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January 17, 2003

African Civil Society Urges World Bank to Suspend Financing for Mining, Oil Projects

We, African civil society organisations comprising NGOs, labour and local communities participating in the Africa Regional workshop on the extractive industries review from 13-17th January 2003 in Maputo, Mozambique call upon the World Bank Group to stop financing and support for mining, oil and gas until adequate and transparent mechanisms are established for lending as well as damages to national economies, local communities and environment by current World Bank Group financing are addressed.

Our long experience has shown that the interventions by the World Bank Group in the extractive sector in the continent are not only shrouded with secrecy but also has not resulted to poverty reduction which is the Bank's primary objective. The interventions have rather accounted for increased poverty, environmental destruction and human rights abuses especially among rural communities living within the precincts of such interventions.

We feel that the framework for the on-going Extractive Industries Review (EIR) process is inadequate to ensure a proper definition of the future role of the World Bank Group. For instance, there was no adequate consultation between the various stakeholders to establish the framework for the review process. The focus thus is limited as it does not attempt to review the past especially the role of the World Bank in the continent's indebtedness and unsustainable debt servicing.

There is doubt regarding the commitment of the World Bank Group to the outcome of the EIR process. Even as the process is in progress the World Bank Group is considering and approving new projects.

Africa is richly endowed with natural resources including minerals, oil and gas. In the past, these mineral resources have been exploited by colonizing states that structured the African economies as sources of cheap raw materials for the sustenance of Northern industries.

The World Bank Group's involvement in mining, oil and gas in Africa has contributed to intensifying colonial patterns of exploitation and the plunder of natural resources and peoples, leading to impoverishment, environmental degradation, human rights abuses, unsustainable debts and a relationship of domination and dependence.

During the past two decades, the World Bank Group and the International Monetary Fund (IMF) have promoted the liberalization of the extractive sector through reforms that compel mineral-rich African countries to relinquish ownership and control of extractive industries to foreign mining and petroleum companies while the Bank and its affiliates (the International Finance Corporation-IFC and Multinational Investment Guarantee Agency-MIGA), provide financing and support to foreign investors. The increased involvement of the World Bank Group is not accompanied by a corresponding increase in decent conditions of life for the people of Africa. It has rather led to a significant inflow of Foreign Direct Investment (FDI), which promotes corporate interest and corruption.

Despite the large increase in Foreign Direct Investment (FDI) in extractive activities in Africa, the peoples of the continent are poorer and the economies of African countries are weaker. The Bank's role in the extractive industries has only succeeded in generating excessive profit for foreign investors with mining codes that ensure minimal taxes for foreign mining companies, increasing the debt burden of African countries and reducing the quality of life for peoples living in resource-rich communities and states. While nations derive little or no benefit from the extractive industries the people living in the communities affected by mining and other extractive activities have had to cope with impoverishment resulting from diseases, environmental degradation, air and water pollution, human rights abuses and social dislocation.

A major consequence of World Bank Group support for FDI in mining, oil and gas in Africa has been that indigenous small-scale miners have less room to operate, even though on balance they contribute more to the national economy than large-scale foreign operators. A substantial amount of foreign exchange earnings derived from the extractive industries are retained abroad while insignificant amounts are retained in the national economies of Africa.

Mining has remained an enclave activity with little or no linkages to other sectors of the African economies. As a result any "multiplier" benefits that result from processing or refining accrue outside Africa. Furthermore mining presents African countries with a major challenge in the form of new exposure to the volatility of the commodity markets.

Despite the clear disadvantages of World Bank support for FDI in mining, oil and gas in Africa, the Bank continues to promote such patterns of investment as a source of quick revenue for debt servicing. For example, the government of Cameroon, despite having to borrow from the World Bank to participate in the Chad-Cameroon Pipeline, will spend more in debt servicing than the projected revenue from the project.

World Bank sponsored extractive investments aggravates scarcity of land, which the majority of the populations depend on for their livelihood through farming. In many cases communities have been displaced from their lands to make way for mining companies, with little or no compensation. The land scarcity and community impoverishment is exacerbated by massive environmental degradation and pollution caused by extractive industries, as environmental safeguards are weak and often ignored by the World Bank Group and their beneficiaries.

World Bank supported extractive companies and host governments have engaged in grievous human rights abuses including killings of community members protesting the negative impacts of such investments, such as in Nigeria and Tanzania.

As stated by a report published by the World Bank June 2000, natural resources exploitation in Africa is a major source of conflicts in the continent. The World Bank support to extractive industries activities in Africa creates conditions for conflict as contending interests within states compete for control of revenue from mining operations and as corrupt management of revenue leads to the collapse of state institutions. Communities may also get into conflicts over competition for the limited jobs that mining companies provide, which fall far short of the promise of job creation, which the World Bank and its beneficiary companies always make.

Moreover, the World Bank is an undemocratic and unaccountable institution controlled by the few richest countries with African countries having little or no influence in the Bank's decision-making processes. Such an undemocratic, untransparent and unaccountable institution cannot spur African development.

In view of the foregoing observations, we call on the World Bank Group to stop financing and support for mining, oil and gas until the following conditions are met:

1. The cancellation of the debts of poor African countries, which were incurred un-transparently and which have been over-paid by countries during decades of debt servicing. Cancellation of debts will allow African countries to invest in more productive and sustainable sectors of the economy for the benefit of the mass of the peoples.

2. Extensive independent review of the impacts of existing World Bank investments in the extractives sector to ascertain how to correct and compensate for the damages to communities.

3. A clear guarantee from the World Bank Group that all new loans to government or private sector investors must be approved by the legislature of the host country and given extensive prior publicity in the interest of the citizens that are supposed to be beneficiaries.

4. Genuine prior consultation with communities rather than the information sessions. Such consultations should respect and recognise the rights of host communities to reject investments that will harm their livelihood and violate human rights.

5. There is a clear commitment by the World Bank Group to address and put an end to the culture of impunity that has characterized acts of gross human rights abuses involving members of the security forces and foreign multinationals operating in resource-rich areas.

6. A clear guarantee from the World Bank Group that there should be no funding of projects in countries that are ruled by undemocratic regimes, involved in armed conflicts or where extractive projects may create conflicts.

7. A clear guarantee that there shall be no funding for projects located in ecological sensitive zones such as forest reserves and state and or community protected areas.

8. A clear guarantee from the World Bank Group that there shall be no loans for mining projects in countries where the rate of corruption is high and where there is no acceptable mechanism to tackle corrupt management of revenue.

9. All extractive investments should be subjected to prior independent Environmental Impact Assessment using the best available standards.

10. The World Bank Group should ensure that the profit of beneficiary companies and the royalties to governments be disclosed to the citizens.

11. Improve the accountability of the complaint investigation and resolution mechanisms of the World Bank Group by enhancing their transparency and strengthening their independence.

12. Clear commitment by the World Bank Group and governments to support artisanal mining by protecting their land and mining rights and through the provision of financial and technical assistance to improve their productivity, minimize social and environmental risks associated with their activities and enhance access to markets for their produce.

13. All conditions should apply to all members of the World Bank Group including the IFC and MIGA.

We hope that the World Bank Group will establish mechanisms and durable processes of compliance to these conditions in a manner that ensures effective participation of all stakeholders.