Aug 11

2014

U.S. / Africa Leaders Summit: challenges for investment, development and the rule of law

An historic meeting was held last week in Washington D.C., the U.S.-Africa Leaders Summit. The purpose of the three-day event was to showcase U.S. commitment to investment in Africa. President Obama spoke of companies’ “exciting new partnerships and initiatives…that will create more economic opportunities for both Africans and Americans.” Meanwhile, activists were holding a parallel summit of sorts, hoping to highlight issues of corruption, transparency and accountability that plague the continent. At an event sponsored by the Open Society Foundations, Global Witness, Human Rights Watch, and Oxfam America, among other groups, both Vice President Joe Biden and Secretary of State John Kerry spoke of how corruption stifles economic growth and investment. Yet, as activists pointed out, section 1504 of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act (Act) has yet to be enacted much less enforced. Section 1504 is an anti-corruption provision that requires all extractive companies listed on U.S. stock exchanges to publish each year all payments they make to the U.S. and foreign governments in the countries where they operate. The Act could have a great impact on the “resource curse” that afflicts Africa, particularly sub-Saharan Africa, as a majority of the largest mining and oil companies would be covered by the Act. In 2012 alone, the continent’s oil and mineral exports were worth $305 billion. Presumably, if the Act were to work as envisioned, every cent of that $305 billion would be accounted for. It would be much harder for the political elite to line their own pockets and grab what they can with the impunity they have now. There would be a much greater possibility that at least some of those revenues would be used to provide basic human rights – education, healthcare, judicial systems. A substantial impact could be made on improving the plight of the most impoverished. Eradicating corruption is not an issue that concerns governments only. Companies are complicit as well. In fact, the U.S. Congress passed the Act in 2010, but in the four years since, powerful oil companies have lobbied to stop the regulations from being implemented. Such fierce lobbying begs the question of why these companies are so set against the Act, especially considering the European Union, Norway and Canada have all enacted similar legislation following the lead of the U.S. Companies themselves also have an interest in the eradication of corruption. Corruption weakens the rule of law, and a company cannot effectively operate if it does not have faith that the legal system will adequately protect it. Transnational companies must be assured that their investments are secure, particularly in less stable parts of the world. This is simply not possible where corruption is rampant and the government either refuses to or lacks the ability to uphold the laws. Neither can a company follow through with its human rights obligations where government fails to uphold the rule of law. Laws such as the Dodd-Frank Act are meant to alleviate much of this risk related to corruption and weak rule of law. Serious concerns should arise with regard to companies that lobby to stop the enactment of the law. It is not just the profits of companies at stake, or the personal profits of corrupt government leaders – it is the development of a continent which could lift millions of people out of poverty. [Author: Patricia Carrier]