Towards a Transparent and Accountable Natural Resource Regime in Africa; Awakening Citizens’ Participation

A proceeding’s report

with support from Publish National Committee What You Pay of The Netherlands NORWAY Report 2 Towards A Transparent And Accountable Natural Resource Regime In Africa; Awakening Citizens’ Participation

A proceeding’s Report Report 3 A proceeding’s report This is a report of one day’s conference organized by Global Rights Alert (GRA) in partnership with Publish What You Pay (PWYP-U), Publish What You Pay (PWYP) Norway and School of Liberal and Performing Arts conference. Brief Introduction The extractive industries generate tremendous wealth for more than 50 countries around the world, but many of these nations have been unable to translate the windfalls into long-term growth and improved well being for citizens. As such, for many Oil, Gas and Mineral rich counties, development remains elusive; the rich get richer and the poor stay poor, economies stagnate, corruption flourishes and conflict deepens. It is time citizens from producing and consuming countries joined together to demand better governance and accountability in the generation and use of natural resource wealth.

It is against this background that Global Rights Alert (GRA), and partners1 organized a conference with the aim of awakening citizen’s participation in natural resource governance in Africa. The meeting which was held on 9th April 2014 was attended by over 120 participants from Uganda, Norway, Liberia, Ghana, Mozambique, Tanzania and South Sudan. They included Students, University Professors, Civil Society Organisations and government officials.

1Publish What You Pay- Norway, Publish What You Pay- Uganda, Greenwatch Uganda and the School of Liberal and Performing Arts- Makerere University TOWARDS A TRANSPARENT AND ACCOUNTABLE NATURAL RESOURCE REGIME IN AFRICA: AWAKENING CITIZENS’ PARTICIPATION The conference was opened by Winfred Ngabiirwre ED Global Rights Alert (GRA) and current chair of Publish What You Pay Uganda (PWPY-U), who emphasized the need to have citizens who are knowledgeable about the oil and gas sector and are able to hold their leaders accountable on expenditure of oil revenues.

Mona Thowsen, from PWYP Norway noted the need for Uganda to have good guardian’s ­ politicians and institutions ­ that can make natural resources beneficial to Ugandans citizens.Her emphasis was on institutions having the capacity to track money flows­ as a result of tax avoidance ­from corporations that operated in Uganda.

Thowsen further pointed out that money lost through tax avoidance can be detrimental to an economy. With H.E Thorbjorn Gaustadsaether the help of Auditing firms and lawyers, the companies can Norwegian Ambassador to Uganda find their way around the taxman, denying the country its deserved revenues.

The extractives industry has been under increased criticism for corruption, tax evasion and for shipping profits where from countries where the upstream operations are taking place and to other parts of a company’s corporate structure Mona noted. In addition to this, Mona informed participants that today a number of states have made it their business to offer legal arrangements which are tailor Report 5

Panelists Dr. George Lugalambi , Prof. Byaruhanga Rukooko, Mr. Camilo Correia Nhancale and Mr. Charles Onach made for undermining legal relations and tax obligations in other states. These she referred to as tax havens or secrecy jurisdictions. When companies use secrecy mechanisms it means that no government in the world is able to see the whole picture. It is like a puzzle whereby governments are only able to see one piece, the piece that the company would like you to see. So when information is seen in isolation, the disclosed information which is only one piece of the puzzle; it may not be directly wrong but it may convey or be highly misleading or give incorrect interpretation.

She reported that billions have been lost in transfer pricing in the extractive industries. Publish What You Pay Norway estimated that over USD100b disappeared to potential mispricing of crude oil in US between the years 2000 and 2010. Profits can then be moved from the resource country and to extractive industry company. So when tax authorities do not have access to vital and key information to know if a pricing was right which is very important to calculate tax how can you know that the tax base is right.

Companies can associate profits through the use of complex financial instruments; one of the most complex is what is called the derivatives and it¹s an integral part of the global financial system. It’s even wise by some of the facilitators to use derivatives because government might not understand the consequences. An international question which is emerging now and can be discussed is if tax is has become Report a voluntary thing for multi National companies. 6 For Africa it means illicit capital flows out of African countries, flow into bank accounts in financial centers across the EU.

In 2011, it is estimated that 43.7 b Euros left Africa in a way of illicit financial flows that means that financial institutions in secrecy jurisdiction are complicit in moving capital from the host country to a home country moving it within a company¹s structure and transferring it into a secret jurisdiction. Such volumes of money is so big that it¹s hard to understand so in order to visit the perspective African countries should see the combined 34.3 b in development aid according to the OCD and of course this is money that is could have been used to invest in education, health care what a country would prioritize for its citizens.

So to the extent the part of taxable profit can be moved out of the country it directly hurts the country in question and it is economically significant to a country¹s tax base.

Natural resources belong to the state as my colleague Winnie says the state represents its citizens. It is only natural that citizens would like to be the guardians of their home. We should be thankful for those who notice the tribute because there is so many ways of getting it wrong.

Mona closed by saying, ‘We know we have to fight corruption to benefit from the oil resources in our society we do need all the ingredients that can contribute which can convert natural resource wealth into a common good. So therefore the question should perhaps not be who gets oil first but who gets the right transparency mechanisms in place first in order to make oil a common good.’

The Norwegian Ambassador to Uganda, H.E Thorbjorn Gaustadsaether narrated how Norway’s CSO’s had grown to be of influence in his country, that way leading to a healthy and transparent oil and gas sector. He also said that government should not shy away from open and frank discussions with citizens on accountability and transparency. He said that the debate should be mostly from an informed point of view if they want to be listened to by government. Norway is currently working with Uganda and nine other Report governments to help them build a solid legal system for Uganda’s nascent oil sector- 7 learning from their experience.

The first presentation titled why and how citizens participate in natural resource governance, the case of Mozambique? was by Camilo Nhancale from Jevuntude Desenvolvimento e Advocacia Ambiental-Mozambique. In his presentation, Camilo making reference to his home country Mozambique argued that citizens of any country have the right to demand for accountability because the constitution tasks the politicians – guardians – to manage resources on their behalf. He also noted that at the end of the day, it is the citizens who

Norwegian Ambassador H.E Thorbjorn Gaustadsaether, Hon. Micheal Mawanda, Mona Thowsen and Ms. Winfred Ngabiirwe benefit or pay the price for any environment damage in the extractives sector. This, he says gives them the right to participate in demanding for accountability.

Camilo however pointed out that citizens can participate in natural resource governance because the national legal framework allows them too. He also said that they can request for government to join the Extractives Industry Transparency Initiative (EITI) and advocate for disclosure of contracts

Dr George Lugalambi, of The Revenue Watch Institute (RWI) presented a paper on the role of the media in natural resource governance in Africa: in the case of Ghana, Uganda and Tanzania. In his presentation, Dr Lugalambi said that the quality of information that the media publishes, depends on the quality of the democratic culture. Hon. Peter Lokeris, Minister of State for He argued that robust commentary in Uganda Energy and Mineral Development cannot come through the media if the quality of the democracy is weak. He pointed out that as long as the democratic fundamentals are not in place, it becomes impossible to awaken the voice and participation of the citizens.

He concluded by saying that RWI is currently raising the level of knowledge for journalists through a training program on extractives, in order for them to understand the oil and gas sector, in order to report better.

The third presentation was made by Prof. Byaruhanga Rukooko, an Associate Professor at Makerere University on The contest between local/ancestral rights and development of natural resources; the case of Uganda. He specifically highlighted that the contest already existed between the communities where resources are located and the government seeking to exploit the resources. Such contestations exist where the people have to be compensated because oil exploration activities are going on, on their land. He cited a fundamental flaw in the constitution in defining who is a Ugandan andwho can own land. Even if the constitution guarantees that Ugandan citizens own land, the Report Land Act enables acquisition of land by the state, which has been characterized by poor compensation. He faulted the government for not implementing the recommendations by 9 the Human Rights Commission, which raised the red flag over the current compensation and resettlement of about 7119 people, to make way for a refinery.

Charles Onach an activist and lecturer from The Upper Nile University in South Sudan presented on the topic: The impact of the war on natural resource governance in South Sudan. He informed participants that South Sudan is currently into a third month of a political crisis that turned into two warring factions turning the guns against each other. Given that South Sudan is an oil producer, Onach noted that the economy depends on almost 90percent of oil revenues to finance its budget. He says with the war, some areas have scaled down production.

Onach notes that the oil revenues will be diverted – if not already – to meet military and security expenses of the government. He notes that corruption has always existed in South Sudan and as a result citizens have not benefited from the oil and economic growth the country. It could get worse with limited or no accountability during the war. He said whichever faction is controlling the oil fields, this was likely to prolong the war. A prolonged war, he says, can lead to the resource curse as development will stagnate.

After the presentations, the moderator, Charles Mwangusya Mpagi, then opened the session for comments and questions.

From Tanzanian participants, it was noted that the country is currently drafting a new constitution that was meant to pave the way for broader transparency in the gas sector.

The participants from Mozambique highlighted the misplaced legislation in the country where Members of Parliament are debating their retirement packages, instead of how to manage recent gas better.

From Uganda, it was noted that confidentiality clauses in the oil contracts were a serious hindrance to transparency and accountability. There were concerns that the citizens are not being informed enough about their resource. There were questions on who will fight for the rights of the people in resource rich areas, notably Bunyoro? Other questions included: Do we have the power to demand for these rights? And whether the media, CSO and politicians can withstand the pressure of corruption?

Hon. Peter Lokeris the State Minister for Energy and Mineral Development made a keynote speech, where he insisted that government was providing all the information required and that laws had been passed to guide the governance of the oil and gas sector.

He defended government acquisition of land, noting that the state had the right to acquire land for the benefit of the people of Uganda. He also defended the much criticized compensation process emphasizing that it was transparent. Furthermore, he defended the confidentiality of the Production Sharing Agreements signed with oil companies.

He however eluded to mention whether Uganda would be joining the EITI, but said they will comply, eventually.

The Afternoon session then started with Michael Mawanda, Chairman, Parliamentary Forum on Oil and Gas presenting on: Parliaments as vanguards of accountability in Africa’s extractives industries: experiences of Uganda’s parliamentary forum of oil and gas. He lamented the slow implementation of two oil laws – Downstream and Midstream – by the government after they were passed by parliament. The implementation of the laws includes formation of an oil regulator and company, to act on behalf of government and partly ensure transparency.

Mawanda criticized the compensation of residents of Hoima who are giving way for the refinery. He called the process haphazard, noting that there was no formula in compensating the people with a huge time lag between land valuation and delivery of payment.

From the Anti-Corruption Coalition-Uganda, Abbas Kigozi, presented on how can citizens in natural resource endowed countries guard against corruption in the extractives industry; a case for Uganda. Kigozi, noted that reference to the oil and gas sector as complex is an excuse that needs to stop. His presentation focused on the fact that citizens are interested in having the why, when, where, Report how and what answered, without the use of technical terms that make it complex. 11 He says that Uganda’s delay to join the EITI will only continue to increase the rumors and speculation on oil revenues the country has received.

Joseph Hirya, Director Audit from the Office of the Auditor General then presented a paper on following the money in the extractives industry: Experiences of the Office of the Auditor General. He focused on what the OAG is doing to follow the money and identify fraud and value for money. He pointed out that there is an audit department on the energy sector where petroleum audits fall. The department has about six people who carryout these audits.

He said the entire petroleum value chain is audited, including limits on what companies can spend and who they employ. He cited an example of a company that had brought in an expatriate nurse yet there are qualified Ugandan nurses who can do the job. He says they refused to approve the employment of this expatriate. He further says they were able to refuse some expenditure requests by oil companies.

The OAG also outsources some of its work to audit firms like KPMG, PWC among others, which help them carryout the audits, since they have broader expertise. He said that currently the OAG is doing skills development to enhance them better to carryout audits.

The final presentation of the day was made by Abena Yirenkyiwa, Christian Aid Ghana, which focused on All’s well in Ghana? Assessment of the Public Interest and Accountability Committee (PIACC) in Promoting Transparency in the extractive industry. The PIACC was formed in 2011 to ensure that the Petroleum Act is being adhered to by government and oil companies. Since its establishment, it has produced 2 out 4 reports, with focus on whether tax was being paid, revenues received by government and expenditure. Abena noted that PIACC had published these reports and had a public debate, which eventually led to government responding to some of the queries in the report promptly. The public participation is said to have been overwhelming. Not all is rosy, she notes though. As a civic body it lacks funds to enable it do some of the Report logistical work required to make it do its work. It largely depends on foreign funds. She attributed the delays in the release of reports. The Petroleum Act was also said to be obscure 12 as it doesn’t prescribe which committee in parliament should take on the report. This has led to the reports gathering dust in parliament.

It was then opened up from comments, questions and answers, a session moderated by Jackie Asiimwe. Most of the questions were directed towards the minister. Mulabi Stephen Makerere University Student noted how Uganda has several anti-corruption laws, but corruption continues to rise and whether oil revenues will be spared. For the MP, Irene from Greenwatch said there were concerns that ruling party interests decisions did not represent the general needs of the country. For the OAG, Hirya was asked by Fatima from Mozambique how they maintained independence to avoid interference from the Ministry of Finance.

In response, the Minister continued to defend the protection of oil fields for the safety of Ugandans and against saboteurs. He also revealed that they had come up with names for the people who will be working for the National Oil Company and that they were awaiting approval. He also cautioned against the negativity surrounding the oil and gas sector.

MP Michael Mawanda, said the party interests cannot be overruled most of the time because they are looking to pass laws and policies that keep them in power. He also says as parliament they debate the OAG reports and recommend action.

Hirya responded by saying that they are independent because they audit and submit reports to parliament every year. He said that the OAG should always be independent if it is to produce credible reports.

The discussion continued until proceedings were called to a halt at 1:45pm with Prof. Rukooko from Makerere University thanking everyone for participating. He noted that not everyone was a thief, insisting that politicians and institutions should strive to be accountable and transparent to the people they serve. Annex

Concept Note Report Towards A Transparent And Accountable 13 Natural Resource Regime In Africa: Awakening Citizens’ Participation The management of natural resources in developing countries is an increasingly important driver of sustainable economic growth. In 2011, exports of oil and minerals from Africa, Asia, and South America were worth over $1.4 trillion. This is more than 10 times the value of official development assistance provided to these same regions.

Current trends in most African countries testify to the importance of natural resources with increased exploration and exploitation activities on the continent and specifically in the great lakes region where Uganda, Kenya, Tanzania, Rwanda and Burundi have intensified their exploration for oil, gas and minerals with substantial discoveries. On the other hand on the other hand, countries like South Sudan, Mozambique, Liberia, DRC, South Africa among others have exploited their natural resources for years now, with varying benefits and problems resulting.

While the exploitation of natural resources is expected to transform the prospects of resource nations from poverty to development, in most of African countries this has largely remained a dream as the majority of citizens in natural resources rich countries have remained poor, with limited access to basic infrastructures and services. The discussion on how natural resources have for a long time been kept secret by some governments and companies, leaving citizens with no platform to input and hold duty bearers accountable.

For the decade years the discussion on transparency and accountability has intensified, bringing together civil society, community members, companies and governments to round Report 14

tables; with their aim of improving transparency and accountability in the extractives. It is however critical to note that the participation of citizens/General public remains low, because of a number of challenges including lack of information, secrecy among others.

Civil society organisations through coalitions such as Publish What You Pay (PWYP) have contributed greatly to the citizen participation agenda, engaging Multinational companies, governments, community members and civil society groups.

It is against this background that Global Rights Alert, in partnership with Publish What You Pay Uganda (PWYP-U), Publish What You Pay (PWYP) Norway and Makerere University School of Liberal and Performing Arts have organized a one day seminar, scheduled for 9th April 2014, starting at 9:00am- 2:00pm, at Makerere University, Senate Conference Hall. The Seminar is under the Theme “TOWARDS A TRANSPARENT AND ACCOUNTABLE NATURAL RESOURCE REGIME IN AFRICA: AWAKENING CITIZENS’PARTICIPATION”

The event is expected to attract at least 100 participants from different countries such as Liberia, Ghana, South Sudan, Mozambique, Tanzania and Uganda.

It is expected that, by the end of the seminar

• Participants will have an improved understanding on the important of citizen’s participation in shaping Africa’s natural resource governance regime, including opportunities and challenges associated with such campaigns.

• Participants will be able to design campaigns that empower citizens to participate in natural resource governance in their countries Towards A Transparent And Accountable Natural Resource Regime In Africa: Report 15 Awakening Citizen’s Participation Agenda Time Activity Contact Arrival Participants 8:00-9:00am Winfred Ngabiirwe Global Rights Alert Welcome remarks and 9:00-9:10am introductions Prof. A Byaruhanga Rukooko- Makerere University Key note address

H.E Thorbjorn Gaustadsaether, The Norwegian Ambassador to 9:10-10:00am Uganda Opening Remarks Hon. Peter Lokeris Minister of State for Energy; Ministry of Energy and Mineral Development CITIZENS RIGHT TO PARTICIPATION IN NATURAL RESOURCE GOVERNANCE: Report ASSESSING THE STATUS 16 Mr. Camilo Nhancale- How can citizens participate in Jevuntude natural resource governance; Desenvolvimento e the case of Mozambique Advocacia Ambiental- Mozambique The role of the media in natural resource governance in Africa; Dr. George Lugalambi Session One: the case of Ghana, Tanzania Revenue Watch Institute Moderated Panel and Uganda discussion The contest between Prof. A. Byaruhanga local/ancestral rights and Rukooko- Makerere development of natural University resources; the case of Uganda The impact of the war on natural Charles Onach resource governance in South The Upper Nile University Sudan. in South Sudan 10:40-11:20am Moderated Q and A session

11:20-11:50 am BREAK ENSURING FINANCIAL TRANSPARENCY IN NATURAL RESOURCE GOVERNANCE Report How can citizens in natural 17 resource endowed countries Cissy Kagaba, Anti- guard against corruption in the Corruption Coalition- extractives industry; the case of Uganda Uganda Following the money in Uganda’s Joseph Hirya, the Chief Oil and Gas sector: Experiences of Auditor from the Office of the Office of the Auditor General the Auditor General in Uganda 11:50am-12:30pm Session Two: Parliaments as vanguards Moderated panel of accountability in Africa’s Hon. Michael Mawanda- discussion extractives industries: Chairperson, PFOG Experiences of Uganda’s Parliamentary Forum on Oil and Gas (PFOG)

All’s well in Ghana? Assessment of Public Interest and Accountability Ms. Abena Yirenkyiwa- Committee in promoting Christian Aid, Ghana transparency in the extractives industry

12:30- 1:10pm Moderated Q and A session

1:10pm-1:15pm Wrap up of day’s discussions

1:15-1:25pm Closing remarks LUNCH AND DEPARTURE

ATTENDANCE REGISTRATION

NO NAME ORGANISATION 37 Levis Mugumya MUK 1 Muguta Godeon MUK 38 Mundekyere Ephraim MUK 2 Danniel Mwenji CRDI 39 Dr. Wilber Ahebwa MUK 3 Kwesiga Stev UBF 40 Eve Nabulya MUK 4 Karota Francis MUK 41 Mwijukye Tomson PFOG 5 Issa Kirarira Nile Dialogue P Revenue Watch 6 Adiga Hassan MUK 42 George Lugalambi Institute 7 Richard Ruati UTOSS History and Archeology 43 Katono Nzarwa Deo 8 Sifuna Danniel MUK MUK 9 Namaganda Lydia MUK 44 Nakyanzi Swabra MUK 10 Fredrick Musisi 45 Asiimwe Julius Rurema ICT 11 Aceng Judith C APILU 46 Mulabi Sephen MUK 12 Prof. Kirumira R.E MUK Africa Challenge 13 Nkabala. N. Helen Cituss 47 Ben Odongo 14 Lokeris Peter Ministry of Energy Foundation Africa Challenge 15 Kamugisha Samuel The observer 48 Julius Byahruhanga 16 Matsiko Haggai The Independent Foundation 17 Edward Ssekika The Observer 49 Judith kyalisiima ACODE Norwegian Petroleum 18 Busiicu Maseera 50 P. Musana Mak Acad 19 Gerald Tenywa 51 Mohammed Muhamud IBIS Ghana 20 Sarah Bireete CCG GTT&CWUof GTUC- 52 Offoh Emannuel Eduah 21 Gaustansaether Norway Ghana 22 E.G.Jenser Norway 53 Upendo Furaha Pneza AP2000 – Tanzania 23 Janvier Hakizimana EHARAP 54 James Ninrew Dong AMA/PWYP S. Sudan 24 Fred K MUK 55 Irene Ssekyana Green watch Uganda 25 John Barugahare MAK Department of 26 Magara Deborah MUK 56 Ngole Benedict 27 Nampanga Robinah MUK philosophy MUK 28 Annie Sturesson Denmark 57 Chris Tuhirirwe Mak 29 Twinamatsiko Wilberforce MUK 58 Patience Atuhaire Uganda Radio Network 30 Arao Sarah MUK 59 Jenipher Kyobutungi GRA 31 Emannuel Mukuru 60 Naturinda Resty GRA Upper Nile Oil 32 Charles Onak Judo 61 Betty Akol GRA Taskforce South Sudan Alex Modest 62 Policy Forum 33 Lamii Kpargoi Liberia Media Center Ruchyahinduru 34 Amara Andrew MUK 63 Jesadeh TC Boley Front page Africa 35 Rukundo Joshua AFRICAF 64 Wellekema Jukoryan Vosieda Liberia inc 36 Beatrice Ongode Action Aid Uganda 65 David D.Sackoh Unite Workers Union Christian council of 67 Grace Kalambo 102 Katende Abdu MUK Tanzania COMM.INIT. FOR Africa Agency for 103 Sentongo LS 68 Otai Peter Charles HEALTH&ENVI. C.I HE change 104 Nabayunga Esther MUK 69 Goerge Boden Global Witness 105 Kizito Mathew MUK 70 Dr. Tumwine Fredrick MUK 106 Obace Emannuel MUK 71 Mapango Samuel NPA. Uganda 107 Ambayo James MUK 72 Kayonza Ann MUK 108 Edopu James MUK 73 Okello Rachel MUK 109 Masembe Joel NGO Forum 110 Catherine Bekunda Ministry of Energy 74 Barigye Emanuel Maseja MUK Office of the Auditor 75 Bunkeddeko Joseph MUK 111 Joseph Hirya General 76 Opolot John Alfred MUK 112 Kiiza Venenscias Red pepper 77 Ainembabazi Deborah MUK 113 Sarah Shija NCA - Tanzania 78 Christine Byaruhanga MUK 114 Abena Afari Christian Aid – Ghana Africa Challenge 79 Ansinguza Patience 115 Elizabeth L Walmann PWYP Norway Foundation 116 Christine Amdam PWYP Norway 80 Ivan Atuyambe ACACIA-AFRICA 81 Jackie Asiimwe 117 Camilo Nhancale KUWUKA Mozambique Unity Oil Task force- 118 Fatima F Mimbire CIP Mozambique 82 Luk Riek Nyak South Sudan SINTIQUIAF 119 Laurino Chiconele Unity Oil Taskforce – Mozambique 83 Wanzala Samuel South Sudan 120 Ercilio Claudio Zimba Mozambique 84 Steven Mondo RCDF 121 Takyuka Martin Waswa MUK 85 Otai James Africa Media Agency 122 Jessica Kaahwa Makerere CHUSS 86 Emmah Vickerd Global Witness 123 Moses Namayo NBS TV 87 George Boden Global Witness 124 Murungi Belinda M MAK Chuss 88 Peter Turyakira MUK 125 Robinah Kajwenge DGF 89 Maurice Enenu ANARDE 126 Prof. Emeritus ABT Akiiki Mak CHUSS 90 Alex Nkabahona MUK Olando Richard Mak 91 Musoke R The Independent 127 CHUSS 92 Tenywa Hamid MUK 128 Odoi Innocent Makerere 93 Atwongirwe Lora MUK 129 Adonge Susan Odongo 94 Abbas Kigozi ACCU 130 Lynn Mutembesa Global Rights Alert 95 Nantumba Clare MUK 96 Vicent Nuwagaba MSR 131 Belinda Katuramu Global Rights Alert 97 Kanye MUK 132 Rukiya Makuma Global Rights Alert 98 Paul MUK 133 Dickson Turyahabwe Global Rights Alert 99 Ntanga Mathias MUK 100 Mwanahewa M MUK 134 Winnie Ngabiirwe Global Rights Alert 101 Mabiok Chuol Thomas CUU Report 20 Report 21

GRA would like to acknowledge the support of the following

Publish Publish What You Pay What You Pay Uganda NORWAY

School of Liberal and Performing Arts Makerere University Plot 128,Old Kira Road, P.O Box 27977, -Uganda Tel. +256 414 531 661 Email: [email protected] Website: www.globalrightsalert.org