23 Sep 2015 | BMW Foundation | Europe and the Emerging Economies
It was to this place, in northern Tanzania, that the BMW Foundation and the Dar-es-Salaam-based Uongozi Institute had invited the some 25 participants of the 5th BMW Foundation Global Table. Over the course of the two-and-a-half-day meeting, four major topics were addressed through a variety of discussions and platforms. Uniquely, all topics related to specific projects of the Uongozi Institute, with the idea that the results and findings should be incorporated into the work of the institute, which is, among other things, advising the Tanzanian government.
By way of introducing the topic, Hany Besada, a consultant at the African Mineral Development Centre at the United Nations in Addis Ababa, addressed the question of “How can resource governance and revenue sharing arrangements be improved in resource-rich regions of East Africa?”
One of his key observations was that in countries where resource wealth has become a curse, decision-making processes had happened in the wrong order. Investors had gotten onboard before the legal framework was in place, and by the time the local population got involved there were hardly any decisions left to be made.
The working group thus called for a dialogue process that has to start far in advance of any actual decision being made about how to share resource revenues and that needs to involve all stakeholders – national governments, extracting industries, local governments and administrations, businesses, communities, and civil society. This process needs to be long-term, inclusive, and transparent to equalize the power imbalance between and among the various stakeholders.
Moreover, the dialogue needs to focus on developing common values and a shared vision of how the resources can benefit the country and its people. All subsequent decisions and legislation should be governed by this vision and be made transparent. This also applies to the publication of the contracts between governments and the extracting industries. Getting the local population involved is key. Based on the principle of shared value, it is about achieving a real community of interests between the local population that needs to benefit directly from resource extraction and the extracting industries that would thus be given greater planning security and protection against protests.
The participants also suggested that every resource exploitation project have a plan for ceasing extraction and prepare local communities for a future when resources are exhausted. This was all the more urgent as profitability, especially from gas exploitation, was rather volatile; moreover, due to the decarbonization of the economy, fossil energy sources may no longer be exploited to mitigate climate change.
In terms of sharing the revenues from resource extraction, the working group came up with several successful instruments. These include an equity (shares) scheme as it is practiced, for example, in Alaska, the establishment of trust funds (Chile), and the development of a direct employment scheme including high health and safety standards, as is the case, for example, in the mining industry in Uganda.
The group wants to flesh out its recommendations in a policy paper for the Uongozi Institute and gather additional best practice examples.
While the first working group dealt with mechanisms and instruments, the second topic focused on the stakeholders themselves. Wei Shen, professor of international business at Lancaster University, presented China’s Maritime Silk Road strategy as a still evolving concept capable of redefining the relations between China, Africa, and the corridor states and holding the potential to strengthen economic relations, improve regional security, and deepen intercultural understanding. It could provide an enormous boost to investments and bring new jobs and skills to Africa.
According to the participants, there was a wide gap, however, between expectations in East Africa (where most of the envisioned major infrastructure projects could be realized) and Chinese interests. One way to reconcile these interests could be to focus on shared interests and measures to build trust. To this end, the working group formulated several recommendations addressed
A third working group elaborated on these ideas by looking at a specific case study:
With strong support from China, the Tanzanian government is developing a new Special Economic Zone at the port city of Bagamoyo, some 30 miles from Dar es Salaam. Franny Leautier, Managing Partner of Mkoba Private Equity Fund, briefly sketched the project’s framework conditions as well as the current planning status, which is characterized by the fact that so far there have been mostly informal meetings and dialogues.
Therefore, the working group’s first recommendation was to establish a steering committee that would represent all societal groups and make decision-making processes more transparent. Key topics should be urban development, industrialization, and tourism in the zone. With a view to the current master plan, the group was particularly adamant that the zone should incorporate specific areas, especially residential areas, and that industry-related educational and research facilities should be made part of the plan. In terms of industrial development, the participants recommended to focus on environmentally sustainable and forward-looking industries that have as few external environmental effects as possible. Building on the local economy, a strategic focus could be on agro-processing, on the dairy and fishing industries. These could be complemented by further industries with a focus on local manufacturing and services. In addition, special attention should be paid to developing upscale tourism – including beach, historical, and conference tourism – and the infrastructure this requires.
The fourth working group was occasioned by the forthcoming adoption of the Sustainable Development Goals (SDGs) on September 25, 2015. “It all depends on the issue of implementation,” was how Glenn Denning, professor at Columbia University, opened the discussion. Together with the participants, he came up with several ideas to strengthen accountability during the implementation process.
The Uongozi Institute in particular will continue to work with the (preliminary) findings of the working groups. Participants want to publish articles or formulate policy recommendations on several aspects of the issues discussed at the Global Table. The BMW Foundation will continue to follow up on and support these initiatives. Moreover, China’s Silk Road will be a prominent topic at the forthcoming 1st Berlin Global Forum.
Text: Barbara Müller