Workshop on International Law, Natural Resources and Sustainable
Development
Escaping the Winner’s Curse: The Africa Mining Vision and the Challenges of the
International Trade and Investment Regime
Yao Graham
Centre for Latin American Studies, Stanford University
This paper explores the challenges that aspects of the international trade and investment
regime and existing contractual relations with foreign mining TNCs pose for the mineral
based structural transformation agenda set out in the Africa Mining Vision (AMV).
The AMV is an important expression of growing new Afro-optimism. Adopted in 2009 by
African Heads of State the AMV posits a paradigm shift in African mining away from the
current raw material commodity export model dominated by foreign TNC. It seeks the
“transparent, equitable and optimal exploitation of [Africa’s] mineral resources to underpin
broad-based sustainable growth and socio-economic development”. In this view the mining
sector becomes “a key component of a diversified, vibrant and globally competitive
industrialising African economy”. The boom in Africa’s mineral exports and earnings, due to
sustained high demand from major emerging market economies and the high prices of the
last decade have been the main drivers of Africa’s best growth performance in three
decades.
The Africa Mining Vision is the most comprehensive expression of the new mood of
“resource nationalism” across Africa and in many ways is reminiscent of some of the
aspirations of the NIEO. Many countries are revising their mining fiscal regimes and seeking
re-negotiation of mining contracts with foreign TNCs to increase their share of mineral
revenue from the high prices. The high prices and high TNC profits have exposed the poor
terms on which many African countries, on the basis of advice from the World Bank, have
allowed the exploitation of their minerals since the late 1980s. The policy framework
offered by the Bank is neatly summarised in the following quote from its 1992 Strategy for
African Mining: “The recovery of the mining sector in Africa will require a shift in
government objectives towards a primary objective of maximizing tax revenues from mining
over the long term, rather than pursuing other economic or political objectives such as
control of resources or enhancement of employment. This objective will be best achieved by
a new policy emphasis whereby governments focus on industry regulation and promotion
and private companies take the lead in operating, managing and owning mineral
enterprises.”
This framework has been characterised as resulting producing a “winner’s curse” whereby
African countries did attract the foreign investment which is enabling the export growth in
response to the increased demand but on disadvantageous terms and which sacrificed
important policy options. National laws offering incentives and contracts favourable to the
firms were situated within investor friendly bilateral international trade and investment
agreements.
Some of the recent attempts by a number of African countries to revise their mining laws
and renegotiate contracts have ran into thicket of legal threats and political pressure from
investors and their home governments, resulting in retreats in some cases. Taken in its
totality the Africa Mining Vision embodies a much more radical agenda than any national
measures to date. What challenges does the international trade and investment regime –
bilateral investment agreements, free trade agreements such as the EPAs, and WTO rules
pose for the industrialisation ambitions of the AMV? In 2008 a conference of African
ministers of Mineral Resources “Called on AU Member States to work together to ensure
that international agreements that they enter into enhance rather than undermine Africa’s
policy space for integrating mineral resources development into their economies” and urged
“them and the Regional Economic Communities (RECs) to ensure that the ongoing Economic
Partnership Agreements (EPA) and World Trade Organisation (WTO) negotiations do not
limit this space”. How good are the prospects for this?