Importance
1. Importance of the Mineral Sector
Minerals are unique natural resources in that, unlike other natural resources such as trees and fish, they are both limited and non-renewable. Throughout history, they have played a key role in the development of societies and communities where they have been found. In The Gambia today, our lives would be untenable without minerals. From computers to cars, cooking pots to houses, minerals are ubiquitous in a way unmatched by any other group of materials.
a. Solid Minerals
In The Gambia, key solid minerals currently being exploited include heavy minerals comprising ilmenite, zircon, and rutile for export (used mainly as additives to paint), sand and gravel for the construction industry, and clay for both the construction industry and artisanal sector.
Heavy minerals represent a potential source of hard currency. Even though there has not been proper recording of their contribution toward GDP, it is clear that as one of the few export products of The Gambia, they represent an important source of valuable foreign exchange. The Janneh Commission revealed how the former president connived with unscrupulous businessmen such as Muhammed Bassi to defraud the State of mineral revenues. Unfortunately, when the new government came to power, Bassi was simply replaced by the hand-picked GACH.
It is common knowledge that construction minerals such as sand and gravel are used daily as important and essential inputs in building our houses and roads—a sector which currently represents over 6% of The Gambia's GDP and is growing rapidly.
b. Hydrocarbons
Petroleum and gas exploration has been ongoing in The Gambia since the 1950s but has recently seen heightened interest due to discoveries and ongoing production in the region, particularly just a few kilometers to the north in Senegal. Since 2017, the government has received over $70 million in revenues from petroleum activities, with a total investment of over $100 million.
The above may not represent the full potential of the mineral sector. Issues identified below, when addressed, may not only potentially add to the list of minerals to be exploited but also create better socio-economic value.
As such, the need for special and proper management of minerals cannot be overemphasized. When minerals are properly and well managed, they can lead to prosperity and improved societal wellbeing. Examples of countries where minerals have been well managed include the Gulf countries and Botswana. On the other hand, poor management of mineral resources can and has resulted in social instability, regression, and even conflicts. Unfortunately, examples abound in Africa, where the source of many conflicts can be traced to poor mineral resource management or a mere perception of it. We have had our own share of issues resulting from mineral resource management, such as the Faraba incident, where lives were tragically lost.
Minerals, therefore, are without a doubt not just economic resources but also a means to attain prosperity, social cohesion, security, and stability.
2. Current State of Affairs
Like most other sectors of the economy, the mineral sector is grappling with ill-informed policies, many of which, if properly addressed, can result in improved wellbeing for Gambians.
a. Structural Issues
The governance of the mineral sector is currently led by the Ministry of Petroleum, Energy and Mines, but has in the past been under the purview of the Ministry of Land and Survey in the 1970s, Trade and Employment in the 1990s, and the Office of the President in the early 2000s. From this array of parent ministries unrelated to the subject of minerals, one can be forgiven for concluding that not much thought went into deciding under which ministry mineral administration should be located.
The placement of an agency or department under a particular ministry may seem inconsequential on the surface, but in practice it has major implications for efficiency, performance, and delivery. Furthermore, there is an apparent lack of appreciation for the implications of the size and volume of activities and, therefore, the need to optimize government resources, including human resources. Keeping petroleum and minerals together with energy under the same ministry without giving serious thought to the similarities and synergies of the governance or regulatory matters of each is not just inefficient but also unsuitable for the Gambian context. Yes, many countries may have similar arrangements, but for good reason, including ongoing production and refining of petroleum.
i. Solid Minerals: The Mines and Quarries Act was promulgated in 2004; therefore, it is obsolete. After over 20 years of promulgation, there have been no regulations to operationalize it. This means there is much discretionary and arbitrary decision-making. Regulatory gaps and uncertainties constitute major deterrents to investment and development of this subsector, which also explains the lack of serious investment in the mining sector. It is currently under the purview of the Ministry of Petroleum, Energy and Mines, but there is no basis for the location of minerals under this Ministry, except that it is done by other countries who may have a different context.
ii. Hydrocarbons: A clear understanding of the distinction between petroleum resources and petroleum as a source of energy is critical in deciding whether or not to put these two sub-sectors together. Whereas petroleum resources are mainly a revenue-generating natural resource, petroleum products as a source of energy are a component (not the major one) of infrastructural development resulting in service provision. Such a service, by the way, can be created without necessarily the presence of petroleum or its products. This is not in any way trivializing the importance of petroleum products as a critical source of energy. Thus, simply because petroleum is a source of energy does not in any way mean petroleum and energy need to be placed under the same Ministry. Equally, the Petroleum Act has been promulgated since 2004, meaning it is also obsolete and requires amendment.
b. Governance Issues
Minerals can be broadly defined as either solid minerals or hydrocarbons. Notwithstanding such a distinction, there are common important underlying governance principles and policies that need to be considered and adopted to realize the optimal value from all minerals.
i. Solid Minerals: With an obsolete legislation and no regulations or published guidelines and procedures, there are no clear and transparent rules and procedures for allocation of rights for solid minerals, which is key to the transparent management of mineral resources. The lack of an internally well-structured Geological Department means accountability for actions or inactions is weak, because there is no clarity as to whose responsibility it is. Without yardsticks often contained in regulations, the monitoring of compliance with terms and conditions of allocation has been an issue.
Furthermore, the lack of a revenue management policy means that revenues generated from these resources are not judiciously utilized. Minerals being non-renewable means revenues from their exploitation must be transformed into other forms of capital, such as human and infrastructural, to achieve intergenerational use of these resources. It was clear from the Janneh Commission report that all funds that have been generated over the past 20-30 years have either been squandered by the former president or simply been pumped into annual budgets, while the resources are being depleted. Recent newspaper reports shed doubt on the fairness of the allocation of mining rights to GACH.
current state
Furthermore, there are no social, gender, and environmental policies, resulting in the continuous degradation of the coastal areas. Moreover, policies aimed at creating linkages between the exploitation of these resources and the local economy do not exist, thereby limiting the extent to which they create development impact. The people of Sanyang, Tujereng, Gunjur, and Kartong have unfortunately lost gardens and other sources of livelihood as a result of poor mineral administration policy.
Another major weakness in the management of these resources is the absence of conscious and concerted efforts to integrate, particularly solid mineral resource development, into the broader socio-economic development plans of the country.
ii. Hydrocarbons: While this sector is relatively well governed with many of the tools of governance in place, there are still some shortcomings. With such huge revenue potential, revenue management legislation must be developed. We all saw in November 2021 how the then-Minister of Finance Mambureh Njie hastily brought an emergency bill only to find justification for using the $30 million windfall revenues paid by BP as compensation for non-fulfillment of commitments made under the A1 license terms. This means if we were to receive hundreds of millions of dollars without legislation on how it should be utilized, some politician will simply come up with fictitious reasons and justifications on how to utilize it.
Furthermore, the Petroleum Act of 2004 needs amendment or repeal because it is outdated, has numerous inconsistencies and ambiguities.
3. PPA’s Solutions
A good understanding and diagnosis of the challenges outlined above represents the first step toward solving the problem. The greatest potential value from mineral resources is that derived through the integration of their exploitation into greater socio-economic policies by choosing policy options that create linkages between mineral resource development and other sectors of the economy. For example, in The Gambia, with a fixed small land size of about 11,300 square kilometers and as one of the most densely populated countries in the world, resulting in contending uses of land, policies on the use of our construction sands, gravel, and clays must be integrated with building and land management policies. Hundreds of thousands of cubic meters of sand are used in fencing empty and unused plots all over the country with the sole objective of securing or solidifying ownership or tenure. In other words, if security of tenure is adequately addressed under land administration policies, there should be no need to use scarce sand resources only to achieve the same objective.
Therefore, the overarching mineral development policy of PPA is to integrate sector policies into other policies, while the specific policy actions to remedy the issues defined above are outlined below.
a. Structural Reforms
Ministry-level reform will involve decoupling hydrocarbon resource development from energy, which is an infrastructural development imperative.
i. Solid Minerals: The current structure of the Geological Department does not suit the mandate of a mineral administration and survey department, which are the two roles it is currently assuming. Therefore, to get the best out of this institution, it needs to be internally structured to clearly delineate mineral administration and survey roles.
ii. Hydrocarbons: The merger of the Geological Department (to be renamed Mines and Survey) with the Petroleum Commission and other natural resource management institutions such as lands and fisheries will not only optimize the available human resources but also streamline the allocation of limited specialized capacity.
b. Governance Reforms
i. Solid Minerals: A clear, comprehensive legislative framework with an amendment of the Mines and Quarries Act, under which the roles of the Mineral Administration will be clearly delineated from those of Geological Survey. Regulations, procedures, and guidelines for key processes will be developed, which will reduce discretion and arbitrary decision-making. Such clarity of the regulatory regime will foster transparency, while delineation of roles will foster accountability and efficiency.
ii. Hydrocarbons: Develop revenue management legislation to ensure that whatever revenues are received from these resources will be put to good use. Amend or repeal the Petroleum Act and develop the numerous legislations needed for the development of the sector.
solutions
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