Keep resource companies out of foriegn aid? You’d only be hurting Africans – by Lucas Robinson (Globe and Mail – December 3, 2012)

Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

 Addis Ababa — Countries throughout Africa are discovering an abundance of minerals, gas and oil beneath their territory. Madagascar is touting trillions of dollars in potential profits from its offshore gas reserves. Zambia continues to pull almost 1900 tonnes of copper from the ground every day – contributing to year-on-year economic growth rates of over 6 per cent.

Ethiopia, where I live, is currently home to 19 million people living on less than $1 per day, and appears to be pinning at least part of its financial security on discovering two to three billion barrels of proven oil reserves. Uganda, Kenya and Tanzania are also looking to exploit newly discovered gas and oil fields, just as Ghana and Nigeria shore up their investments in these sectors.

And yet “supporters of Canada’s foreign aid” are busy criticising the Canadian International Development Agency and International Co-Operation Minister Julian Fantino for what amounts to a very minor engagement with extractive industries. After Mr. Fantino announced a new policy in which the private sector, especially mining companies, would be more directly involved in the delivery of foreign aid alongside CIDA, the response from many quarters was nothing short of venomously hateful. Indeed, many in Canada’s aid community appear to be against any engagement by the private sector in reducing global poverty.

This is not a constructive approach to reducing poverty.

Critics are right to point out that efforts to extract Africa’s resources have historically caused more grief than anything else. “On average, resource-rich countries have done even more poorly than countries without resources,” writes Joseph Stiglitz, a former chief economist with the World Bank. This “resource curse” fuels conflict and corruption, and the profits from these sectors are too often removed from the continent by foreign-owned companies.

But Canadians – through CIDA – should be focused on precisely these challenges. Working with the African Development Bank, as CIDA does, to improve domestic legislation and regulatory structures is beneficial to companies and the countries that are courting them. Helping small and medium businesses in developing countries become more effective suppliers to large and multi-national investors is good business. Helping people in those same countries learn the necessary technical skills to become valued members of the workforce is good for investors and good for employees.

Canada, more than any other country, has the opportunity to play a critical role on these issues: both as an industry regulator and as an aid-donor.

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