Pass transparency laws to guide companies

…Activist tells FDI source countries

European and American countries which are the source countries for foreign direct investment to most developing countries have been called upon to ensure the passage of legislation that will curtail financial secrecy by their multinational companies.

This measure will compensate for the weak regulations and lack of political will on the part of developing countries that receive such investments, according to Mr. Richard Ellimah, Executive Director of Centre for Social Impact Studies (CeSIS), a research and advocacy organisation operating in the extractive sector.

The issue of financial secrecy has become a controversial issue in recent times, with some developing countries starting a campaign to get source countries of foreign direct investments, especially in the extractive industry, to crack the whip on erring multinational companies.

Mr. Richard Ellimah recently delivered a presentation on the “Socio-Economic Impacts of Mining on Indigenous Communities” to a group of Norwegian students on an exchange programme at the University of Cape Coast. The bi-annual programme sees students visiting resource-rich communities to understand the interface between socio-economic policy formulation at the national level and the incidence of poverty. The students visited some communities in the Obuasi Municipality like Ahansonyewodea and Tutuka to see at first hand, the impact of mining on these communities.

In the view of Mr. Ellimah, the existing regulatory and legal regime for mining in the country is comparatively weak, and this accounts for the environmental problems as well as minimal financial benefits to the state. He believes that if the source countries can pass effective legislation against financial secrecy and corruption, and make multinational businesses more transparent and accountable, then such investment would be more beneficial than the foreign aid developing countries receive. He lauded the United States for passing the Dodd-Frank Legislation that enjoins American companies operating anywhere in the world to abide by principles of transparency and accountability. Even though the Dodd-Frank Legislation is being challenged by some activists, it is a clear manifestation of the willingness of the American government to streamline the operations of their multinational companies operating in the global south. Furthermore, even though initiatives like OECD Guidelines, Global Compact and the Voluntary Principles exist to hold multinational companies to guide multinational companies operating in developing countries to operate transparently and respect human rights, they are mostly voluntary and not binding.

Mr. Ellimah, who is also a Steering Committee member of Publish What You Pay (PWYP – Ghana) and the National Coalition on Mining (NCOM), repeated calls for the quick passage of a Mining Policy to indicate the role of mining in Ghana’s development. While admitting that mining has benefitted the Obuasi community in terms of infrastructural development like roads, electricity and telecommunications, he also stressed that mining has caused a lot more harm to the environment and livelihoods of poor farmers. He believes that a more structured support from the state for indigenous small scale miners will help open up mining communities, provide employment and boost local revenue generation since local companies are not involved in capital flight as the multinational companies.

The state, according to Mr. Ellimah should be earning more from mining, if the right laws were passed and implemented.

Source: CeSIS