Last week, over 7000 people descended on Cape Town for the annual African Mining Indaba. I have been attending this event for many years now and perhaps for the first time, the sense of change in the sector was more palpable than ever. As we move into the new decade, we also move into a new era of accountability and those in the extractive sector are under more pressure than ever to change the way they operate. And this year, climate change and sustainability infused many of the discussions. Criticism of the sector is of course nothing new, however, social media, strengthening of democracy and the increasing power of the electorate in countries across Africa to hold their governments to account has meant that many mining companies and governments are now having to drastically re-assess their positions.
Mining companies have been under pressure to address climate change for years and have taken huge strides in aligning their strategies with the green agenda. Governments too have certainly been more vocal about tackling climate change. Last year South Africa introduced a carbon tax that taxes miners per ton of carbon dioxide. Yet, there is a new and growing trend that governments across the continent more than ever ensure that foreign companies are playing by the book. Many have been busy reviewing and updating mining legislations to incorporate more stringent environmental policies with some now moving to impose punitive sanctions for non-compliance. The “implementation gap” between the laws that govern extractive industries and the practices in reality is becoming a thing of the past, governments are no longer merely paying lip service to protecting the environment. And we are likely to see this trend continuing over the coming year.
Another trend that is again rearing its head in the sector and was heavily discussed throughout the week was resource nationalism. As we have seen in Tanzania, actions associated with resource nationalism by governments are usually introduced as amendments to existing mining laws and can be implemented at very short notice. Such measures are often instated in order to inject cash into faltering economies, as was the case with Zambia’s sales tax and the customs and excise (precious stones) export duty introduced last year. They may also involve changes in ownership quotas or work-force requirements. Whilst the drivers of resource nationalism are undoubtedly complex and country-specific, it is vital that companies are on top of monitoring the new regulations and laws that manifest themselves. There is increasing government appetite to impose hefty fines for non-regulation in a number of resource rich countries.
As we see the Africa Continental Free Trade Agreement enacted over the coming years, with some changes expected as early as July this year – we hope to see gradual harmonisation of regulations and laws across countries. However, for now legislation will remain notoriously hard to navigate with each country having its own local laws and practices which will be vulnerable to change with electoral cycles.
For us, the week confirmed the necessity of access to critical legal knowledge and the right local legal experts. The Afriwise platform is helping an increasing number of international businesses operating in Africa mitigate the risks associated with non-compliance with local law and regulations. Get in touch to find out more: info@afriwise.com