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Guinea: Winners And Loser in Country's Bauxite Industry
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UN Integrated Regional Information Networks
9 June 2008
Posted to the web 9 June 2008
Conakry
With half of the world's known bauxite reserves, Guinea's mining sector is seen as the country's most important engine of growth. But some civil society groups fear the hundreds of thousands of dollars companies should be paying in taxes to support development in villages on mined land does not always get through to the right people.
"Companies have been mining here for 36 years and we have never once in that time received taxes from them for using our land," said Helage Suriba Sylla, president of the rural development committee (CRD) which regulates community development in Mambia, which lies in Kindia prefecture, 80 km from the capital Conakry.
"Rather than making people richer, mining has made them poorer," said Akoumba Diallo, a mining sector researcher. "It polluted their environments so they can't grow crops or let animals feed near mining sites. And it is hard to get water anywhere because it's contaminated."
With mining contributing to 85 percent of the country's external revenue, and the World Bank estimating investments of up to US$20 billion in bauxite mining in Guinea over the next decade, the government is currently rewriting and renegotiating its mining contracts - unchanged for 25 years - with 15 companies to ensure Guineans are more likely to benefit from the wealth they spawn.
But that is just part of the puzzle. The government too must better scrutinise its own financial flows and tax systems to ensure money is not 'lost' in the system, analysts told IRIN.
Money 'lost' in the system
Mining companies are legally obliged to pay taxes to owners of the land they mine, as well as being encouraged to support additional local development projects that will improve people's lives.
Anatoly Panthchenko, director-general of RUSAL the holding company of the Compagnie Bauxite de Kindia (CBK) which mines Mambia's land, says they have been doing just this since starting mining in the region in 2003.
"We have been paying US$100,000 in annual taxes directly to the Kindia prefecture," he told IRIN. "The distribution of the money rests with them according to the needs they have identified in Mambia."
But Sylla told IRIN Mambia's 25,000 citizens have only ever received one payment from the prefecture in 2006, which they used to build a secondary school.
And there is little evidence of any development money having been spent in Mambia. Most of the houses are crumbling, there is no electricity, and no well so residents collect their water from a muddy puddle on the ground, which is linked to an open-source spring in the forest.
"Mining here has impoverished us. They took our fertile land for the mining so we have to grow our crops here and there between rocks," said Sylla.
"We have tried many times to find out where the money is - we even went to the interior ministry in Conakry - but the Prefecture doesn't seem to want to give it to us. We have no idea where it goes - we imagine most of it ends up in someone's pocket."
Seeing this for themselves, the CBK became concerned that the money was not being well spent, according to Cirra Dieng, communications officer at the CBK, and withdrew its payments in 2007 awaiting some explanation.
They are still waiting.
IRIN was unable to get an interview with the Kindia prefecture to find out more.
Better government scrutiny
According to Siaka Bakayoko, programme director at the World Bank in Guinea, these financial accounting glitches are just the kinds of problems that the government needs to address if the benefits from mining are to be spread more equitably in the future.
"There are still 'vulnerability points' in this sector - from the award of the contracts to mining companies, collecting taxes and royalties, allocating budgets, distributing revenues and using them in sustainable development projects," Bakayoko told IRIN. "In the past companies have said 'we gave this much money to the state' but it wasn't properly scrutinised. These flows must now be audited."
To improve accounting, he added, "The government needs to strengthen governance systems to track financial flows in this sector. And the transfer of funds to people needs to be tracked at the prefecture level."
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This also involves strengthening the government's central Public Accounts Committee, according to Bakayoko.
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