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France, World Bank to Help African Nations Negotiate Mining Contracts

Categories: Sub-Saharan Africa, Cote d'Ivoire, D.R. of Congo, France, Madagascar, Togo, Citizen Media, Development, Economics & Business, Environment, Governance, International Relations

To celebrate the 40th anniversary of the Franc Zone [1] monetary cooperation agreements, the President of Côte d'Ivoire, Alassane Ouattara [2], and the French Minister of Finance, Pierre Moscovici [3], have published a joint text advocating the establishment of an initiative to end “the excessive exploitation of Africa’s reserves” [4] [fr].

Following this address, a press release from the World Bank stated that they have created a fund to help African countries better negotiate [5] the exploitation of their natural resources. This measure seems to formally highlight not only failures of African governments to profit from their resources but also the disproportionate benefits obtained by international operators.

An urgent need for fairer deals 

That this measure aims to ‘promote fair and equitable trade contracts’ is the main information to take from this joint address. But the press release also makes reference to an often controversial past between France and its former colonies.

Mr Ouattara stated that [4] [fr]:

Nous entendons lutter contre le décalage qui demeure, trop souvent, entre une vision datée et pessimiste de l’Afrique et le dynamisme économique actuel du continent. L’Afrique du XXIème est en mouvement, en croissance, riche de ses réserves naturelles et désireuse de démocratie. [..] La relation entre la France et l’Afrique doit pour cela être redéfinie, comme l’a souhaité le Président de la République française.

We intend to fight the gap that too often remains between a dated and pessimistic vision of Africa and the current economic dynamism of the continent. The Africa of the 21st century is in motion, it is growing as well as being rich in its natural reserves and eager for democracy. [..] The relationship between France and Africa needs then to be redefined, as the French President wishes.

Video of the meeting between Ouattara and Moscovici, uploaded by AbidjanNetTV [6].

In Togo, République Togolaise commented on the project and noted that [7] [fr]:

Dans leur tribune, Alassane Ouattara et Pierre Moscovici appellent de leurs voeux une relation redéfinie entre la France et l'Afrique, après des décennies de liens ambigus, parfois teintés de corruption, entre Paris et ses anciennes colonies.

In their forum, Alassane Ouattara and Pierre Moscovici call for a redefined relationship between France and Africa, after decades of shadowy connections, sometimes tinged with corruption, between Paris and its former colonies.

In Jeune Afrique, Stéphane Ballong, citing Makhtar Diop [8], World Bank Vice President for Africa, noted the failure of African Governments [9] [fr] to date and gave more details on the content of the Aid Fund for fairer contracts:

“Un ministre des mines ou des finances ne dispose pas forcément des ressources nécessaires pour employer l’expertise la meilleure au monde pour négocier des contrats équilibrés.” Il s’agit donc d’essayer de combler cette défaillance en fournissant  aux pays d’Afrique, l’assistance technique nécessaire (ressources financières et humaines) pour obtenir de meilleures conditions contractuelles [..]

“A Minister of Mines or Finance does not necessarily have the required resources to employ the best expertise in the world to negotiate balanced contracts.” We must try to address this failure by providing the necessary technical assistance (financial and human resources) to African countries, to obtain better contractual conditions [.]

He added [fr]:

Cinq grands domaines devront être couverts  par ce fonds : les conseils juridiques pour améliorer les modalités contractuelles des investissements dans les industries extractives, en amont les diagnostics sur la capacité institutionnelle des États, l’aide technique relative aux risques sociaux, les conseils pour des politiques publiques visant à développer des pôles de croissance en amont et en aval de l’industrie extractive. La France s’est engagée à apporter une contribution de quelque 15 millions d’euros qui seront repartis entre la Banque mondiale et la Banque africaine de développement.

Five main areas need to be covered by this Fund: legal advice to improve the contractual terms of the investment in the mining industries, upstream diagnostics on the institutional capacity of the governments, technical assistance relating to social risks, public policy advice aimed at developing poles of growth upstream and downstream of the mining industry. France is committed to providing a contribution of approximately EUR 15 million that will be distributed between the World Bank and the African Development Bank.
Kailo Mines, Democratic Republic of the Congo by <a href="http://www.flickr.com/photos/julien_harneis/">Julien Harneis</a> on Flickr (CC-license-2.0) [10]

Kailo Mines, Democratic Republic of the Congo by Julien Harneis [11] on Flickr (CC-license-2.0)

A measure against the growing influence of China in Africa?

Many observers have suggested that these measures are targeted to counteract the growing influence of China in Africa [12] [fr]. Philippe Hugon, Research Director at IRIS (Institute for International and Strategic Relations) did not fail to note the irony [13] [fr] of the situation:

Dans le fond, les relations que la Chine entretient avec l'Afrique ressemble avec ce qui se faisait en France il y a une trentaine d'années : des liens forts dans le champs du politique, une non dissociation des liens public/privé et une importante corruption. Le tout sans être très regardant sur les situations environnementale et sociale.

Basically, the relationship that China has with Africa is similar to what was happening in France 30 years ago: strong links in the field of politics, non-separation of public and private connections along with significant corruption. All of this without being very mindful of the environmental and social situation.

Bacary Gill in the Democratic Republic of the Congo noted the different development styles [14] [fr] of France and China in Africa:

La Chine a été un moteur pour la construction d'infrastructures. Elle fait également renaître des projets jugés insuffisamment rentables par les entreprises occidentales. Mais, certaines industries africaines naissantes ont été touchées par la concurrence chinoise, et la population locale ne bénéficie pas toujours de l'effet d'aubaine de ces nouveaux projets, en raison d'un taux insuffisant de “local content”, c'est-à-dire d'embauche et de sous-traitance locale. [..] Malgré des liens forts avec un certain nombre d’États africains, la France a eu tendance, sur le long terme, à se retirer de ce continent. Le poids des investissements, la présence militaire, tous les indicateurs vont dans ce sens.

China has been a driver for the construction of infrastructure. It also breathes new life into projects deemed insufficiently profitable by Western companies. But some fledging African industries have suffered from Chinese competition, and the local population does not always benefit from the knock-on effect of these new projects, due to an insufficient rate of ‘local content’, i.e. local employment and subcontracting. [..] Despite strong ties with a number of African States, France has long tended to withdraw from this continent. The weight of investments, military presence, everything points in that direction.

For all that, this initiative seems to indicate that France is not counting on letting China expand its influence without resistance. An interview with Mr Moscovici on Jeune Afrique confirmed France’s desires.

The French Finance Minister said [15] [fr]:

L'Afrique subsaharienne ne représente que 3 % des exportations et des importations françaises, avec à peu près 14 milliards d'euros d'importations et 12 milliards d'exportations. C'est trop peu. Je ne veux pas critiquer la Chine, je trouve cela désuet. C'est en réorientant le partenariat entre la France et l'Afrique vers l'investissement que nous trouverons de meilleures réponses. En aidant nos entreprises à mieux appréhender le risque, qu'elles tendent à surévaluer ; à aller de l'avant, en donnant une priorité au secteur de l'énergie où nous avons une grande expertise. Nous n'avons pas à avoir peur des Chinois.

Sub-Saharan Africa accounts for only 3% of French imports and exports, with about 14 billion Euros of imports and 12 billion Euros of exports. It’s not enough. I do not want to criticize China, I find that outdated. By reorienting the partnership between France and Africa towards investment we will have better outcomes. We will help our companies to better understand the risk that they tend to overestimate and moving forward, we will give priority to the energy sector where we have great expertise. We have nothing to fear from China.

In Madagascar, the role of China in the exploitation of the country’s natural resources, in particular illegal rosewood [16], has been discussed in detail.  However, the role of France in the Madagascar political crisis of 2009 [17] has made local observers weary of French initiatives to help Africa.

Regarding this, Lalatiana reported on the difficulties for Francophone Africa [18] [fr] after colonisation, and received this comment from Rajo Rajaonarivelo (in the comment section):

Il est indéniable que les français ont voulu implanter des modèles de gouvernance et des gouvernants qui servent leurs intérêts dans les pays anciennement colonisés. Mais, comme on dit, it takes two to tango, il faut bien que nos gouvernants soient d’accord. Etait-ce le cas ? à nous tous d’y répondre. Sur un autre plan, avant la colonisation et même quelques années après, nous avions atteint l’auto-suffisance en riz. Il y a même eu des années où Madagascar en exportait. Aujourd’hui, nous sommes obligés d’importer 200 000 à 300 000 tonnes par an. Je ne pense pas que la France ou le Royaume-uni ait un quelconque intérêt là-dedans.

It is undeniable that the French wanted to establish governance models and governments that served their interests in former colonies. But, as they say, it takes two to tango, our rulers must agree. Was this the case? It is up to all of us to answer. On another level, prior to colonization  and even for a few years after, we were self-sufficient with respect to rice. There were even years where Madagascar exported it. Today, we are forced to import 200,000 to 300,000 tonnes per year. I don't think that France or the United Kingdom has any interest in this.

There seems then to be consensus that African countries need to better understand how to negotiate the exploitation of their natural resources. If this measure actually leads to fairer contracts, it is doubtful that anyone will be concerned that it was conceived with specific geopolitical objectives in mind.