Kentaste is a local company reviving the coconut industry along the Kenya coast. (Photo courtesy of Joanne Muchai)
Opinion by James Michel (victoria, seychelles)
Inter Press Service
VICTORIA, Seychelles, Oct 02 (IPS) – Everyone knows that small island states are on the frontline of global warming. Rising sea levels, acidification destroying fisheries and coral reefs, and changing patterns of rainfall are just some of the challenges. Some low-lying islands have already been lost to the ocean.
These challenges are real and can hardly be understated. Yet there is another side to the story, too: one that tells of a creative response and new opportunities. The fact is that small island states are on the frontline of the Blue Economy.
Several years ago, in 2016, I wrote a book (Rethinking the Oceans: Towards the Blue Economy) to show why urgent action was needed. The interconnected seas cover most of our planet and yet we have always treated them as second best, as if the riches that are found there will last forever. Instead, I have for long argued that our approach must be sustainable. It must serve not only today’s needs but also tomorrow’s generations.
A decade ago, the idea of the Blue Economy was poorly understood. Why, people would ask, is it any different from how the sea has always been used? Things have changed since then and the question is no longer ‘why’ but ‘how’. In my second book on the subject, Revisiting the Ocean: Living the Blue Economy, I show what progress has been made and where we can find some of the most important changes.
There is a great deal more to be done, not least of all in stemming the relentless flow of harmful practices. But there are already signs of progress. To show this, I look to local communities and business startups, to visionaries and philanthropists, as well as international bodies. Go to remote beaches to see how communities (often led by women) are taking matters into their own hands. Or to the workshops of inventive young entrepreneurs who are finding ways to do things better. I am a realist but also an optimist and in my new book I try to balance a pervasive sense of impending doom with a strong message of hope.
Kentaste is a local company reviving the coconut industry along the Kenya coast. (Photo courtesy of Joanne Muchai)
COP28 will bring together the great and the good, drawn by the prospect of a new approach. But it will also attract those who are not so enamoured with a sustainable approach to the ocean. Fast-growing nations with, literally, billions of mouths to feed will not so easily be persuaded that sustainability is the right approach. Nor will commercial and other interests which are poised to scrape the ocean floor for rich mineral reserves. Yet, if we are not to destroy our planet, restraint has to win the day. In the crowded rooms of the upcoming event in Dubai, we must lose no opportunity to press the case.
My own nation, Seychelles, has one of the world’s smallest populations and yet, surrounded by a vast stretch of ocean, we have pioneered new ways to sensibly manage this immense gift of nature. Planning our marine space in a rational way is how we are making progress and I commend the lessons to other small island nations. We have also been innovative in attracting funds and the ways we have done this, too, is a shared resource.
Under the auspices of the European Union, Seychelles last year hosted an event where African entrepreneurs displayed their exciting ideas and projects. Fabrics produced from leaves and fish skin gathered locally, natural fertilisers from seaweed, productive ways to recycle fishing nets, and desalination units using renewable energy. With the help of large funding bodies like the UN and EU, much more can be done to unleash creative energy. Revolutions invariably start in small ways and nothing short of an ocean revolution is needed. Urgently!
I look forward to COP28 and I know that the host nation, the United Arab Emirates, will do all that it can to lead by example. Let us go to the conference with enthusiasm, welcoming every new initiative. I will be there, along with friends from other small island states and it is up to us all to make our voice heard.
Copies of my new book will be available at the event (as well as direct from https://www.jamesmichelfoundation.org) and I hope I can share with you some of my own ideas and a record of the wonderful efforts being made around the world to save our precious ocean.
James Michel is a former president of the Republic of Seychelles and a leading international advocate of the Blue Economy.
Carbon credits in Africa can be generated by projects that curb emissions with a major focus on switching to renewable sources such as solar energy. Nasho solar power plant in Eastern Rwanda. Credit: Aimable Twahirwa/IPS
by Aimable Twahirwa (nairobi)
Inter Press Service
NAIROBI, Sep 29 (IPS) – With current efforts to boost Africa’s carbon credit production by 2030, experts believe the commitments will require Governments to switch from a voluntary to a compliance market by generating renewable energy for a portion of national and regional electricity supplies.
The compliance market in Africa, according to experts, is critical for countries to establish a carbon price through regulations to control the supply of allowances that are then distributed by national and regional regimes.
“It is all about getting the business model right (…) the capability of African Governments is there very central to having the right kind of information and investing in local business models,” Mahua Acharya, the Chief Executive Officer of C-Quest Capital (CQC), one of the world-leading carbon finance company told IPS.
Currently, African leaders are pushing market-based financing instruments, such as carbon credits which can be generated by projects that curb emissions with a major focus on switching to renewable energy sources.
Carbon market initiative allows polluters to offset their greenhouse gas emissions by investing in development or initiatives such as tree-planting or renewable energies. Nevertheless, experts point out that they are still cheaper to purchase in Africa due to poor regulations and weak policies.
Renewable energy was at the heart of discussions at the 2023 Africa Climate Summit (ACS) in Nairobi, Kenya, and shifting away from centralized fossil fuel energy towards people-centred green energy sources is now seen as the single most effective way to expand the continent’s participation in voluntary carbon markets.
The African initiative’s goal is to produce 300 million new carbon credits annually by 2030, comparable to the number of credits issued globally in voluntary carbon offset markets in 2021.
Mahua Acharya, the Chief Executive Officer of C-Quest Capital, recommends Innovative business models for African Governments to unlock carbon markets.
“This is a very ambitious target and a fantastic opportunity for Africa to set the course,” Mahua said in an exclusive interview.
Article 6 of the Paris Agreement’s rulebook governing carbon markets gives countries a right to emit carbon dioxide at an agreed price per tonne, but one of the major challenges facing most African countries is the lack of appropriate strategies to earn money on these carbon markets.
The latest report on carbon markets and climate finance by the Eastern Africa Alliance shows that Burundi, Ethiopia, Kenya, Rwanda, Sudan, Tanzania, and Uganda are currently scaling up carbon credit production via voluntary carbon market activation plans.
Under the new move, internationally traded credits between governments and private sector players are acceptable under Article 6 of the Paris Agreement.
For example, Rwanda, as one of the few countries that expressed willingness to begin trading in voluntary carbon markets, is currently exploring key strategic sectors in which projects that reduce carbon emissions can be designed to sell credits on the carbon market. Officials emphasize that the major focus will be on renewable energy, the country leveraging on the carbon market as the source of climate finance.
However, some experts point out that such projects and programs need to be “authorized” to avoid the same carbon credit being sold twice.
“Voluntary approach is vulnerable to the decisions of corporate entities to meet their net zero goals – which is fine, but shaky if you think that countries should be basing economic planning decisions around this,” Acharya said.
Carbon finance – the revenue from the sale of carbon emission reduction linked with mitigation activities – is a green growth opportunity for many developing and emerging economy countries.
On the sidelines of the Africa Climate Summit in Nairobi earlier this month, some activists rejected carbon markets, describing them as “false solutions and narratives that undermine African communities’ rights, interests and sovereignty.”
The Executive Director of the Pan African Climate Justice Alliance (PACJA), Mithika Mwenda, told IPS that he was disappointed that the principle of shared responsibility was a missing point.
“The initiative seems to be promoted by powerful interests who benefit from maintaining the status quo of fossil fuel dependence,” he said.
While Mithika is convinced that, in most cases, these carbon market investments do not serve the climate justice imperatives for Africa, Acharya points out that different African countries are at different stages of preparedness and clarity towards putting carbon markets to work.
“These carbon finance transactions are very precious to many African countries because they are forex-based and provide a good degree of risk mitigation,” Acharya said.
The latest Africa Environment Outlook for Business by the United Nations Environment Programme (UNEP) shows that Africa could become a trailblazer in renewable energy solutions, with abundant solar, wind, hydro, biomass, and geothermal resources that may contribute to a 6.4 per cent increase in GDP from 2021 to 2050.
Businesses in the energy efficiency sector can provide products and services, such as lighting systems, smart buildings, and efficient industrial processes on the continent, it said.
While Carbon markets are seen as an incredible opportunity to unlock billions for the climate finance needs of African economies while expanding energy access, some carbon credit experts stress the need for the African Union (AU) as a continental body to position itself economically on equal footings with other major economic blocks.
“There are thousands of billions of dollars are being allocated as loans on high-interest terms to poor countries seeking help to cope with climate change impacts,” said Adhel Kaboub, Associate Professor of economics at Denison University in Ohio, USA, and the president of the Global Institute for Sustainable Prosperity.
“Through these schemes, Africa cannot continue to play the role of source of cheap raw materials while serving as a large consumer market for the Global North,” he said.
Rwanda is among the countries planning to use carbon markets to meet their Nationally Determined Contributions (NDCS) to the Paris Agreement.
Currently, the Clean Development Mechanism (CDM) and Voluntary Carbon Market (VCM) are the two operational mechanisms allowing the country to earn carbon credit units by reducing greenhouse gas emissions.
The state-owned Petróleos Mexicanos (Pemex) oil company is completing its seventh refinery on a 600-hectare site at Dos Bocas in the municipality of Paraíso, in the southeastern state of Tabasco. The plant will process some 290,000 barrels of fuels per day when it reaches full capacity. CREDIT: Erik Contreras-Gerardo Morales / IPS
But the monument lacks another element that has been vital to the region: oil, which has damaged the other three symbols through pollution. Marine animals have been affected by the oil and the mangroves have almost been cut down in a territory that had ample reserves of crude oil.
Despite the fading bonanza, the Mexican government decided to build the Olmeca refinery in the industrial port of Dos Bocas, in Paraíso, to refine some 290,000 barrels per day of oil from the Gulf of Mexico and thus reduce gasoline imports.
It will be the seventh installation of the National Refining System in the country, in a port area that already has a crude oil shipping and export center of the state-owned oil giant Petróleos Mexicanos (Pemex), which controls the exploitation, refining, distribution and commercialization of hydrocarbons in the country.
Construction of the new infrastructure on an area of 600 hectares began in 2019, and although it was officially opened in 2022, the work has not been completed and it is expected to be fully operational in 2024.
But the plant has already provided revenue for the local economy, in the form of rents, transportation and food. However, there are also fears about its impact on a city of more than 96,000 inhabitants.
Genaro, a cab driver who preferred not to give his last name and is married with three children, said there is a sensation of risk. “We know what has happened in other places where there are refineries, with all the pollution. Besides, accidents occur,” he told IPS.
Near the plant is the Lázaro Cárdenas neighborhood, home to hundreds of people and named after the president who nationalized the oil and electric industry in 1936.
There is an uneasy feeling among the local population. Irasema Lozano, a 36-year-old teacher who is a married mother of two, is one of the residents who is apprehensive about “the newcomer” to the city.
“Look around, there are houses, schools, stores. The government says it is a modern plant and that there is no danger, but we don’t feel safe with this huge plant,” she said.
Cab driver Genaro owns a house in the area, which he rents out. But he is now seriously thinking of selling it.
Construction of the plant has altered the life of the sprawling city around Dos Bocas. The “orange people”, referring to the color of the uniforms worn by everyone who works at the facility, are a permanent reminder of the changes as they move around town.
Talking about oil in Tabasco is a delicate matter, since the state is used to living with the exploitation of a light, low-sulfur, cheap and easy-to-extract hydrocarbon. It is also the home state of President Andrés Manuel López Obrador, a staunch defender of fossil fuels.
Pemex has financed the Olmeca megaproject with public funds, through its subsidiary Pemex Transformación Industrial. Its subsidiary PTI Infraestructura y Desarrollo has overseen construction.
The project has already had a high cost overrun, as the initial investment was estimated at seven billion dollars, a figure that has climbed to 18 billion dollars, according to the latest available data.
On this occasion, PTI ID has not turned to the international market to finance the work, according to the response to a public information access request from IPS.
The Olmeca refinery has a cost overrun, escalating from a planned initial investment of seven billion dollars to 18 billion dollars. The Mexican government expects the plant, located in Dos Bocas, in the southeastern municipality of Paraíso, to be fully operational by 2024. CREDIT: Erik Contreras-Gerardo Morales / IPS
The support of international banks
Traditionally, Pemex has depended on financial flows from international private banks. Between 2016 and 2022, 17 institutions gave nearly 61.5 billion dollars to the state-owned oil company, according to annual reports under the heading of “Banking on Climate Chaos” produced by a group of NGOs.
The British bank HSBC was the main financial backer of Pemex during this period, contributing 7.6 billion dollars, followed by the U.S.-based Citi (6.9 billion) and JP Morgan Chase (6.0 billion).
Pemex’s data gives a broader picture, as it shows more players in its lending field. Through direct loans, bond issuance, revolving credits (with automatic renewals) and project financing, 16 financial institutions have granted it 78.9 billion dollars since 2015.
In doing so, the international markets allow Pemex to obtain money for its operations and development, but in exchange they have turned it into the oil company with the highest debt in the world, some 100 billion dollars, which poses a great threat to Pemex and, by extension, to the country.
The main mechanism used is the insurance coverage or underwriting of Pemex’s financial operations by charging a commission.
Maaike Beenes, leader of banking and climate campaigns at the non-governmental BankTrack, told IPS that the large flow of financing means that banks feel confident that Pemex can repay the debt.
“Apparently it is because they think there are guarantees because it is a state-owned company. There is a lot of financing for the expansion of fossil fuel activities,” she said from the Dutch city of Amsterdam.
In 2020, Mexico was the 13th largest oil producer in the world and 19th largest gas producer. In terms of proven crude oil reserves, it ranked 20th and 41st respectively, according to Pemex data.
Two flares burn gas in the Nuevo Torno Largo neighborhood, in the municipality of Paraíso, in the vicinity of the Olmeca refinery. The southeastern state of Tabasco, on the coast of the Gulf of Mexico, has suffered the effects of pollution generated by oil production for more than 50 years through spills, contaminating gases, and water, air and soil pollution. CREDIT: Erik Contreras-Gerardo Morales / IPS
Fueling the crisis
By raising Pemex’s debt rating, the international banks risk their own voluntary climate targets for greenhouse gas (GHG) emission reductions, since the Mexican company’s GHG emission reduction targets are low.
For example, HSBC aims to achieve zero net emissions – where neutralized emissions equal those released into the atmosphere – in its operations and supply chain by 2030 and in its financing portfolio by 2050.
The bank says it is working with its clients to help them reduce their emissions. Its energy policy states that it will not finance new oil and gas fields.
But HSBC’s net zero goal has some gaps. According to the international Net Zero Tracker platform, its strategy lacks a detailed plan to achieve it, and has no reference on equity investment and no specification on formal accountability for monitoring progress, even though it covers Scope 1 (A1), 2 and 3 emissions.
A1 emissions come directly from sources under the polluter’s control, A2 emissions are indirect emissions from purchased energy, and A3 emissions are those originating in the final use of energy, not covered in A1 and A2, according to the Greenhouse Gas Protocol standard, the most widely used in the world.
By 2022, Citi committed to achieving a 29 percent absolute reduction in emissions for the power sector and a 63 percent reduction in the intensity of its portfolio pollution for the electricity sector by 2030, addressing A1, A2 and A3 levels.
In this regard, Net Zero Tracker says the bank does not have a complete detailed plan for these decreases and makes no reference to investment in fossil fuel companies.
Another major player, JP Morgan Chase, has a target of a 69 percent reduction in the carbon intensity of power generation, which accounts for most of the sector’s climate impact, by 2030.
In the oil and gas segment, the company aims for a 35 percent decrease in operational carbon intensity, as well as a 15 percent drop in end-use energy carbon intensity for the same year.
But its net zero targets are in doubt, as Net Zero Tracker points out that they have shortcomings, such as a complete detailed plan, and no reference to equity investment and only partial coverage of A3.
Louis-Maxence Delaporte, fossil-free finance campaigner at the non-governmental Reclaim Finance, said that international financing for companies like Pemex is problematic as it is not aligned with the 2015 Paris climate change agreement, which sets out to keep global warming below 1.5°C.
“By not meeting these targets there is only greenwashing, like net zero. Their commitments are not credible. It is said there is no room for new fossil fuel projects, but the banks continue to support oil companies, like Pemex,” she told IPS from Paris.
“In Mexico there are perverse incentives because the country depends on extractive activities. There is a vicious circle, as these activities demand a greater share of the public budget and the banks channel money into them,” she told IPS from London.
A photo taken at the entrance to the Olmeca refinery, which the Mexican government expects to start up by the end of the year and to be fully operational in 2024. The plant is located next to the Lázaro Cárdenas neighborhood which is home to hundreds of people, in the Paraíso municipality of the southeastern state of Tabasco. CREDIT: Emilio Godoy / IPS
Dirty money
Pollution from Pemex’s activities has grown since 2018, a reality to which its financiers turn a blind eye.
In 2019, the Mexican oil company released 48 million tons of carbon dioxide (CO2) equivalent into the atmosphere, an increase of 3.3 percent, compared to 2018 levels, according to the report that Pemex sent to the Securities and Exchange Commission, a requirement for the company to sell bonds in the U.S. market.
In 2020, that pollution increased to 54 million tons, a rise of 12.5 percent, and the following year, to 70.5 million, an increase of 7.1 percent.
The main drivers of these increases have been the expansion of exploration, production and refining activities, plus drilling and flaring.
As of October 2022, Pemex was not in compliance with the 10-point framework of Climate Action + 100, a platform dedicated to measuring companies’ approach to the Paris Agreement goals. These aspects are related to short- and long-term reduction targets (2025 and 2050), decarbonization strategy and climate policies.
Therefore, the oil company, the eighth-largest global polluter as of 2017, according to the ranking of the non-governmental U.S. Climate Accountability Institute, is in breach of the Paris Agreement, adopted in 2015 and in force since 2021.
This also makes Mexico a country in non-compliance, as Pemex accounts for 10 percent of its GHG emissions.
Pemex has projected the reduction of pollution from its oil and gas production and extraction from 22.9 tons per 1000 barrels of crude oil equivalent in 2021 to 21.5 in 2025. For oil refining, the target is 39.6 tons per 1000 barrels in 2035, compared to just under 45.2 tons in 2021.
Delaporte criticized these targets as weak and insufficient, as they address only exploration and production (A1) emissions and leave out A2 and A3, the latter being the most polluting.
The Olmeca refinery is located in a coastal area of southeastern Mexico prone to flooding and exposed to rising sea levels due to increasing temperatures, one of the consequences of burning fossil fuels. CREDIT: Erik Contreras-Gerardo Morales / IPS
The national buttress
Another facet of the financial movement is related to national development banks, which have been pushing fossil fuel expansion without respecting their own social and environmental safeguards.
Since 2019, Bancomext has delivered 895 million dollars to the oil and gas industry, including Pemex, although the specific amount that went to the company itself is not public knowledge.
Banobras has been a great support for the oil company. In 2021, it provided over 1.1 billion dollars for the total acquisition of the Deer Park refinery in the U.S. state of Texas, of which Pemex already owned half and Shell the other 50 percent.
In addition, the bank shelled out 299 million dollars for the renovation of the Miguel Hidalgo refinery in the central state of Hidalgo.
Nafin lent Pemex 200 million dollars to upgrade the plant in 2021.
One phenomenon is the participation of the National Infrastructure Fund (Fonadin), which until now had never financed the fossil fuel sector. Last year, the fund contributed 346 million dollars for the renovation of diesel and gasoline processing technology at the Hidalgo refinery and at the Antonio M. Amor refinery, located in the central state of Guanajuato.
The latest operation involves 2.5 billion dollars in financing for the acquisition of the 13 production plants owned in the country by the Spanish company Iberdrola, 12 gas plants and one wind farm, in what has been described as part of “a new nationalization process.”
This maneuver also shows that international banks are still interested in financing fossil fuels, as the Spanish banks BBVA and Santander, as well as the U.S. Bank of America, have expressed a willingness to provide financing for the already agreed acquisition.
Climate activists stress that Mexican development banks have had social and environmental standards in place since 2017, but argue that they have been reluctant to apply them when it comes to Pemex.
Banobras has no safeguards assessments with respect to oil and gas projects, according to responses to information requests submitted by IPS. The same applied to Nafin, which did not carry them out in 2022 and 2023. The bank conducted one in 2021, classified as a bank secret. Bancomext also keeps information on this matter classified.
In the municipality of Paraíso, when the refinery begins to fully operate sometime in 2024, the pace will slow down, contrary to what the government wants. “We hope it will be profitable because it has cost a lot. And we hope nothing serious happens,” said Lozano, the teacher.
Beenes said Mexican and foreign banks should respect the Paris Agreement and abandon fossil fuels.
“State-owned banks can offer guarantees or insurance for credits. That is worrying, it is a problem for the transition. We are asking them to support the transition with specific investment conditions. It is in their best interest to stay away from fossil fuels, because they run the risk of having stranded assets in their portfolios,” she said.
The expert believes that banks are aware of the need for change, but the question is how fast they can do it.
Delaporte said development banks should finance green and non-oil companies.
“The change must be global, including commercial banks, development banks and hedge funds. Shareholders should ask Pemex not to build more facilities. If it refuses, they should divest and put the money into renewable companies,” she said.
Guzman, for her part, warned that if the current trend continues, it will be difficult for Mexico not only to meet its own climate targets, but also its contribution to the overall goal of keeping the global climate increase down to 1.5 degrees Celsius.
“There is talk of the need to continue mobilizing financing through national development banks for climate change. They should take advantage of this to allow the channeling and mobilization of funds” for the energy transition, she said.
A former fishing village based in the Buhuka flats on the Uganda side of Lake Albert on the DRC border. Residents in the area say oil exploration has come with changes. Credit: Wambi Michael/IPS
by Wambi Michael (kampala, buliisa, kikuube)
Inter Press Service
KAMPALA, BULIISA, KIKUUBE, Sep 21 (IPS) – French oil and gas giant TotalEnergies and China National Offshore Oil Corporation (CNOOC) are moving with pace in the development of oil and gas projects with a potential investment portfolio estimated at more than USD 15 billion. IPS looks at the project’s human rights record for the compensation of affected communities.
The development of oil and gas infrastructure in Uganda’s Albertine has been moving quickly since February 2022 when China National Offshore Oil Corporation (CNOOC) and France’s TotalEnergies signed the Final Investment Decision (FID).
It is anticipated that part of the 1.4 billion barrels of oil discovered in the Rift Valley region bordering DRC should be pumped out of the ground by the end of 2025.
TotalEnergies EP Uganda is working with CNOOC Uganda and Uganda National Oil Company (UNOC) through a Joint Venture Partnership plan to invest more than USD 10 billion to develop upstream facilities alongside the East African Crude Oil Pipeline (EACOP) that will transport oil produced from Uganda’s Lake Albert oilfields to the port of Tanga in Tanzania onwards to world markets.
Some Have Benefitted
The effect of the flow of so-called “petrodollars” to a region whose people have for ages begged for development is visible to those who have been to this area long before oil and gas were discovered there. From once-dirt roads to several newly constructed tarmacked roads, an international airport near completion, and new iron-roofed houses in some communities as compensation to the Project-Affected Persons (PAPs), as they are commonly referred to in the Districts of Hoima, Buliisa, Kikuube, and Nwoya.
“I think oil has impacted the Buliisa district greatly. Because I would not expect this road. Can you imagine a tarmac road has reached my home? It is because of oil. It was going to take us many years to get such good roads if the oil project had not kicked off,” says Mugaye Richard.
While there are serious environmental concerns related to the developments, the developers and the government are determined to proceed. Some residents, like Richard Mugaye, have benefited from compensation in cash or had new houses say they benefited way before the oil gets out of the ground.
“I’m expecting an even better life when oil production begins,” says Amina Lubyayi, a 38-year-old mother of seven who lives near the Buhuka flats, where China National Offshore Oil Corporation’s (CNOOC) Kingfisher development is located. The project will produce 40,000 barrels of crude oil per day during peak production.
Lubyayi is among those who had houses constructed for by CNOOC under the King Fisher resettlement action program in Buhuka flats.
“Our house was walled with mud and reeds. The mud would collapse whenever it rained. That is no more; I used to cook from a makeshift kitchen, but now I have a permanent one. We have light from solar, and we have a pit latrine, too,” Lubyayi told IPS.
Over 100 kilometers away from Kikuube to Buliisa district, 40-year-old Phinehas Owor-Mungu is planting fruit trees in the gardens of his newly acquired four-roomed stone-built house.
He told IPS that he was among the “lucky ones” whose land and developments were affected by TotalEnergies projects. “Because I and my family live in a much better house. I also got some cash in compensation for trees and crops and a disturbance allowance,” he explained.
“You see, sometimes, when you are eating well, your neighbors may be jealous. People have been compensated. Those who opted for cash got their cash, and we who opted for houses have had houses built for us. The roads here have improved, and people are getting employed. And then one says people are worse off?”
Down the road, 33-year-old Stephen Enach is busy placing a slab on a pit latrine to one of the houses that will soon be handed over to another person affected by the oil projects.
Jobs like Enach’s have become plentiful, and many young men and women are directly working with TotalEnergies or its subcontractors.
So far, 12,000 jobs have been created, according to Betty Namubiru, the Manager of National Content at the Petroleum Authority of Uganda.
“It is important to note that 94 percent of the 12,000 are Ugandans. We hope to hit 160,000 jobs when the construction of facilities is at its peak. And more Ugandans will have more opportunities,” Namubiru told IPS.
Compensation Complaints
Fred Lukumu, the District chairperson, told IPS that while the Buliisa District is witnessing some of the benefits of oil and gas developments, there has been an outcry over the delay in compensating the PAPs.
“So many people have lost their lives before earning their compensation which they were entitled to because of the delay. There has also been an outcry that compensation rates have been generally low. Especially for land.”
He told IPS that land in Buliisa district was valued at 3.5 million shillings ($945) per acre, yet in the neighborhood, the cost of land there was almost double the cost.
Fred Balikenda is one of those who have refused to be relocated from their land before they are adequately compensated. He is a resident of Kigwera sub-county, where TotalEnergies is putting up several structures, including a central processing facility. While all his former village mates accepted compensation and moved to their resettlement houses, Balikenda told IPS that he was determined to die for his land.
“They came and fenced my land illegally. They were supposed to construct a house for me before I vacated. The road which I was using was closed,” he narrated. “A man will remain a man. I will stay here. If they don’t pay me 200 million shillings, I will not shift. They will kill me, and it will remain as history.”
Peter Lokeris, Minister of State for Minerals, is one of the government officers who has tried to resolve compensation-related complaints. He told IPS that the 200 million shillings ($540,000) that Balikenda was demanding was exorbitant. He told IPS that the government has faced challenges with “speculators” who said have tended to hike the price of the land beyond the market rates.
“We shall have to repay the oil companies the money they have used to build houses and pay compensation. They are not free,” he said. “So, if we think that we will cheat the companies, the companies will cheat us. If we produce and there is no profit, we shall not earn anything as a country.”
In July, Human Rights Watch released a report, “Our Trust is Broken,” which documented what it described as “devastating impacts” on the livelihoods of Ugandan families from the land acquisition process.
“Critically, Human Rights Watch found that affected households are much worse off than before,” said the report.
“Most lands were initially evaluated in 2017-2019. Compensation was not received until three to five years later, in 2022 or 2023. Considerable hardship accrued from these delays that were also poorly communicated amidst confusion over the ability to access crops during this time,” the Human Rights Watch report said.
“EACOP has been a disaster for the tens of thousands who have lost the land that provided food for their families and an income to send their children to school and who received too little compensation from TotalEnergies,” said Felix Horne, senior environment researcher at Human Rights Watch. “EACOP is also a disaster for the planet, and the project should not be completed.”
Dickens Kamugisha, a lawyer and the Executive Director of the African Institute for Energy Governance (AFEIGO), told IPS that some of the PAPS have waited for over five years without compensation.
“We have seen hundreds of Ugandans who are being displaced without fair and adequate compensation. The constitution says you must give those who are affected adequate and fair compensation.”
TotalEnergies says it would apply an uplift of additional financial compensation of 15 percent per year for the period between the valuation of the inventory and payment in Uganda to mitigate the impact on the communities.
“These measures were aimed at mitigating the effects of these delays on the PAPs in their daily lives. In practice, most people interviewed by Human Rights Watch only received 30 percent (two years of 15 percent) even though compensation delays, in many cases, were between three and five years. One man said: “This was grossly inadequate to make up for several years of diminished or no revenue from lost land.”
Another man said: “For three years, I did not access my coffee plants. Two kids dropped out of school. My revenue went from 4 million to 1 million a year. They gave me 30 percent.”
Patrick Jean Pouyanné, TotalEnergies’ Chief Executive Officer, has continued to dismiss reports like the one by Human Rights Watch.
“I can tell you that we always take care of community concerns. There are so many reports by third parties. Not by us because nobody believes in us. The fact is that you can have one or two people who may not be happy with the way they are relocated. But we are doing that in the best standards possible.”
However, Human Rights Watch said TotalEnergies’ practices on EACOP’s land acquisition process were inconsistent with its expressed commitment to uphold relevant international standards on land acquisition.
Why the Delay in Compensation?
Ernest Rubondo, the Executive Director at the Petroleum Authority of Uganda, whose Authority regulates the Oil and Gas Sector, told IPS that the delay in compensation for EACOP, Tilenga, and Kingfisher developments was one of the challenges. However, he noted that no land can be utilized for the projects before full compensation.
He explained that the processes of land acquisition and compensation in Uganda are not short.
“First of all, you have to properly identify the land that you would like to acquire. Secondly, you have to confirm the number of people who are on the land. And that isn’t always easy because the land ownership systems in the country are quite different,” he said. “There are many people sitting in Canada and the US, but they have land here.”
Rubondo told IPS that in some instances, they found people occupying land but had no proof of ownership and did not know how much land they had, especially in the Albertine region, where land had not been titled right from the colonial period.
The Determination of Compensation Rates
According to Rubondo, the determination of compensation rates originated from the district where the land is located.
“The district has to propose the rate; the government Chief Government Valuer has to compare them with what happens in other districts and the other values. As you would expect, no one ever accepts that this is the right amount for ‘my land’. So, you start going back and forth,” explained Rubondo.
He said once the rates are determined, they are communicated to the landowners who had options whether to receive cash compensation in exchange land for land, or have houses built for them.
“For those that opt for cash, you have to help them to open bank accounts; then you have to educate them on how to handle the money. Because NGOs are saying it is unfair to get these large amounts of money and put them in the hands of people who have never had such large sums of money,” added Rubondo. “You will never have all of them to agree. You put those who disagree in a certain bracket. So that process is not short.”
He noted that the value of the land identified for the project changes per year.
“The delays have been recognized. And these project-affected persons are being compensated for the delay at a rate of 15 percent per year. Thirty percent of the value of land compensation for disturbance is a disturbance allowance. And then they are given things like food to take them through the transition.”
However, Dickens Kamugisha told IPS that government officers tended to prioritize fast-tracking projects like EACOP regardless of the complaints by PAPs.
“It’s those officials who say that they have learned from the failures of those other oil producers, that they will not repeat those mistakes. But when you say the project must move on when you know that there are things you must address, what are you doing to your country? What are you doing to your citizens?” asked Kamugisha.
Compensations Update
IPS received information from the Petroleum Authority about the status of compensation under the King Fisher Development Project (KFDP) operated by CNOOC, Tilenga Development, operated by TotalEnergies, and EACOP under a joint venture led by TotalEnergies.
Tilenga Project by TotalEnergies
The total land requirement for the Tilenga Project is approximately 2,901 acres. The land acquisition process for the Tilenga project stands at 97 percent, with approximately 5,412 out of 5,523 PAPs fully compensated, with 143 resettlement houses handed over, 15 are ready to be handed over, and 77 under construction.
The Kingfisher Development Project (KFDA) by CNOOC.
The acquisition of land for the KFDA was concluded at 100%. The total land requirement for the KFDA is approximately 1,020 acres with 727 Project Affected Persons (PAPs). Sixty-five (65) resettlement houses were constructed and handed over to the owners.
EACOP Compensation Ugandan Side
The total land taken for the EACOP project was estimated at 2,740 acres, housing four construction camps, heating stations, and the pipeline right of way (ROW). The compensation stood at 84 percent, with 3,062 out of 3,656 having received their compensation and a total of 177 resettlement houses handed over to the respective owners.
Opinion by Jomo Kwame Sundaram (kuala lumpur, malaysia)
Inter Press Service
KUALA LUMPUR, Malaysia, Sep 20 (IPS) – The growing and changing material requirements for new technologies have triggered natural resource scrambles for strategic minerals, generating dangerous rivalries fought out in the global South.
Scrambles for resources
Jayati Ghosh, Shouvik Chakraborty and Debamanyu Das have analyzed these new scrambles for mineral resources in developing countries triggered by major new innovations since the electronics boom.
Jomo Kwame SundaramNatural resources here refer to naturally occurring solid, liquid or gaseous materials in or on the Earth’s crust. When extracted and exported commercially, they are considered primary commodities.
All technologies – both peaceful and military – have specific material requirements. For example, energy transitions need particular minerals for renewable energy generation, transmission and storage.
New technologies, with specific material requirements, are changing the nature of rivalries – among states, corporations and individuals – seeking to control these mineral resources.
Feasible mass use of renewable energy requires extracting needed natural resources, which incurs costs and has adverse consequences. Commercial feasibility implies profitable extraction of desired minerals.
Thus, addressing global warming by generating more energy from renewable sources – while desirable and necessary – in turn generates new problems and challenges which need to be addressed.
Rare earths
Despite their name, rare earth elements (REE) may not actually be scarce. But most REE are difficult and costly to extract as they are usually found together with other minerals. Unsurprisingly, REE demand and supplies have changed greatly in recent years.
For the time being, demand for at least 17 ‘rare earth’ minerals is expected to grow. The inter-governmental International Energy Agency (IEA) projects supplies of some critical minerals will increase at least 30-fold over the next two decades.
Extracting lithium and other such minerals also has very problematic environmental implications. Mined all over the world, REE are usually processed and separated by several stages of often complex and costly extraction and chemical processing, with many harmful to the environment.
China currently leads the world in rare earth production, with over a third of the world’s known REE reserves. While Chinese companies dominate some supplies, China’s rare earth imports currently exceed its exports.
Nevertheless, China dominates ‘downstream’ processing of REEs. Chinese companies control over 85 per cent of the costly REE processing processes. Unsurprisingly, China also accounts for over 70% of the world’s photovoltaic solar panel production and over 90% of its silicon wafer manufacturing.
Lithium
Lithium is one of the minerals over which control has been hotly contested. Lithium is particularly needed for processes to replace mechanical energy generation using fossil fuels. It is also needed for many industrial, office and household appliances, including rechargeable batteries, electric vehicles and electronic goods.
Batteries – including rechargeable lithium-ion electrical grid storage devices – account for three-quarters of current supply. The IEA’s Sustainable Development Scenario expects demand to rise 42-fold in less than two decades!
In 2021, there were almost 89 million tons of known lithium resources, mainly in developing countries. For decades, lithium mining has been very controversial, largely due to increasingly better known adverse environmental impacts.
As pure lithium is very chemically reactive, it is often mined as ore, as in West Australia. It is also obtained from salt flats and brine pools in the southern cone of South America, particularly in Bolivia, Chile and Argentina.
For decades, China has led the world in lithium mining. Australia and the US were second and third by the start of the pandemic, with 12% and 9% respectively. While Australia is the world’s largest exporter, lithium is mainly and increasingly mined in developing countries by a relatively few companies.
Undermining communities
REE mining has adversely impacted various ecosystems and communities. Mineral deposits may have to be raised from subterranean sources, or ‘concentrated’ by evaporation.
Such techniques typically deplete, contaminate and otherwise reduce access to fresh water. Local water systems – used by people, animals, including livestock, and plants, including crops – are often badly compromised as a consequence.
Extractive mining and related operations have worsened such environments. But mining companies can often get their way with impunity, often intimidating communities with the help of local politicians, government officials and police.
Such ecological damage has devastated forest and vegetation cover, caused biodiversity loss, and compromised hydrological systems. Thus, extractive operations often involve abuses, with adverse effects for local communities.
Economic gains to local communities are typically modest compared to mining’s adverse consequences. Benefits largely accrue to local ‘enablers’ while costs vary within communities with circumstances.
The authors also urge majority government ownership of mineral extracting and processing companies. This will reduce foreign reliance and meddling, including by big powers such as the United States and China.
Government transparency and accountability, including independent audits, can help ensure less adverse consequences and fairer compensation for all involved.
This also prevents elite capture, abuse and deployment of mineral rents in their own interest. Avoiding such abuses is necessary to ensure resource rents actually advance sustainable development, as Bolivia is striving to do.
Sustainability undermined?
New frontiers for mineral extraction are emerging, especially as innovation creates new extraction and processing possibilities. This implies a vicious circle as global warming becomes both cause and effect of such mineral extraction.
Mining practices threaten ecological fragility and vulnerability. Similarly, polar and seabed exploration and mining may well trigger disastrous environmental consequences, including mass extinctions of vulnerable polar and marine life.
Opinion by Jomo Kwame Sundaram (kuala lumpur, malaysia)
Inter Press Service
KUALA LUMPUR, Malaysia, Sep 13 (IPS) – The commodity boom early this century was mainly driven by mineral prices. Yet, mining’s contribution to developing countries’ revenue has been modest, largely due to massive tax evasion and avoidance.
Less mining royalties
Decades of well-supervised mineral extraction prove resource extraction by accountable and effective states can accumulate more ‘resource rents’ to enhance sustainable development and social welfare.
Jomo Kwame Sundaram
Well-regulated, progressive resource rent taxation can greatly enhance such extractive industries’ fiscal contribution to public wellbeing and national development.
But mining royalty rates fell significantly at the end of the 20th century to a range up to 30 per cent. Mineral revenue rates must be increased if resource-rich developing countries are to progress.
Those responsible have justified lowering resource rents for host governments and economies. The World Bank’s Extractive Industries Transparency Initiative supposedly seeks to cut corruption associated with mining, and to attract more mining foreign direct investment.
From the late 20th century, Tanzania rapidly became the third largest gold producer in Africa – after South Africa and Ghana, once known as the Gold Coast.
But with negligible royalties and tax revenue, Tanzania – a least developed country – subsidizes the government-provided infrastructure built to attract primarily foreign gold mining investors.
Ten policy proposals
The Intergovernmental Forum on Mining, Minerals, Metals and Sustainable Development (IGF) and the African Tax Administration Forum (ATAF) have proposed how developing countries can benefit more from their mineral resources.
Their book – The Future of Resource Taxation: 10 policy ideas to mobilize mining revenues – considers policy options available to governments, and offers lessons from how several have successfully implemented the proposed approaches.
Minimum Profit Share for Government
Many governments receive mineral resource rents via royalties and corporate income tax. A few insist on minimum government revenue even when prices fall below thresholds. The book assesses whether such ‘profit sharing’ – in Tanzania, the Philippines and Ecuador – improved on the status quo ante.
Production Sharing Contracts
Many governments get oil and gas revenues via production sharing contracts. Some have been considering whether such arrangements would work well for other minerals. A chapter considers issues arising from executing such contracts.
State Equity Participation
State equity participation enables governments to receive dividends and other benefits from their investments. The volume offers practical guidance in this regard.
Commercial State-Owned Enterprises
Nationalist desires for mineral resource ownership may involve fully state-owned mining enterprises to maximize economic benefits to the nation. One chapter recommends how such companies should be established, expanded and reformed to succeed.
Variable royalties
Variable royalty rates are easier to enforce than profit or cash-flow based taxes. The book offers pragmatic guidance from reviewing variable royalties in 15 countries.
Related-Party Sales
Resource-rich Latin American countries have been using commodity prices from a relevant exchange – such as the London Metals Exchange – to reduce tax dodging involving mineral transactions. Such reference prices are less vulnerable to related-party mineral sales’ tax dodging.
Carbon Pricing and Border Adjustment Mechanisms
The carbon border adjustment mechanism (CBAM) taxes imports from outside the European Union (EU) for presumed greenhouse gas emissions at rates equal to what EU-made products are charged by its Emissions Trading Scheme. The report considers CBAM’s likely impact on mineral-exporting developing countries, and whether they should emulate it.
Community Revenue from a Development Turnover Tax
Some mining tax instruments cater to specific demands from resource-rich countries. One chapter discusses a ‘development turnover tax’ requiring private mining companies to invest in shared public infrastructure. Alternatively, the national revenue authority can collect a development turnover tax for a government-run mining development fund to do likewise.
Competitive Bidding for Mining Rights
Under the correct conditions, competitive bidding can efficiently assign mineral resource extraction licences to private companies. The report describes how countries can increase revenue from allocating mining licences via competitive bidding.
Better Monitoring of Quarrying
In most resource-rich countries, regulatory oversight and mining revenue mobilization tend to focus on precious minerals, ignoring quarried industrial minerals. Remote monitoring can help tax authorities better assess quarried output volumes and sales.
Implementation matters
When mining companies use their power, money and influence to get mining rights, land, water and other resources, they invariably provoke resistance, often local. But better international, national and local regulation can reduce such adverse impacts and related conflicts.
Some proposals in the volume involve incremental changes, while others are more radical. But they all need careful government consideration to ascertain appropriateness. Of course, the likelihood of success also depends on various circumstances.
Governments require human and financial resources to implement the proposed reforms. They should avoid inefficient and ineffective tax incentives as well as enforcement powers undermining government policies and the law.
Effective implementation often needs support for resource-rich developing countries – from international organizations, bilateral and other development partners – to improve mineral resource rent collection.
Generally, mining revenue has fallen short of expectations – largely due to inappropriate laws, poor investment agreements, overly generous tax incentives, tax evasion and avoidance. Some countries also lack the needed expertise, information and means to effectively implement mining taxation, free of corruption.
Intensified competition for mineral resources is worsening rivalries. As demand grows, new alliances and rivalries are emerging, even as circumstances change.
With such uncertainties in a fast changing international situation, developing countries can better advance their national interests by cooperating and staying non-aligned, rather than competing with other mineral producing nations.
STOCKHOLM, Sweden, Sep 12 (IPS) – While climate change is relentlessly progressing, threatening life on earth, world leaders continue to meet while planning for a future where this immense menace to human existence remains a minor item on the agenda.
Opinion by Marianne Buenaventura Goldman, Reitumetse Nkoti Mabula (cape town, south africa)
Inter Press Service
CAPE TOWN, South Africa, Sep 05 (IPS) – The Role of the New Development Bank in Monitoring Project Impacts on Communities
The 15th BRICS Summit held in Johannesburg, South Africa this month has once again put the spotlight on the Lesotho Highlands Water Project (LHWP) as a shining example of multilateralism and the New Development Bank’s (NDB)commitment to financing sustainable development projects within BRICS countries and other developing countries. During the 2023 BRICS Summit, the New Development Bank and the Trans-Caledon Tunnel Authority (TCTA) signed a 3.2 billion Rands loan agreement for the implementation of Phase Two of the Lesotho Highlands Water Project (LHWP) in Lesotho. This funding complements contributions by other financiers, notably the African Development Bank (AfDB) and the Development Bank of Southern Africa (DBSA).
LHWP is a multi-phased water infrastructure project which involves construction of a number of dams in Lesotho to transfer water to South Africa, while generating hydropower for Lesotho. The entity that is responsible for implementation of LHWP in Lesotho is the Lesotho Highlands Development Authority (LHDA). The TCTA, a state-owned entity charged with financing bulk raw water infrastructure in South Africa, is responsible for financing and building the LHWP.
News of the signing of this agreement was received with some interest and enthusiasm in many quarters in Lesotho, partly because of the participation of Prime Minister Matekane during the Summit, as an observer, and largely due to the perceived benefits of this loan for Basotho. On the other hand, the news was also viewed with skepticism by civil society organisations working with communities directly affected by LHWP in light of the adverse social, economic, environmental and gender impact which communities continue to experience daily. The truth is, whilst it is laudable and important for both Lesotho and South Africa that the NDB provided this crucial financing for socio-economic development of their peoples, it is equality imperative that this development should not come at a cost to vulnerable and marginalised communities who have been forced to host this project.
The benefits for communities in South Africa are straightforward; according to the media release issued by the NDB on the 21st of August 2023, LHWP Phase II will increase the water yield of the Vaal River Basin by almost 15%, supporting economic growth and livelihoods of approximately 15 million people living in Gauteng Province, including communities in three other provinces which also stand to benefit from increased water supply. However, these benefits are not guaranteed for thousands of people and communities directly affected by this project in Lesotho.
LHWP Phase II has garnered its fair share of criticism and controversy recently, for its operations and impact on the people of Polihali, Mokhotlong. These include heavy handed police intervention against people who rightfully express dissent and protest to some aspects of the project or how it is implemented. There are also complaints about the project’s implementing authority, the Lesotho Highlands Development Authority (LHDA)’s compensation policy. These include unfair compensation amounts to communities which were based on unilaterally determined compensation rates and periods, non-payment of communal compensation which has prevented communities from developing income generating projects, and lack of developments such as provision of water and sanitation for communities.
Implementation of LHWP requires acquisition of land from local communities; it is estimated that 5,000 hectares of land will be flooded by the Polihali Dam.1 This acquisition of land will result in significant negative impacts on the livelihoods and socio-economic status of the local populations. Communities are going to lose arable land, grazing ranges for livestock which is the main store of wealth for communities in the area, medicinal plants, useful grasses and wild vegetables which form the basis of livelihoods for communities.
Another challenge of the construction of this Dam is the required resettlement and / or relocation of communities. It is currently estimated that 270 households and 21 business enterprises will need to be relocated, mainly due to the impoundment of Polihali reservoir.2 About 12 communities will be relocated, and an additional 5 communities will be required to resettle entirely, a process that will have great economic and socio-economic and cultural implications for generations to come. Regrettably, there is no livelihood restoration strategy that has been developed by the LHDA to ameliorate the plight of these communities or at least no such strategy has been shared and/or discussed with communities and their representatives.
Negative gender impacts have also been noted; women within LHWP Phase II project area are already marginalised because of cultural stereotypes and practices which prevent them from owning land. The LHWP Phase II Compensation Policy has only served to solidify and exacerbate the problem of gender inequality through its gender biased payout of compensation procedure which deprives women of compensation for land previously managed or shared. This increases their economic vulnerability and susceptibility to gender-based violence. In fact, there have been concerning news reports in recent months, of increasing number of gender-based violence cases including teenage pregnancies and girl-child school dropouts, sex work/transactional sex, sexual violation especially of young girls, and increased HIV infection prevalence. These have been linked directly to the influx of immigrant contractors and labour workers who have come to work on the LHWP, continuing a trend which was first observed during implementation of the previous phases of this project. It is worrying to note, that at this point in the of implementation LHWP Phase II, there is still no gender policy, and the implementing authority still insists on turning a blind eye to the vulnerability of women as a result of this project.
The news of the NDB providing a loan for Phase 2 of the LHWP, totaling an amount of 3.2 billion Rands (US $ 171.5 million) raises further questions on the NDB’s policies and practices concerning transparency, accountability and its environmental and social safeguards, including gender. The NDB has indicated its plans to further strengthen gender mainstreaming in all its projects in its second five year General Strategy (2022-2027). As called by BRICS civil society organisations since the start of NDB operations, the NDB needs to urgently put in place a gender policy, with support of gender specialists at the NDB to oversee that gender is integrated in all aspects of its projects, in strong partnerships with its clients such as the TCTA and the LHDA.
All eyes are on the former Brazil President, Dilma Rousseff, new President of the NDB on her ability to transform the NDB from a multilateral development bank whose track record appears to be gender neutral towards one can proactively empower women and delivering on gender equality as part of New General Strategy and operations. In a recent statement, Rousseff explained that a priority of the NDB will be to “…promote social inclusion at every opportunity we have. The NDB needs to support projects that help to reduce inequalities and that improve the standard of living of the vast communities of the poor and excluded in our countries.”
The NDB has now grown beyond the BRICS countries, and recently included new member countries such as the United Arab Emirates, Bangladesh, Egypt and Uruguay and has greater aspirations to add many more countries. Given the NDB’s expansion, it is critical that the NDB begin to live its vision of being an accountable institution for the South, by the South. The NDB should urgently put into practice its policies such as on Information Disclosure. By doing so, the NDB will enable communities to access information on projects that directly affect their lives and livelihoods. The NDB also needs to work more closely with its clients to follow through on the NDB guidelines provided in its Environmental and Social Framework. The Civil Society Forum of the NDB (South Africa / Africa), including Lesotho community-based organisations calls on the NDB to learn from past mistakes experienced during the implementation of Phase 1 of the LHWP. During Phase II of the project, the NDB and other development finance institutions such as the DBSA and AfDB should ensure that the LHDA convenes effective and timely community consultations, provide basic services such as clean water, and ensure adequate and fair compensation to all affected communities – especially women who have in the past been left behind.
During the 2023 BRICS Summit, which took place on 22-24 August, Minister Naledi Pandor of South Africa’s Department of International Relations and Cooperation underscored the need for the NDB to do outreach at the local level in terms of sharing information on the projects the NDB funds, including vital project information, including the $3 billion the NDB plans to invest in South Africa. All eyes are now on South Africa and Brazil with leadership from NDB President Rousseff and Minister Pandor to push for stronger and more inclusive development outcomes of the NDB, with women front and centre of all future NDB projects.
The LHWP Phase II is an example of the challenges faced by communities affected by large infrastructure projects with funding from Public Development Banks (PDBs) such as the NDB, AfDB and the DBSA. As the hundreds of PDBs convene at the 4th Finance in Common Summit (FICS) in Cartegena, Colombia on 4-6 September to join forces to transform the financial system towards climate and sustainability, it will be important that PDBs transform their models to be more effective in promoting positive development outcomes for communities. PDBs have been advocating to increase volumes of finance for development. Civil society across the globe are in solidarity, making their voices heard at the FICS expressing concerns that limited attention is being given to the need to shift the quality of that finance to ensure it does not exacerbate the current crises and to ensure it shifts the power in decision making. Such attention is even more needed as the current financial architecture hinders the ability of governments to protect people and the planet.
Marianne Buenaventura Goldman is co-Chair, Civil Society Forum of the NDB (Africa) & Project Coordinator, Forus Reitumetse Nkoti Mabula is Executive Director, Seinoli Legal Centre
CARTAGENA, Colombia, Sep 04 (IPS) – In the midst of a complex web of crises, spanning climate change, biodiversity depletion, constraints on civic space and mounting debt burdens, civil society organizations and human rights defenders from over 50 countries have united their voices to call for immediate and impactful action from Public Development Banks (PDBs).
The global coalition’s message is clear: when it comes to financing for development, principles of rights, justice, sustainability, transparency, accountability and dignity for all cannot remain mere slogans. They must form the core of all projects undertaken by all Public Development Banks.
The Finance in Common Summit has become a pivotal platform for Public Development Banks from around the world. The fact that this year’s summit is taking place in Cartagena, Colombia, the deadliest country in the world in 2022 for human rights, envrionmental and indigenous activists, development banks must acknowledge and integrate the protection of human rights into their projects.
“Development banks are advocating to play an even bigger role in the global economy. But are they truly fit for this purpose? Unfortunately, the stories of communities around the world show us that development banks are failing to address the root causes of the very problems they claim to solve. We need to hold them accountable for this,” says Ivahanna Larrosa, Regional Coordinator for Latin America at the Coalition for Human Rights in Development.
“When PDB projects cause harm to people and the environment, PDBs must remedy these harms. All PDBs should implement an effective accountability mechanism to address concerns with projects and should commit to preventing and fully remediating any harm to communities,” adds Stephanie Amoako, Senior Policy Associate at Accountability Counsel.
The ongoing crises demand a transformation in the quality of financing and a power shift to include the voices of communities. The existing financial architecture not only impedes governments’ ability to safeguard both their citizens and the environment but also contributes to the escalating issue of chronic indebtedness. Policy-based lending and conditionalities enforced by International Financial Institutions have steered countries toward privatization of essential services, reduced social spending and preferential treatment for the private sector. This burdens the population with higher taxes, inflation, and weakened social safety nets.
“The same multinational companies that have polluted and violated human rights in Latin America are now obtaining financing from development banks for energy transition projects. Another example is the development of the green hydrogen industry in Chile, which carries a very high environmental and social risk,” says Maia Seeger, director of the Chilean civil society organization Sustentarse.
Addressing these issues requires a comprehensive and sustainable transformation of the financial architecture as well as holistic reforms and synergies with civil society and communities. Environmental and neo-colonial debts need to be a thing of the past and equitable reforms the thing of the present.
Global civil society, in response to these challenges, demands bold and decisive actions in a collective declaration signed by over 100 organisations. The demands are the result of a 4-year process in which a coalition of civil society organisations has come together to call on all PDBs at the Finance in Common Summit to embrace tangible actions that genuinely prioritize and protect people.
Just last month we have seen that change is possible when communities are involved, as the people of Ecuador voted to ban oil drilling in one of the most biodiverse places on the planet, the Yasuní National Park in the Amazon rainforest.
“The global financial system needs not just a rethink but a surgical operation, and that requires bold action. Governments and institutions such as the Public Development Banks must cancel the debt of the countries that require it and put in place concrete and immediate measures to put an end to public financing of fossil fuels, to have financing based on subsidies so as not to fall into the debt trap once again. It is time for the rich countries, the biggest polluters and creditors, to offer real solutions to the multiple crises we are currently experiencing,” says Gaïa Febvre, International Policy Coordinator at Réseau Action climat France.
“Public and Multilateral Development Banks must divest from funding false climate solutions and projects that harm forests, biodiversity and communities. Instead, they should redirect finance to support gender just, rights based and ecosystems approaches that contribute to transformative changes leading to real solutions that address climate change, loss of biodiversity and create sustainable livelihoods for Indigenous Peoples, women in all their diversities and local communities. Public funds must support community governed agroecological practices, small scale farming and traditional animal rearing practices instead of large scale agri-business which perpetuates highly polluting and emitting industrial agriculture and unsustainable livestock production, the root cause for deforestation and food insecurity,” adds Souparna Lahiri, Senior Climate and Biodiversity Policy Advisor at the Global Forest Coalition (GFC).
The call to action emphasizes that achieving the Sustainable Development Goals (SDGs), effective climate action aligned with the Paris Agreement and successful implementation of the Kunming-Montreal Global Biodiversity Framework require Public Development Banks to pivot from a top-down profit-driven approach to one that prioritizes community-led involvement and human rights-based approaches.
“It is important that civil society participation be strengthened at the Finance in Common Summit (FICS). In previous years, civil society has been sidelined. Clearly, there is still some room for improvement for civil society participation to become truly meaningful. The lack of civil society representative on the opening panel this year is just one example of that. PDBs should promote and support an enabling environment for civil society and systematically incorporate civic space, human rights and gender analysis. This year, we are working towards ensuring that civil society voices, including those from communities are heard at the FICS. In collaboration with the FICS Secretariat, Forus seeks to establish a formal mechanism between civil society and PDBs and to ensure that civil society is recognised as an official engagement group,” says Marianne Buenaventura Goldman, Project Coordinator, Finance for Development at the global civil society network Forus.
While the challenges associated with achieving the 2030 Agenda remain complex, the slow progress in Africa is, fortunately, redeemable. Africa possesses abundant assets to achieve the SDGs. The challenge lies in effectively harnessing these resources to turn Africa’s comparative advantages into global competitive advantages.
As a first step, we need to develop new narratives that move away from portraying Africa as a “victim” and instead emphasise Africa’s position as a solutions powerhouse for rescuing the SDGs and climate mitigation.
Cobalt and platinum, in particular, are critical minerals for the energy transition and electrification of transport systems. However, Africa’s extractive sector is an enclave with insignificant linkages to local economies.
Secondly, we must go beyond the logic of resource extractivism that locks the continent in perennial booms and busts that accentuate Africa’s vulnerabilities to global shocks. To address this, African governments must implement smart industrial policies, foster local value addition, develop regional value chains, and promote resource-driven industrialisation.
These should be supported by well-constructed and executed local content and national suppliers’ development programmes, which will ultimately lead to the emergence of well-performing local small- and medium-scale enterprises.
The evidence is clear that climate action will generate dividends for the continent. To this effect, we need to go beyond GDP metrics. For instance, many African countries, including those in the Congo Basin, possess vast natural wealth, which often goes unaccounted for in official statistics.
Therefore, we need to strengthen the capacities of national statistical systems to incorporate natural capital accounting into national accounts. With this, countries can assess the monetary value of their natural wealth to design ecological compensation schemes, participate in carbon markets, reinforce the value proposition of nature conservation, and secure more fiscal space.
At the right price (e.g., US$120/ton of C02 sequestrated), carbon credit markets could generate US$82 billion of innovative financing per year, with the Congo Basin being a hotspot for this.
However, the fundamentals must be right to secure macroeconomic stability and sustainable financing. These include enhanced trade, sustainable industrialisation, and economic diversification to reduce the continent’s vulnerabilities, improve the share of tradeables in total exports, and generate the millions of jobs that Africa needs for its youthful population.
The African Continental Free Trade Area (AfCFTA), ratified in 2019, offers great potential for trade and investment on the continent, helping to catalyse the development of regional value chains and enable the continent to climb the ladder in global value chains. African multilateral development banks also play an important role in de-risking investments on the continent on the road to making Africa a globally competitive investment destination.
Looking ahead, we should also build on the outcomes of the recently held UN Food Systems Summit and 2nd Stocktaking Moment and accelerate the implementation of the Common African Agro-industrial parks Programme (CAAPs) to promote continental agro-industrialisation and integration.
These agro-industrial parks have the potential to stimulate public and private investment in agro-industries, ensure greater food security across Africa, and increase the value of Africa’s food and agriculture product exports.
Additionally, access to affordable, reliable, and sustainable energy is crucial to achieving many of the SDGs, ranging from poverty reduction and advancements in health, education, water supply, and industrialisation to mitigating climate change, yet Africa faces a huge energy gap. Building the Inga III and IV dams must be prioritized to increase access to renewable electricity.
To finance these and other transformational projects, dormant funds in our pension funds should be mobilized as efforts to reform the global financial architecture and reduce the cost of borrowing for our countries continue.
Africa must keep its eye on the prize and chart its own path to rescuing the SDGs. Isolated solutions and “business as usual” projects will no longer suffice. We need to strengthen Africa’s institutions and agency by building ecosystems for transformational change and leadership.
Drawing inspiration from the ‘moonshot’ programmes that led to the historic moon landing in 1969, economist Mariana Mazzucato highlights the importance of creating structures that foster collaborative, mission-oriented thinking, and a shared sense of purpose.
To build such an environment on the continent, ultimately, we need leaders from all walks of life who are responsive and transparent, embrace multi-stakeholder consultations, and work inclusively towards strengthening social compacts and domestic accountability to fully harness Africa’s potential for achieving the SDGs.
Antonio Pedro is Acting Executive Secretary, UN Economic Commission for Africa and UN Sustainable Development Solutions Network Leadership Council Member
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This cookie is set by GDPR Cookie Consent plugin. The cookies is used to store the user consent for the cookies in the category "Necessary".
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This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Other.
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This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Performance".
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The cookie is set by the GDPR Cookie Consent plugin and is used to store whether or not user has consented to the use of cookies. It does not store any personal data.
Functional cookies help to perform certain functionalities like sharing the content of the website on social media platforms, collect feedbacks, and other third-party features.
Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors.
Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics the number of visitors, bounce rate, traffic source, etc.
Advertisement cookies are used to provide visitors with relevant ads and marketing campaigns. These cookies track visitors across websites and collect information to provide customized ads.
