Among the potential causes of conflict is unjust distribution of wealth generated from the resources. Hence, it is wise enough to examine the existing laws and their practices to get a sound answer as to whether the ‘unjust distribution’ would become an issue or not. Proclamation 39/1975 suspended the right of citizens to participate in mining operations, which is a disappointment. But this was restored by Mining Operation Proclamation No. 52/1993 that individuals have long been engaged in mining operations. The currently active proclamations as well as the directives however have more than this. They have provisions regarding the necessity of community development in resource areas which improve the living conditions of the people in the area.
Mining Operations Proclamation No. 678/2010, for example, states: “Mining licensees, exploration licensees as appropriate, shall participate in community development plan of the peoples within the license areas and shall allocate money for such expenses.”
Provisions also require the government to coordinating proponents to pay the community development fund, support local administration to prepare community development project proposals, evaluate the proposals, monitor their implementation and reward recognition for better performing licensees.
Accordingly, health and education facilities, skills trainings, water supply and provision, road construction, etc. are the areas of community development licensees have been contributing. However, these have not satisfied the standard set by state and federal governments, as the Ethiopian Extracting Industries Transparency Initiative reported pointing out there are certain companies that have not yet engaged in community development..
To avoid this Motuma explained to the House of Peoples Representatives that the ministry prepared a system which requires each company to contribute the proportion allocated per individual mineral type. He also affirmed the House that all such proportional contributions would be collected by one entity before refunding. This would be an ideal solution that could fill the gaps noticed in community development project implementation by certain companies previously, he mentioned.
In addition to their engagement in and funding community development schemes, companies of extractive industries are obliged to be environmentally responsible. This emanates from the Constitution of the land that grants citizens inalienable environmental right of citizens: “All persons have the right to a clean and healthy environment.” (Article 44: Environmental Rights). Hence, extractive companies and the concerned government institutions at various levels have to operate in accord with the nation’s environmental policy, laws and proclamations, which entail issues like mandatory impact assessment and reporting, funding the cost of rehabilitation of impact, relocation compensation fund, etc. – a fundamental power deterring conflict as a result of environmental impact from extraction operation.
Since people also have the right to participate in national development and have to be consulted with respect to polices and projects affecting their community. In line with this, federal and state governments as well as the sectoral institutions are required by law to adequately communicate the development projects, their impacts, benefits, relocation, rehabilitation and compensation, and get the will of the people in the area to be affected before commencing the extraction process. They should also monitor and support the healthy implementation of projects.
Besides, who collects how much of which revenues from extraction and/or production are clearly stipulated in a very transparent way to the extent what proportion of it goes to which development or service sector. Accordingly both the federal and state governments have the power to collect revenues, but royalty, income tax, and government free equity from large scale mining operators go to the federal government.
Experiences of overseas and local firms engaged in the Ethiopian extractive industries (both operational and under exploration) in the past few decades can be taken as an epitome of zero conflict for there have not been such compliant report from the firms.
This is in fact the result of the government’s commitment to utilize the resources for the nation’s development. It’s also apparent that the nation does not only has sound policies, laws, proclamations, but also institutional and human capacity to execute these legal elements to bring the intended development which will equally benefit all citizens of the land.
Seeing it the other way, it is the result of the commitment the people of Ethiopia to build lasting peace in the nation which has laid a foundation for the current inflow of significantly increasing number of globally renowned foreign companies to the sector. In deed the nation in addition to building reliable peace and security locally, has been striving for the peace and security of the region.
In addition to the peace and stability, sound policy and legal frameworks, relatively cheap labor, the nation has attractive incentives. Straight line method depreciation is used for preproduction expenditures and capital expenditures. Besides, there is inviting interest payment and loss is carried forward for 10 years. Licensing authorities also provide supports on issues like duty free, work permit, mineral sample for laboratory analysis, infrastructure facilitation, intervening conflict resolution between community and licensees, assist on business visa acquisition, geological field visit, among others.
On top of this, the fact that the nation has joined the global Extractive Industries Transparency Initiative (EITI) and has set up the Ethiopian Extractive Industries Transparency Initiative (EEITI) is additional powerful tool to dry most threats discussed. The initiative has been actively working with the proper stakeholders and communicating its performances to the public.
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