LONDON (Thomson Reuters Foundation) - Norway has agreed to give $4.9 million to the African Development Bank (AfDB) to help African governments negotiate "fair and balanced" deals with oil, gas and mining companies operating on the continent, the bank said on Monday.
The money will go to the African Legal Support Facility, a body set up by the AfDB to help African governments hammer out complex commercial deals.
“Norway is seeking to help turn Africa’s ‘resource curse’ into a ‘resource blessing’ by supporting the negotiation of better contract terms,” Norway’s minister of international development, Heikki Eidsvoll Holmas, said in a statement.
The ‘resource curse’ describes the phenomenon of countries rich in natural resources that often have significant governance problems, high levels of corruption and widespread poverty.
“The aim is for the countries to strengthen their own revenues and economies, and in the long term for them to be able to manage without aid,” Holmas added.
‘Governance and accountability’ is one of the AfDB’s five 2013-2022 strategic priorities and improved governance in the extractive sector is expected to play a significant part in that effort.
The Democratic Republic of Congo, for example, lost at least $1.36 billion in potential revenues between 2010 and 2012 due to cut-price sales of mining assets to offshore companies, according to a report from the Africa Progress Panel, led by former United Nations Secretary-General Kofi Annan.
“This work also enhances financial transparency surrounding contracts which are crucial to be able to uncover and stop illicit financial flows,” Holmas said. “Every year, 10 times as much money disappears out of developing countries through illicit financial flows as is received in the form of aid and development support.”
The AfDB forecasts growth in Africa at 4.8 percent this year, with sub-Saharan Africa - excluding South Africa - the fastest-growing region at 6.6 percent.
But aid to Africa from the developed world has been cut for the first time in 10 years and the continent needs to look for ways to make that money go further.
“The reality is, Africa is being ripped off big time,” African Development Bank president Donald Kaberuka told Thomson Reuters in June.
“Africa wants to grow itself out of poverty through trade and investment - part of doing so is to ensure there is transparency and sound governance in the natural resources sector,” he said.