If only mineral wealth could bring true gains

BY ANTONY LOWENSTEIN

HERE IN PAPUA NEW GUINEA, the local media is filled with stories that economic growth in Asia will help the local people:

Papua New Guinea is well positioned and poised to reap huge benefits from the fast growing economies of Asia.

ANZ Group Bank chief executive Mike Smith said closer trade and investment ties with Asia, in particular China and India, can transform PNG’s economy.

Mr Smith, who arrived in Port Moresby last Tuesday and addressed a cocktail night at the Crowne Plaza Hotel, said PNG should continue to position itself to capture the expanding trade flows between Asia and the Pacific. Mr Smith was in Port Moresby to meet with customers, government representatives and ANZ bank staff.

Frankly, it’s hard to take these predictions seriously. Massive mineral wealth has brought little benefits for the vast majority of citizens in PNG. In Africa we see the same paradox:

Last week, NGO Global Witness published its latest report on the oil, gas and mining industry in Africa. Running at 40 densely-written pages, the work looks in detail at three countries: Angola, Nigeria and the Democratic Republic of the Congo (DRC).

All three, says the report, have been afflicted by the Resource Curse, or ‘paradox of plenty’. The countries all have an abundance of natural resources, but suffer from extreme poverty.

Angola and Nigeria are two of the largest oil producing countries in Africa.  Respectively, oil provided 63% of government revenues in 2009 in Angola, and 40% in Nigeria.

‘…Their citizens, however remain amongst the poorest in the world, with approximately 70% of Angolans and 80% of Nigerians living on less than two US dollars a day.’

The DRC, meanwhile, ranks bottom on the UN’s Human Development Index despite a vast wealth of natural resources – particularly in mining.

The main problem in Angola and Nigeria, says the report, is the opacity of oil contracts in the two countries.

While their governments have sought to ‘demonstrate greater transparency in the payments received from the oil sector’ over recent years, regulation and public scrutiny of allotted contracts is severely lacking.

In addition, it appears that government officials could be shareholders of the very companies that have been awarded major extraction contracts.

In Angola, Global Witness unearthed a number of indigenous oil companies that have been able to obtain shares in oil.

They ‘do not disclose publicly their beneficial owners, or, when they do, some of the shareholders have the same names as senior public officials’, the report reveals, ‘creating public suspicion’.

Comments

[David Kitchnoge]

Early indications are that we won’t escape this dreaded path.

Our politicians are seemingly fighting over who should have control of our mineral wealth. But none of them have actually told us what they will do differently to effectively transfer the wealth from resource projects (macro level) down into people’s pockets (micro level).

With all its filth and health concerns, buai seems to be the only effective and transparent medium for the transfer of wealth from one class of society to another.

But that’s not enough. We need a better and smarter vehicle/s to facilitate this transfer to occur quickly (whilst we still have it) and in a sustainable manner.