Private sector lapses worry WEF boss

Rainforest logs are rafted in Nigeria, which has been hailed for its management of natural resources (Akintunde Akinleye, Reuters)

Rainforest logs are rafted in Nigeria, which has been hailed for its management of natural resources (Akintunde Akinleye, Reuters)

Better co-operation between the private and public sectors is critical to growing capacity and boosting economic development on the African continent, said Frannie Léautier, the co-chair of the World Economic Forum on Africa and executive secretary of the ­African Capacity Building ­Foundation.

A lack of capacity and skills in the administrations of many African countries has been a stumbling block to the continent's economic growth and development.

But Léautier said the private sector was "equally deficient" in its ability to work with either communities or  governments, particularly when it came to the management of the continent's natural resources.

Léautier was in South Africa last week ahead of the World Economic Forum on Africa, which will be held in Cape Town early next month.

Her comments come at a time when the relationship between state, community and private sector on the continent is uneasy. "It is a generic problem, Africa-wide," she said.

The events of Marikana, where more than 46 people died, was one such example, said Léautier. But other African countries were experiencing similar strife, she noted. Cameroon and Liberia were battling illegal logging by private companies, and in southern Tanzania community protests had erupted over the development of gas sector infrastructure in the region.

The African Capacity Indicators 2013 report released by the African Capacity Building Foundation revealed that, although capacity development in the natural-resource sector was usually thought of as required by governments, civil society and local communities, "a great deal of capacity" was also lacking on the part of the international investor.

In many cases, according to an executive summary of the research, international investors were "unable to 'read' local sociopolitical, ethnocultural and economic environments in Africa" to enable them to "innovate and outline arrangements that work and are mutually beneficial".

Domestic processes
The research found that capacity development was needed, not only for government stakeholders, but also "for stakeholders engaged in international and domestic processes in natural-resource management".

This applied not only to international investors, but also to domestic companies, Léautier said.

"You need to build the capabilities of multinationals, but also of ­domestic companies, to be better able to understand, negotiate and therefore work to deliver what is committed to communities," she said.

This had to be done in a way that did not result in the private sector taking on what should be government responsibilities, said Léautier.

The main "hot spots" for tensions were in cities, in regions neighbouring extractive industries and at ­country borders, she said.

The interface between the public and private sectors was also critical to the continent's ability to meet its infrastructure needs, particularly complex, multicountry projects such as the Grand Inga hydroelectric project, to be built in the Democratic Republic of Congo.

Building capacity
"A lot of the infrastructure would have to financed and put in place by the private sector, but there is a heavy reliance on what the public sector needs to do in advance," she said.

According to the foundation's research, however, African countries are steadily building the capacity to manage their natural resources better, with a number of countries showing improved capabilities.

These include: Mozambique's transformation of its forestry sector, which resulted in the cancellation or reduction of the land area of 1 500 investor contracts owing to noncompliance with their investment plan; Ethiopia's efforts to develop the capacity of the staff at higher-education institutions in the area of natural-resource management and ecotourism; and Nigeria's endorsement of the Extractive Industries Transparency Initiative, aimed at ensuring transparency of revenue flows for natural resources, as well as its establishment of a sovereign wealth fund along with Angola.

But, more broadly, change has been characterised by, among other things: growing state coherence on natural-resource management policy frameworks; the renegotiation of old contracts; the adoption of robust and transparent governance structures; and the employment of civil society organisations, both local and international, as pressure groups to hold multinational companies accountable to their corporate social responsibilities.

 

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