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HomeAfricaMining royalty agreements in Africa need to be revisited, UNECA official says

Mining royalty agreements in Africa need to be revisited, UNECA official says

The Deputy Executive Secretary of the UN Economic Commission for Africa (UNECA), Abdalla Hamdok, has bemoaned the low percentage that Africa is getting from mining royalty agreements, saying that there is a need to revisit contracts on royalties.

Hamdok said despite Africa being endowed with enormous natural resources, the continent is not benefitting from its abundant resources and that in the mining sector, there is the need to support member states negotiating better contracts, which he said is key.

“If you look at royalties generated from contracts, they stand today in Africa at a very low level of probably about 8 percent, this is something that has to be revisited,” Hamdok said Monday when he addressed journalists at the eighth African Development Forum (ADF) taking place in Addis Ababa, Ethiopia.

Hamdok, who noted that the mining sector to a large degree was managed in close isolation from the rest of the economy, said what is needed now is for the mining sector to be integrated in a much better way and comprehensive manner that would allow the resources generated to be ploughed back into development activities.

He said generated resources from the mining sector would help in funding the needed development activities such as achieving the Millennium Development Goals or going into infrastructure development on the continent.

“We have seen mines that are a stone throw away from the villages and yet there are no roads, electricity and even water in those villages. This situation should not continue, we have to change this,” Hamdok said.

He, however, pointed out that UNECA, the African Union Commission and the African Development Bank (AfDB) are embarking on a very ambitious plan of establishing an African Mining Development Centre intended to develop capacities at member state level in addressing negotiating skills and capacity in managing mining in a better way.

He said this will address the capacity gap in the mining sector.

Ali Abou-Sabaa, vice president of the AfDB, said the ADF VIII, ending Thursday, will explore how the natural resources endowment in Africa could be better managed in a way that would make available additional resources to African countries.

“Africa needs to make sure that whatever resources are available to its member countries are extracted and managed and promoted in a manner that brings the maximum benefits to the people of Africa,” Abou-Sabaa told the press conference.

“Collectively, Africans have the responsibility to make sure that our countries are advised on the best way we can manage this.”

He also noted the importance for African countries to be provided with technical assistance so that countries are in a better position to negotiate contracts, especially in areas of extractive industries.

Abou-Sabaa said the bank had two initiatives, one on the African legal support capacity facility aimed at providing technical and legal advice to African countries who are in the process of negotiating major contracts and the second initiative dealing with extractive industry, transparency and calls for both countries and external partners wishing to invest in this particular area to do it in a more transparent manner.

The eighth ADF which began Monday is being held under the theme “Governing and harnessing natural resources for Africa’s development.”

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