DFID Work on Extractive Industry Reforms in Africa

Slide 1

Overview of DFID’s extractives work in Africa• All of DFID’s bilateral programmes in Africa

are currently working or planning to engage with extractive industries

• DFID has operational projects in 5 countries (dark green)

• Scoping studies or project design for work on extractive industries are being carried out in a further 3 countries (medium green)

• 9 countries have expressed interest in working on this agenda (light green).

Slide 2

Most African countries are underexplored – for example only 2% of Ethiopia’s subsoil has been surveyed and even Zambia with its mature mining industry remains 60% unexplored. Paul Collier estimates that future discoveries and resulting exports in Africa will be around five times their current level.

Democratic Republic of Congo (DRC)

Slide 3

Unparalleled mineral wealth: 50% of the world’s cobalt, 25% of industrial diamonds, 5% of copper… BUT fuelling conflict and corruption, not development.

Renewed interest from multinational investors, international initiatives against conflict minerals, and participation in EITI may offer opportunities for changeTax collection from gold in Eastern DRC

Together with the World Bank we are investing in mining sector reform (£28 million DFID contribution)Difficult conditions slow down progress, but we have secured continuation of EITI process on two occasions and are helping directly with contract transparencyImmediate focus will be on conflict minerals in Eastern DRC and partnership with responsible mining companies in Katanga Province

Ghana

Slide 4

Already a major gold producer, Ghana started oil production in 2012; revenues from the first phase could amount to US$850 million

DFID Ghana is developing two new programmes to (a) bring together communities, government and industry in oil producing areas and (b) support state institutions responsible for revenue collection, management and allocation

DFID Ghana’s STAR programme has just awarded $2million in grants to 13 civil society and 7 community-based organisations to strengthen transparency and accountability in the oil sector

Mozambique

Slide 5

Already rich in coal, offshore gas revenues could bring billions of US$s in additional revenues

DFID is designing a new technical assistance programme with the World Bank ($10 million DFID contribution) to address critical reform priorities in the mining and gas sectors

DFID Mozambique is also working to establish a partnership with Rio Tinto to promote sustainable agriculture in mining areas.

Coal in Mozambique’s Tete Province

Offshore gas finds in Mozambique

Nigeria

Slide 6

Nigeria has estimated oil & gas reserves to generate around $100bn over 40 years

BUT corruption means that oil wealth is not helping the poor. Between 2009-2011 £4bn in fuel subsidies were siphoned off

This sum was calculated by a Nigerian National Assembly committee which received support from a DFID project

DFID Nigeria’s £5 million FOSTER project is also supporting the national EITI process which claims to have recovered $442 million of outstanding revenues

The project also helps with the first pilot to implement the Natural Resource Charter

Slide 7

Sierra Leone

Slide 7

Sierra Leone’s civil war gave rise to the term ‘blood diamonds’ but the country is now gaining double digit growth as it harnesses its mineral resources for development. But weak capacity in government jeopardises efforts to achieve transparency and to negotiate effective and equitable mining agreements for iron ore, gold, rutile (titanium) and oil and gas

DFID is helping with essential reforms: We funded the establishment of a National Minerals Agency to oversee all exploration and mining leases and which the Minister of Mines recently presented to international investors as a major sign of progress and commitment to good governance

We are also working with the World Bank (DFID contribution $3.5 million) to provide technical assistance to the Ministry of Mines and Mineral Resources

Tanzania

Slide 8

Tanzania is a major player in the East African offshore gas boom

IMF estimates that increased revenues from gas, gold and nickel could reach $3.5bn per annum even before new gas discoveries (announced 18 March)

DFID Tanzania has taken a lead with the World Bank to establish a strategic dialogue between the government and the international community – involving Paul Collier

Other recent activity includes launching analytical studies into the potential for local economic linkages from gas investments Offshore gas blocks in Tanzania