Guinea Must Implement its Legislation To Make Progress in Mining Governance, New Research Finds
28 June 2017
Guinea’s mining sector ranked 63rd among 89 worldwide assessments, and 20th among 31 assessments in sub-Saharan Africa
Reforming failing revenue management would help Guinea reduce loss of mining value
The legal framework is satisfactory, but Guinean officials should focus on its implementation
CONAKRY, 28 June 2017—A global index assessing countries’ oversight of natural resources has ranked Guinea’s mining sector 63rd among 89 assessments worldwide, and 20th among 31 assessments in sub-Saharan Africa.
The 2017 Resource Governance Index, compiled by the Natural Resource Governance Institute (NRGI), shows how failing revenue management has contributed to the country’s overall poor performance. In the index’s revenue management component, Guinea ranks 78th among 89 assessments. Budget transparency and enforcement of provisions that promise to share part of mining revenues with local authorities emerge as key weaknesses.
Unrest in recent months in the cities of Boké and Kamsar have accentuated the urgency for improved governance practices in the mining sector. Communities’ protests against extraction-related pollution and power cuts highlight the need for effective sharing of revenues on the subnational level, measures to mitigate social and environmental impacts, as well as increased transparency by local authorities to affected local communities on contributions received from mining companies.
Guinea achieves its highest index subcomponent score of 62 of 100 points in licensing, yet allocation of licenses would benefit from added transparency, researchers found. Regarding tax transparency, Guinea performs satisfactorily but could achieve its objectives for tax reform by using the Extractive Industries Transparency Initiative (EITI) as a platform to disclose information on the identities of beneficial owners, mineral production at the project level, exports and payments; the government should also more actively enforce the requirement to publish all contracts.
“Implementation of Guinea’s progressive mining code has been slow and enforcement falls short of obligations, especially in areas like subnational revenue sharing and environmental impact that would promote benefits and limit costs for local populations,” said Evelyne Tsagué, Africa deputy director for NRGI.
The Guinean government participates in several mining operations in the country, in a limited capacity. The only fully state-owned enterprise (SOE), SOGUIPAMI, is one of the weakest elements of Guinea’s extractive sector, despite some spontaneous disclosures. It scores 38 of 100 points and ranks 14th among 27 SOEs assessed in sub-Saharan Africa. As SOGUIPAMI’s role expands in the future, the government should formalize its disclosure obligations and strengthen its oversight over the company.
Tsagué added: “Mining represented over 60 percent of Guinea’s total exports and 24 percent of total government revenues in 2015. The public should have access to the results of the mining contract review process for this reason alone. Given recent acceleration in bauxite production in the country, it is vital that the government integrate better governance practices into the sector as quickly and efficiently as possible.”
A national roundtable on responsible mineral development was held in February 2017. Its aim was to provide the country with an operational strategy in the mining sector and foster dialogue between mining companies, government institutions, Guinean citizens and communities around possible approaches to sustainable acceleration of mineral-based development. This is a step in the right direction, as addressing local concerns in the broader Guinean policy of mineral-based development is indispensable.
The Resource Governance Index is the sum total of 89 sector-specific assessments in 81 countries (in eight countries NRGI assessed both oil and gas and mining sectors), formulated using a framework of 149 critical questions answered by 150 researchers, drawing upon almost 10,000 supporting documents.
For each assessment, NRGI has calculated the composite score using the scores of three index components. Two of the components comprise new research based on expert answers to the questionnaire, and directly measure governance of countries’ extractive resources.
The first component—value realization—covers the governance of allocating extraction rights, exploration, production, environmental protection, revenue collection and state-owned enterprises. The second—revenue management—covers national budgeting, subnational resource revenue sharing and sovereign wealth funds. The index’s third component assesses a country’s enabling environment. This component draws on pre-existing research to measure the broader governance context.