BACKGROUND STUDY EXTRACTIVE INDUSTRIES

Preface

In its Economic Development in Africa Report 2020, the United Nations (UN) Conference on Trade and Development revealed that Africa loses annually an estimated $88.6 billion, equivalent to 3.7% of its GDP, as a result of illicit financial flows (IFFs).As this revelation makes clear, it is not simply by the corruption of government officials and local associates of extractive companies that Africa loses the much-needed resources from extractives for financing its own development. IFFs are the cancer that bleeds the sources of development finance of Africa literally dry.

The extractive industries sector is the major culprit that accounts for almost half of the capital that illicitly departs the continent. According to the report, illicit financial flows related to the export of extractive commodities amount to $40 billion.2 This amount of illicit capital flight, for which the extractive industries sector is responsible, is lower than the foreign direct investment flow into Africa, not by a major margin. This is only one example among the many manifestations of the resource curse for which the extractive industries sector in Africa is known and to blame.

In this study that I had the responsibility of leading, the African Commission on Human and Peoples’ Rights puts on the spotlight the various human and peoples’ rights issues, including IFFs, associated with the extractive industries sector in Africa. Despite its potential and, at times, actual contribution to improved living conditions of people, this Study reveals how the extractive industries in many parts of the continent operate in a context characterized by human rights protection vacuum, with grave consequences not only to the financial sources of development of the affected societies but also to the environment, land rights and the wellbeing of people living in the areas of operation of extractives.