Fixing the failed extractives sector: the government’s credibility is on the line

   By Sayed Ikram Afzali, Executive Director

President Ghani recently appointed a new minister for the Ministry of Mines and Petroleum (MoMP) after exactly one year in which there was no full-time minister to lead one of the most critical sectors in the country. The government’s credibility is on the line, but the true test is not whether a Minister can be appointed and confirmed: it is whether they can finally push through real reforms on the ground.

The new minister faces tremendous challenges. Illegal mining is prevalent all over Afghanistan, fueling conflict and criminality from Badakhshan province to Helmand and from Nangarhar to Herat. Mining contracts have been awarded mostly based on political connections and kickbacks. State-owned enterprises have been subject to misuse by the MoMP leadership. Lack of proper monitoring and weak transparency measures have given companies an open hand to abuse their contracts. As a result, the state generates very little revenue from the sector despite its huge potential. Afghanistan is experiencing a “resource curse” as the state fails to protect resources from abuse and prevent conflict around mines.

However, there is still an opportunity for the new Minister to reverse the trend. Basic reforms that could do much to reduce abuses have yet to be implemented. The top three priorities among these reforms should be: (1) Amending the mining law in consultation with civil society, (2) achieving validation under the Extractive Industries Transparency Initiative (EITI), and (3) cleaning up of the internal mismanagement at the Ministry of Mines.

Amendment of the mining law is pretty much a straightforward task – at least technically – but is a strategic reform which will help prevent conflict and abuse by strengthening the legal framework. This will require attention both to the process and the outcome. Civil society engagement will be key in the process to ensure that the law addresses public concerns and fills the current legal loopholes. Afghan and international civil society organization have done very extensive work on developing amendments already, and recently shared their proposals (including updated legal language) with President Ghani through an open letter. We urge the government to adopt the proposed language into the new mining law. Cosmetic changes will not be enough.

EITI validation is not only a matter of credibility of the Afghan Government, it is an opportunity to ensure much needed transparency in the extractives sector. Afghanistan has not been able to achieve EITI validation despite being a candidate country for the last eight years. It is very likely that Afghanistan will face suspension if the new minister does not change things dramatically. The new minister should provide genuine leadership to the Multi-Stakeholders Group – something that the previous ministers of mines and the current Minister of Finance have failed to do. In addition, the new minister should ensure the quality of the 5th EITI Reconciliation Report by providing reliable data and taking immediate action to implement the recommendations of the previous reports. So far they have done neither.

Last but not the least, cleaning up the internal mismanagement of the MoMP is critical to managing the mining sector. The new minister has the daunting task of addressing corruption and incompetence as one of their first steps. This should be followed by a comprehensive reform of the MoMP to replace the most old-minded and low-capacity officials (whatever their age) with a bright and qualified new generation of civil servants – a strategic need that has been neglected for years.

Afghan civil society will stand united to support the new minister in the reform of the extractive sector. We recognize it is not an easy challenge. But the buck stops with the government, and after two years in which reform has largely stalled, their credibility is now at stake. The consequences for the country are too serious for the Afghan people to tolerate the continuation of failure.