From the AFR:
The Canadian government announced last month it would join Britain by bringing in legislation making facilitation payments – small sums paid to obtain routine government services – illegal and punishable by fines and jail sentences.
But the Australia-Africa Mining Industry Group (AAMIG), which represents more than 100 mining and mining services companies, argues that facilitation payments are an integral part of getting business done in many poor, undeveloped African nations and allowing them promotes transparency.
“We would all like to be able to do business in Africa without the need to make facilitation payments but what drives this behaviour is essentially poverty and lack of resources in governments,” AAMIG president Bill Turner said. “Until the level of economic wellbeing in these countries lifts as a result of investment, and governments have revenue to do what they should be doing, including paying their employees reasonable salaries, then this behaviour is going to continue.
“To think you can just flick some legislation through somewhere around the world, be it Canberra, Ottawa or London, and expect all these things to change is not very realistic.”
Pretty brazen stuff. The cynic might conclude that Australian miners are not bothered by this trapping of the Banana Republic because they grew up in one.
A less cynical viewpoint would still see the miner’s defense as pretty thin. Bribes tend not to lift general standards of living. They are rather part of a well-known development trap in which the profits from foreign investment flow to an oligarchic few, undermining both democracy and general incomes in the process. This, in turn, can lead to the kind of social dislocation seen in many a banana republic or result in the kind of paralysed economic nanny-states of the Arab world.
That’s not to say that the investment can’t deliver big dividends to the people. It can. Some mines are so large that they can deliver huge infrastructure dividends for future development, as well as increased stability. For all of its problems, the massive Chinese investment in Africa has achieved this in large areas.
AusAID does similar, smaller scale, things in a number of Australian focus African states, looking to build civil society and soft infrastructure. This year it will spend $42 million of your money on these endeavours in developing states. Next year it will $49 million.
In the long run, graft is bad for everybody, including the miners, as democracy and transparency is undermined, and sovereign risk rises on expropriation and civil disorder concerns.
If Australian miners only competitive edge in Africa is an ease with graft then they’re working on a false economy.
