Center for Peace, Democracy and Development

Liberia’s Efforts to Avoid the Resource Curse

Posted in Africa, Democratic Development, Education, Foreign Direct Investment, Liberia. Oil Industry, Rule of Law with tags , , , on December 10, 2012 by michaelkeating

 

 

 

by

Tara Conklin

Earlier this month, Robert Sirleaf, son of Liberian President Ellen Sirleaf, came forward to defend his appointment as head of Liberia’s nascent oil industry. Admonishing critics for their charges of nepotism and corruption, Robert declared that he has the competence and experience necessary for him to serve as Chairman of the National Oil Company of Liberia (NOCAL), adding, “I owe Liberia me.”

If it seems suspect to you that President Sirleaf could find no other competent, experienced individual to serve as NOCAL Chairman, (perhaps someone less related to her?) you are not alone. The appointment of her son has raised eyebrows in Liberia and throughout the international community. She no doubt exacerbated the situation by appointing to another top NOCAL spot someone currently being prosecuted for fraudulent transactions of $2.5 million USD.

These recent appointments are just the tip of the iceberg. Liberia’s oil industry has been plagued by charges of bribery, corruption, and fraud since its inception, with companies paying off legislators and their staff for votes on oil contracts. Since these allegations were brought by Liberia’s main auditing and watchdog organization, the General Auditing Commision (GAC), no one has been prosecuted, no bribes were returned, and the deals that the GAC recommended be invalidated have remained in place. (Read details about the allegations here.) Just last month, amidst the appointment of a controversial new Auditor General, NOCAL has become embroiled in a scandal at GAC, where massive layoffs have just taken place. Allegedly, NOCAL played an instrumental role in the dismissal of GAC staff in an attempt to thwart the ongoing audit of the oil sector.

While these reports are disconcerting, it is important to note that the Sirleaf administration has been ostensibly dedicated to fighting corruption and improving accountability, vowing to improve life in the country currently ranked 182 out of 187 by increasing greater transparency. By some accounts, the administration’s anti-corruption policy stance has been widely successful. This apparent contradiction hints at the complex history of Liberia, and begs the question: how did things get this way? Perhaps more importantly, what are the steps to making the oil industry translate to development in Liberia?

Liberian citizens and officials are well aware of the “resource curse”, the paradox through which countries with an abundance of natural resources tend to do worse economically and developmentally than countries without natural resources. Discussions on how to avoid becoming the “next Nigeria”, where oil has caused conflict and stagnated development, take place often in government circles. However, it is immensely difficult to overcome a past history of corruption, resource dependence, and conflict. With natural resources including iron ore, gold, diamonds rubber, and timber, Liberia’s economy is already lacking diversification and is too heavily reliant on these resources, none of which have led to development. Under the presidency of William V.S. Tubman (1944-1971), the iron ore industry propelled Liberia to being one of the fastest growing economies in the world. This growth, rivaled at the time only by Japan, was purported to be a miracle, but in reality it did little for the vast majority of Liberian citizens. In fact, this growth without development set the stage for continued political and social instability, contributing to a bloody 14-year civil war that ended in 2003.(1) The timber trade is said to have helped finance Charles Taylor’s regime, and in recent months, renewed reports of corruption and mismanagement with the country’s timber industry have sparked environmental, economic, and governmental concerns.

With pervasive corruption, an institutionalized culture of wealth grabs, and an economy overly reliant on natural resources, it is high time to ensure that the oil industry not follow in the footsteps of the timber and iron ore industries. Entrenched politicians and powerful private interests are key players in the future of the country’s oil business, so strong political will from the top is necessary to curb “business as usual”. President Sirleaf must fulfill her campaign promises and live up to her reputation as a recent Nobel Prize winner by getting tough on corruption. To do this, watchdog organizations like the GAC and the Anti-Corruption Commission must be fully funded and fully staffed. Abuses discovered must be followed up and prosecuted by the judicial branch. The culture of impunity for elected officials must become a thing of the past. Prosecution and conviction of government officials found guilty of corruption would send a powerful message. In addition, a code of conduct for elected officials must be passed into law delineating job descriptions and methods of performance assessment.

Though Liberia is already part of the Extractive Industries Transparency Initiative (EITI), reporting is delayed and spotty. Independent audits should be conducted to ensure accountability and revenues from the resource should be put into dedicated funds, perhaps a sovereign wealth fund (like Botswana’s Pula Fund, or perhaps more ideally, Norway’s SWF) to reinvest in other industries in Liberia and encourage diversification in the country’s economy. In addition, Liberia should utilize good judgment when deciding which companies to grant oil concessions. Companies with a reputation of transparency and based in countries that will hold them accountable back home with strong foreign anti-corruption laws are good choices.

Some measures are currently being undertaken. In November, NOCAL put forth a competitive tender for general audit of its operations, seeking a “reputable international firm”, with bids from Deloitte & Touche, Ernest & Young, and Pricewaterhouse Coopers being reported. Dr. Paul Collier, expert on the resource curse and its contribution to a country getting stuck in the “Bottom Billion”, was in Liberia in September, where he observed some promising aspects of Liberia’s oil industry. These rays of hope provide a path for Liberia to break the cycle of corruption, move past its troubled history, and dodge the “resource curse”. The administration and legislature, private sector, and watchdog groups in civil society must remain vigilant if they want Liberia’s oil wealth to make a positive change for the country. There is a way, but it will require political will that we have yet to see. Here’s hoping for a transparent, accountable, and prosperous 2013 in Liberia.

Tara Conklin is a graduate student in International Relations at the University of Massachusetts Boston.

Embattled Liberian Journalist Was At UMB

Posted in Africa, Freedom of the Press, Human Rights, Humanitarianism, Liberia with tags , , on March 21, 2012 by michaelkeating


Every once in awhile a news item really hits home. I just received this concerning my very good friend Mae Azango. I first met Mae in 2006 when she  came to UMass Boston as part of a contingent of journalists who were doing internships at various media outlets around town.

Since her stay at UMass Mae went on to be one of Liberia’s most famous and fearless journalists who took it as her mission to tell stories about the sufferings of ordinary people. Her coverage of the persistence of female genital mutilation in Liberia has obviously outraged supporters of the practice and we can only hope that she receives the full protection of the Liberian government. To its credit, the government has recently issued a statement in defense of Mae after public campaigns by the Committee to Protect journalists and Amnesty International,  but let’s hope they follow-up with decisive actions.

Another controversy riling Liberia this weeks concerns legislation targeting gays. Despite her recent Nobel Peace Prize, the President of Liberia, Ellen Johnson Sirleaf, has come down strong against the rights of homosexuals in Liberia saying, “we like ourselves just the way we are.” Check out this video exchange between the President and a very uncomfortable looking Tony Blair

Michael Keating

photo: New Narratives

 

Foreign Direct Investment Promises Often Unkept

Posted in Education, Foreign Direct Investment with tags , , on March 3, 2012 by michaelkeating

 

The deals look great on paper. A large mining, energy or agriculture investor pulls into an impoverished country offering cash, jobs, schools,  and clinics. There is a ribbon-cutting ceremony where the President of the country and the Chief Executive of the company beam for the cameras, native dancers perform, and a long list of benefits are read out to the grateful populace.

Fast forward a few years however and the picture never looks as good as that day when the media caravan rolled into town.

In the developing country I am most familiar with, Liberia, that caravan has been rolling on a pretty consistent basis during the first term of President Ellen Johnson Sirleaf. Communities throughout Liberia have seen the CEOs of iron ore, palm-oil, rubber, and more recently oil companies pull up in their Land Cruisers — or descend in their helicopters —  only to disappear once the ink is dry on the contract.

Thankfully researchers have followed up on some of these deals and the news is not always good. In a just published report entitled “Smell- No- Taste: The Impact of Foreign Direct Investment in Liberia,” researchers from the Center of International Conflict Resolution at Columbia University concluded that FDI deals in Liberia just aren’t working the way they were supposed to and are sowing the seeds for future conflict.

Here are the five main conclusions from the report:

1. The marginalization of indigenous communities during concession negotiations and project implementation has resulted in high tensions around a number of FDI projects. This tension has occasionally led to violence and other forms of social unrest, which could feasibly lead to conditions that might threaten peace in the country.

2. Compensation rates for loss of land and crops are outdated, low and inconsistently applied across concessions. Unless directly hired by the concessionaire, members of PACs (Project Affected Communities) experience little improvement to living standards as a result of FDI. In some cases, the shift in land use priorities are producing enhanced food insecurity for PACs.

3. Job creation and industrial economic diversification are challenged by the structural characteristics of the sectors, low human capacity levels and high energy costs. While FDI has produced jobs, they have so far not been of a scale that addresses the extremely high unemployment rate in the country, and it is difficult to imagine how this will change even when the projects become fully operational.

4. Government corruption and financial mismanagement have compromised the good intentions of concessionaire-financed Social Development Funds (SDFs) and contributed to a rising mood of distrust and hostility regarding some concessions.

5. Institutions lack the full ability to effectively monitor compliance of concession agreements and penalize infringements. A rush to sign new deals and fast track economic growth has overwhelmed the government’s ability to ensure that concessionaires act responsibly and are subjected to sound oversight.

There are certainly no quick fixes for issue of improving governance or reducing corruption but NGOs on the ground can do a better job of monitoring the situation  and bringing  issues like these to the attention of the media and to international human rights and humanitarian groups.

In Liberia most of the national media is in the capital Monrovia and they simply don’t have the funds to travel out to investigate the concession areas where abuses might be occurring or where promises are not being kept.

Assisting in building capacity for local watchdogs will be much more effective in the long-run than reports from foreign academics, but this report is certainly a useful and hard-hitting start to what hopefully will be an on-going process of discovery and reportage.

 

Michael Keating