Is Canada fit for purpose to help Tanzania achieve transparency in Extractive Industries?

June 15, 2013 1:02 pm0 comments by:

By Emmanuel Tayari,—

In a surprising move, Canada’s Prime Minister, Stephen Harper, announced that Canada is forming partnerships with Tanzania and Peru to improve transparency in the oil, gas and mining industries in those countries. The agreements are part of a series of partnerships that G8 countries are forming with developing countries in Africa, Asia and Latin America.

Following this announcement by Canada to partner with Tanzania to further strengthen transparency in extractive industries; the announcement has been received with mixed feelings. While proponents say the move would help Tanzania to shape its extractive industries policy, those opposed to the initiative have an even stronger case to make.

Tanzanian analyst who requested anonymity commented: “If Canada was serious about Tax reforms in Tanzania, it wouldn’t have chosen to work hard in the past to try to sabotage the overhaul of mining tax regime. What is happening now is Canada trying to use “extractive industries transparency reforms banner” to try to control Tanzania extractive industry public policy.  They will soon start to commission bogus and selective studies to prove how reforms need to be reformed their way. Then, with PR and complicit media, they will orchestrate coverage to sell their bogus policies which won’t be in any interests for our country, he added”.

Another opponent of the plan argued “What does concern me is fact that, not only will we blow the opportunity to change for the better – but actually will end up with something worse. Accommodating new bad ideas will not lead to a better one. If we want to fight reform of the rules on transfer pricing and stop companies from shifting profits unfairly. We need stop clinging to bad ideas; countries like Canada are not a true partner for that cause, as they have their own vested interests in the oil, gas and mining industries.”

Even though, the timing of Canada involvement has raised questions on its motive. Canada’s move was not very surprising because it has recently signed a Foreign Investment Promotion and Protection Agreement (FIPA) with Tanzania- a treaty designed to protect and promote Canadian investment in Tanzania through legally binding provisions.  This treaty was not subjected to public scrutiny and debate, resulting in criticism that the treaty will give Canada and its multinational Companies new powers to influence Tanzanian policy in extractive industries, and thus the announced move is part of their strategy to protect Canadian mining companies who are among the largest foreign investors in Tanzania.

On the other hand, another analyst dismissed these concerns and urged that. “Canada has accomplished a significant success in its extractive industries. As Tanzania growing its Oil and gas activities, this will involve a combination of legal, economic and environmental issues, all of which are necessary for countries involved in these sectors to have a thorough understanding and expertise; therefore we will take advantage of Canada experience and expertise in the industry to achieve a greater success for our country.”

Interestingly, the natural resource focus on Canada’s aid policy has also raised plenty of eyebrows in the international development community as well  given that the Canadian government has engaged in a consistent policies designed to benefit Canadian’s mining companies at the expense of developing countries. This was  widely noticed when the Canadian mining companies and the Canadian government worked very hard in 2010 to defeat a private member’s bill (Bill C-300) which was sought to establish prescriptive corporate social responsibility guidelines that would have required Canadian mining companies operating in developing countries to comply with stringent requirements. The defeated bill wanted to impose sanctions on Canadian companies found to be operating inconsistently with these CSR guidelines. Sanctions included the withdrawal of financing from Export Development Corporation (EDC) and divestment by the Canadian Pension Plan Investment Board. This defeat ended the possibility of legislating more stringent corporate social responsibility standards for Canadian mining companies operating abroad. These facts also beg the question as many wonder if Canada’s thoughts on transparency have changed.

Extractive Industry public policy is an increasingly hot issue in Tanzania. Since many of the extractive companies active in Tanzania are registered in Canada, it is not surprising that this issue has raised eyebrows.

Regardless of the motive behind Canada’s actions, the Tanzanian government seems like it has conceded that the offer from Canada is genuine, and is working in good faith. But no one knows if Canadian government’s drastic change to its policy on extractive industries can be trusted.

 

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