South Africa and the curious case of the EITI

From 9 to 12 February 2015, Cape Town once again played host to the 21st session of the annual Africa Mining Indaba. Billed as the largest mining investment event in the world, the Africa Mining Indaba provide its estimated 8,000 participants with the opportunity to share ideas, discuss industry trends and either strengthen or forge new cross-continental business relationships.

This year’s events are being held against the backdrop of growing difficulties within the global mining sector with labour tensions, commodity price volatility and strike action prevailing as the sector’s primary quandaries. These issues have proven to be particularly pervasive within the South African mining context. As was the case in previous years, South Africa’s mining sector has continued to be impacted by widespread labour agitation which is placing further strain on an already faltering industry. Of particular concern, however, is the possibility that ongoing mining sector agitation could precipitate levels of violence witnessed during an August 2012 wildcat strike at the Lonmin-operated platinum mine in Marikana, North West province. At least 47 people, most miners, were killed over a 48-hour period between 14 and 16 August.

But what are the factors which continue to catalyse such strike action within South Africa’s mining sector? Without question, the variables precipitating labour agitation within South Africa’s extractive industries are highly complex and multi-layered and, consequently, one dimensional analysis could generate superficial responses. Nonetheless, explanations provided by workers for their grievances expose systemic problems which have and continue to exist within the sector.

For one, South Africa’s mining industry has long been subject to lax regulation and exploitative behaviour which stemmed from the apartheid era. Attempts by South Africa’s post-democratic government to implement sector reforms have been marred by accusations of maladministration, corruption and a lack of transparency. Of particular contention, are claims that policy reforms within the sector were often created and implemented without the consultation of mining communities who also continue to be marginalized from deriving any tangible benefits from the country’s extractive industries. In addition to haphazard policy implementation, the South African government has also been accused of engaging in cronyism and having vested personal interests within the sector which is further hampering much needed industry reforms. However, it is not only mining firms and government which should shoulder the blame for the sector’s problems. Once heralded for its collective bargaining abilities and inclusiveness, South African labour unions are increasingly being accused of assuming a more authoritarian guise and having leadership structures which are failing to engage its membership in key decision-making. Competitiveness between rival unions seeking to dominate the sector has also sowed division which has further complicated negotiations within bargaining chambers.

So how do we go about remedying the situation? Well, it is no coincidence that one of the core themes of successive this and previous AMI’s has been focused on creating greater transparency within the mining sector. Such is its perceived importance that in 2002, an Extractive Industries Transparency Initiative (EITI) was launched during the World Summit for Sustainable Development (WSSD) in Johannesburg, South Africa, The aim of the EITI is to generate increased transparency of financial flows between mining companies and governments, in addition to fostering dialogue between these role players and civil society. In summation, the EITI was created to allow citizens to see for themselves how much their government is receiving from the extraction of their country’s natural resources. Since its launch, the initiative has been touted as being intrinsic to the reformation of several mining sectors across much of the African continent which was once considered to be poorly regulated and exploitive.

However, despite the aforementioned problems related to the extractive industries sector within South Africa, the country has refused continued to calls to join the EITI. Suggestions by government that South Africa has a redistributive fiscal regime which has implemented adequate systems of governance and accountability, thus negating the need for EITI compliance, has drawn widespread criticism from opposition parties and civil society organisations alike. Such sentiments of scepticism have further been reinforced by international corruption watchdogs such as Transparency International and the Anti-corruption Business Portal which have both cited the existence of bribery, intimidation, non-compliance, and poor cooperation within South Africa’s mining sector.

With labour agitation increasing, and the countries extractive industry dwindling, the need for South Africa’s mining sector to be subject to greater reform and transparency is becoming a necessity. Not only will such transparency increase South Africa’s attractiveness for foreign direct investment but it will also hopefully create the necessary conditions which will no longer see the mining industry being viewed as a microcosm for exploitation and unequal wealth distribution.

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