The results of efforts to turn around resource sectors in Liberia and Sierra Leone are contrasting. In Liberia even after the fall of Charles Taylor in 2003, the UN Security Council continued to require that guarantees of proper fiscal governance be in place before allowing some extractive sectors such as logging to restart – thereby stopping all (large-scale) commercial operations, many of which had already been interrupted as a result of the collapse of Taylor’s regime. The Security Council only lifted import restrictions on Liberian timber in 2006 and on diamonds in 2007.
What ensued included a vast array of legal reforms, including on concession allocation processes (eg public bidding), forestry regulations (eg stakeholder consultation, community rights over forests), resource revenue transparency (eg the Liberian Extractive Industries Transparency Initiative), and the establishment of a land commission.
These reforms vastly improved the regulatory context, while capacity-building efforts consolidated institutions. Yet investigations, notably by the UN expert panel group over the past five years, revealed major deficiencies in implementation, including in the awarding or renegotiation of concessions, an issue that also arose in Sierra Leone and that led many to argue for continued external supervision of resource sectors.
Extractive Industries Transparency Initiative
Governments in both Liberia and Sierra Leone have committed to greater resource revenue transparency through the Extractive Industries Transparency Initiative (EITI) – a international voluntary process through which governments and companies are required to publish audited revenue collection from resource sectors. By increasing transparency and thereby facilitating accountability, the EITI is expected to reduce corruption and further legitimise both governments and resource extraction companies, thereby supposedly contributing to peace.
The scheme, however, still requires strong local accountability mechanisms to be effective, including through civil society, and does not sufficiently address transparency in revenue expenditure as well as the level of taxation of resource companies.
Both countries made this commitment in 2006. By 2009 Liberia had become the second EITI Compliant Country (having completed an EITI validation) and had extended revenue transparency to timber and agricultural sectors. Strong backing from President Johnson Sirleaf has been a major factor in this outcome, but also the heavier international presence and a greater sense of urgency in dealing with revenue mismanagement given the massive contracts at stake.
In contrast, Sierra Leone only published its first report in 2010 and was still not compliant at the time of writing of this article (the validation deadline is now December 2012). Sierra Leone’s new Mines and Minerals Act, passed in 2009, does require revenue disclosure and increased taxation. Yet the implementation of this law is patchy and some concessions were recently re-approved despite contradicting the new act. This could contribute to higher levels of corruption, or at least the perception thereof among the population, lower tax revenues over a prolonged period as a result of low tax rates, and weaker donor support – all factors that do not help to consolidate peace.
Resource contract issues also differ between the two countries. Several controversial deals signed before or during the transitional government in Liberia were subsequently cancelled or thoroughly revised, including the cancellation of all logging contracts and revisions to the massive Mittal and Firestone contracts. But in Sierra Leone, most controversial contracts – primarily large-scale mining – have been left unchanged despite the promise of contractual revisions having featured prominently in the electoral campaign of the new President Ernest Bai Koroma.
More attention was devoted to improving contractual terms in Liberia by international agencies and international NGOs, as well as by domestic civil society. The same goes for revisions to logging policy, which in the eyes of former Liberian forestry officials were in fact too thorough, resulting in stalling investments.
From this perspective there should be less tension over resources in Liberia than Sierra Leone – both nationally, arising from unfair contracts and embezzled revenues, and locally, arising from tensions between resource companies and local communities. But this is not necessarily the case. There is more at stake in Liberia given the size of its mining projects, where abuses and ‘bad habits’ are also more entrenched, the capacity of bureaucracies and civil society remain low, and there is limited political will to prevent contracts flouting the law.
The importance of resource sectors will be further magnified if current oil prospecting leads to major discoveries. For now, conflicts mostly remain within the usual realm of extractive sectors, such as the impacts of mining operations on local communities, and the working conditions and pay in industrial ventures, as in the case of some workers from Mittal’s subcontractors.