was US$400 billion, what is to stop the Oil companies holding the exploration licenses from misinforming the government that they had found only US$100 billion worth of confirmed deposits under the lake? Especially when the government was unable to verify those figures?

Wouldn’t an independent state-owned Mining company, that had its own equipment, and that owned a stake in each exploration site, and that was jointly involved in the exploration, so as to be able to verify the findings by its own independently undertaken mapping and surveying reduce such a risk?

Finally, it goes without saying that for them to be successful, any state-owned organisation (including parastatals) should be run and managed by people who by merit are fit to do so, and not by public appointees with little or no experience in the relevant technical field or area.

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Satans Neonazi Conmen (Part 2): To stay put + die / migrate but risk death + persecution

Sometimes the law defends plunder and participates in it. Sometimes the law places the whole apparatus of judges, police, prisons and gendarmes at the service of the plunderers, and treats the victim – when he defends himself – as a criminal. Frederic Bastiat

Rich countries figured out long ago, if economies are not moving out of dead-end activities that only provide diminishing returns over time (primary agriculture and extractive activities such as mining, logging, and fisheries), and into activities that provide increasing returns over time (manufacturing and services), then you can’t really say they are developing – The Myth of Africa’s Rise – By Rick Rowden

It is better to be a lion for a day than a sheep all your life. ~Ghanaian Proverb

It’s a simple mathematical analysis almost every living human being is capable of making, and which nomadic tribes have used for survival for centuries :- Do I stay in my present environment and put up with this drought/ hunger/ deprivation/ corruption/ sh*t and risk death, or do I go somewhere else in search of greener pastures even though there are also dangers there. Which risk is a safer bet? Which risk is worth my life?

For some, the urgency of their situation, or the realisation that there has got to be something better in life than the status quo, than their miserable existence motivates them to take extremely challenging (or even reckless) risks (see here , here , here and here).

The result, some make it out successfully, while others still end up dead (Niger migrants’ bodies found near Algerian border – via BBC,  Substantial risks for African migrants ) while attempting to make it out. Some get to the new frontier but have to endure untold persecution for years; others make it out but find themselves victims of organised crime, while a smaller percentage eventually settle into a newer better life – one still littered with challenges.

This is a realisation which is difficult to explain” one man told me, a Somalian migrant who came to Britain 10 years ago “You have to experience it yourself to understand it

But why are people prepared to risk their lives for what is effectively a pie in the sky; a dream that may never materialise, or which may end up killing them – as it has killed thousands others in the past?

Well, some are running away from unpredictability of life, chronic economic deprivation, high death rates and low life expectancy. Living conditions that can partly be painted using the following pictures:

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Others are seeking new frontiers, and are wearied by the lack of educational opportunities in their own countries (educational opportunities that are narrow, often expensive – and beyond their reach – and that do not cater for a diverse range of skill sets). These people have resolved to find education elsewhere.

Some are fleeing from wars or military conflicts that have ripped apart their societies, setting one man against his brother; fighting on ethnic or religious lines, either for political or resources control. Else, they are victims of organised crime (Trafficking victims too often treated as immigration cases, say campaigners – via the Guardian) – manipulated and scammed into believing a better life awaits them on the other side of the sea. When they get to Europe – they face more persecution!

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Others are purely economic migrants in search for work and better pay because the rate of unemployment in their own countries is too high. Combine that with low wages and increasing cost of living and the picture couldn’t be more depressing. For this group, using the family’s savings to get to Europe, the Middle East, Asia, Australia or America is a safer bet than going months on end without a job. Some families literally bet all their earnings on a single son, with the hope that if he succeeds in reaching Europe, he can get a job and help them by sending money home to them. And if you look at countries such as Somalia where their youth unemployment rate for 14 -29 year olds hovers around 67%, you can easily see why this group prefers to leave. As Mohamed Ali says in this TED talk, there is a link between unemployment and terrorism.

Else, there are those who are sick and tired of the scheming, lies and broken promises from the political classes. This group will often have waited for quite sometime before making a move, betting on one leader or another, hoping that real change that can transform their economic plight will arrive. When it doesn’t after decades of waiting, remaining in the country is not an option. In Malawi, president Joyce Banda, Africa’s second female president, who was warmly received by the international community less than 2 years ago, and who is a favourite to many leaders of Western countries, has been struggling to address a massive embezzlement scandal (see here and here) that has recently been uncovered at State House and in which millions of dollars were stolen from state coffers. Predictably, the beneficiaries of such dirty money are only a few hundred dodgy individuals-mostly those with links to the ruling party, whereas for the majority of citizens, living conditions have not improved in as many years, and in some cases they have worsened with reports of people dying because of lack of medicines, causing anger against the political elite and ruling PP party:

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Then there are the enlightened younger generation who are touted to be the hope of third world. Some of these are fortunate to have received a decent education in their own country (however remote such prospects may seem) or abroad, but are held back by lack of capital, demands of bribes from officials, issues such as regionalism, ageism, nepotism and other cancerous and backward biases. To this group, which is by far ‘better informed’ than the older generations, the idiocy of the political class, the massive corruption and fraud in government, the gaffes from political leaders, the lack of opportunities in society, the water cuts, blackouts / electricity shortage, the ignorance + backwardness of some sections of the older generation, increasing cost of living in the face of low wages, the high crime rates, social sentiments that are out of touch with global happenings in general, are all too much a burden to bear or live with. They look West, or move to developed countries which have better economic and social outcomes.

As an example, consider this statement which was made by a friend on a social media outlet:

“How can a Malawian lose when he/she give up the citizenship? After all some Malawians are treated like second class citizens (Scums) in their own land just because they are coming from certain region. I remember one Malawi head of state said, “Who cares about you in this country all you contribute is 25% to this nation development.” Referring to people from certain region. Thank God he was arrested by nature. Malawi will never develop because people who can really develop the nation are completely outnumbered.”

The numbers of those trying to get to Europe illegally may be high but as I stated in my earlier post, not everyone can live in Europe or North America. And indeed not everyone must want to live in Europe or North America. The countries on these continents have finite resources and mass migration puts a strain on their medical services, and on social and welfare services. Schools can become overcrowded, and native populations can find it difficult to adjust to the newcomers. Further, the culture is different – some may not like what they find. But to top it all,  in the long run, uncontrolled migration is bound to be unsustainable.

However, the solution can never be subjecting migrants (most of whom have genuine grievances) to harsh and inhumane hostile treatment. That does not target the root of the problem – it only causes suffering and creates enmity.

In my view, while there is a historical aspect to migration (which I will explore in my next and final installment) there are things western governments can do to reduce the numbers of migrants that attempt to leave their home countries (‘source countries’) :

1. Government policies on migration should place people at the centre in that there must be realistic alternatives on home soil.

“At its heart, migration is fundamentally about human beings” – Navi Pillay

It may seem like an obvious thing to say but potential migrants living in developing countries must be given an alternative. And if for whatever reason their own government is non-existent (as the Somalian government was for a very long time), incapable or under-resourced such that it cannot provide them with better opportunities – others must decisively step in. Only then will illegal immigration begin to be curbed. Essentially this means that people in a place like Mogadishu must have a realistic shot at life (affordable food; decent educational opportunities; availability of microfinance; adequate security; accessible and affordable healthcare, etc).

A choice between something pleasant and decent – and the journey that could kill them.

This also means that more resources should be poured into challenging extremism, and these resources must be well-administered to ensure that they reach the point-of-need and are not embezzled by corrupt politicians/ officials.

In a discussion with a friend the other day he said something simple but profound:

If you are sending £600 million in aid to Pakistan, are you then monitoring how that money is being spent, or do you then just look away and assume it will be spent properly?” he said

“How can extremism be defeated if there is no accountability from both the donor and the recipient of the funds?”

On this point, while the US and other western powers are withdrawing their forces from Afghanistan and Iraq, wouldn’t it be a good idea for a battalion or two (with the help of Nato or even the likes of Russia, Saudi Arabia and Iran) to get into Somalia and other countries who are considered to be breeding grounds for extremism, to assist the anti-terrorism efforts against the likes of Al-Shabaab.

2. Most people don’t like to live away from their home country, their birth place, but as can be seen above, sometimes circumstances force them to leave. In order for illegal immigration to decrease, there must be better awareness in the home country from where the migrants originate. Instead of european border agencies focussing primarily on questionable measures to discourage illegal immigration, their governments should invest in training to be provided in the home countries of the migrants, to inform the local public of the dangers of illegal migration and what conditions illegal migrants live in. As involving as this may sound, if the national government of an African country such as Niger is unlikely to provide such information, isn’t it sensible for the destination country that will bear the burden of the arrivals to make it a point to do something before people think of leaving? In my view, this system would have much positive outcomes than harassing migrants who are already in Europe/ Australia.

3. Criminal organisations that encourage or fraudulently deceive people into believing that migration will give them a better life must be apprehended. There are no two ways about this-if there are 10,000 criminals trafficking people, then 10,000 must be imprisoned.

Unless the criminals who are encouraging illegal migration and who are providing the means, the actual transportation are caught and put behind bars, and kept there, it will be difficult to stop illegal migration. This also means financing and working with the ‘source countries’ to upgrade their national laws to ensure that such crimes have prohibitive penalties/ jail sentences that are long – giving a clear message.

4. Greater and more equal distribution / sharing of resources:

Western countries must change tactics in the fight against poverty. Most experts agree that ending poverty is key to solving many of the problems afflicting the continent of Africa. But few ever agree on a specific course of action. In my view, there are some ideas that can work better than others, and some ideas have been tried with little or no success.

If people can find a decent job in their own backyard, which can give them a relatively decent lifestyle, or if they can take out a loan to start a small business (and receive support from institutions that can help them succeed), why would they want to risk death for a dream they may never attain? As some argue, Is trade not aid, the answer for Africa? I believe there has to be a fundamental shift in the way western countries deal with Africa and other third world countries in that more focus should be given to getting  people financially independent (irrespective of who is leading the country), and not on the country’s resources. If people are empowered with the means to carve an existence, they will be better equipped to address the bad politics in their country.

Western governments must stop tolerating or financing mediocre and thoughtless leaders that are depriving their local populations of even the basics.

As I hinted here (and here), the quickest way to do this is to begin Research centres / Universities across Africa, with the hope that these will spur innovation in the form of sustainable industries around or alongside them – as has often happened with Universities in most western countries.

‘Working research centres’ focussing on sustainability and green technologies, or ‘Manufacturing Universities’ that make actual products designed for the African market can be built and funded to churn out a breed of African innovators.

Examples of products that can be manufactured here are Mosquito nets, Medicines, Animal feed, Juice extraction and manufacture, Software development, Manufacture of composite materials made from recycled products, Solar panel manufacture and suchlike.

5. Common problems that are hampering the progress of developing countries must be addressed. This also includes regulation of businesses at UN level to ensure that corporations that set up in places like Africa do not take advantage of weaker laws or crooked officials to sign backdoor deals at the expense of the local population, depriving the country of essential tax revenues.

6. The risks and Benefits of migration must be shared.

‘This Article argues that the global welfare gains from migration can be divided in a way that makes all stakeholders better off. It develops the idea of a “Migration Fund” that is used to insure the destination country against fiscally induced or otherwise undesirable migration while simultaneously serving as a mechanism to compensate the source country for the potential adverse effects of outward migration…’

7. Pathways of citizenship for migrants already in the destination country must be created. Most of these people have already suffered painful and unbelievable ordeals – why make them suffer more? Further, most of these people are instrumental in sending huge amounts of money back to their own countries. Some of that money fulfills the purposes laid bare above, and it is in the interest of the host country that this financial outflows continue.

8. Racism must be untaught. The more people in first world countries appreciate that migrants are humans just like them – in almost every other way, the less bias / discrimination there will be in society (irrespective of whether that society happens to be in a first world country, a developed country or in a third world country). There is no substitute to tolerance.

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