An African story – poor, rich Guinea

The West African country of Guinea is rich in resources – and at the same time very poor. This provides the gateway for international corporations who want to secure lucrative raw material rights with a bribe. But also for states that try to outsource their environmental sins.

By Benjamin Moscovici

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A story is told in Guinea: when God created the earth, he wandered around the world to distribute his treasures. In the apron of his wide robe he carried gold, diamonds and gemstones in front of him. He carefully buried the treasures here and there. And then, of all places in Guinea, on the extreme southwestern arch of Africa, he tripped over a tree root and spilled all of his treasures.

Bertis Café is located in a small side street in Guinea’s capital, Conakry. A hut like many here. A few wooden slats, corrugated iron roof above. Inside some benches and plastic chairs. In the refrigerator, seven cola bottles and two cans of energy drink are waiting for a customer. An old tube TV is running in the corner and coffee is bubbling on a small improvised charcoal grill in a large aluminum espresso pot.

Bertis Café: This is where they play Men Lady. Camp Boiro is on the left behind the wall (Deutschlandradio / Benjamin Moscovici)

"Can you explain to me why the country is so poor despite its raw materials?"

"Our politicians are no good."

"There is also a lack of good education."

"The country is simply miserable. The problem is corruption."

Corruption is not the only problem

If you listen around the country, you always get the same answer to this question. "Corruption is to blame". What about the consequences of colonialism, what do people think about the activities of international corporations or about the world trade system?

"We have to talk about our own mistakes, not just those of others."

"People have to stop blaming France."

"The origin of the problem is here in Guinea. It is up to us to change that."

"Guinea is rich. That’s true. And yet we are poor."

Conakry: Poverty Despite Resource Abundance (Deutschlandradio / Benjamin Moscovici)

It is Guinea’s resource paradox: the world’s largest iron deposits are slumbering in the south-east of the country, on the border with Sierra Leone and Liberia. In the north, on the border with Mali, there are gold and diamonds. And in the northwest are the largest bauxite reserves on earth, raw material for aluminum. Almost 100 percent of Guinean exports come from the mining sector, and almost half of the Guinean national budget is financed by the mines. By far the largest share is bauxite mining. If you want to understand why Guinea is poor despite all its resources, you must first look here.

Poverty despite resource abundance

Aluminum is the most common metal in the earth’s crust. However, it never occurs in a pure, unbound, metallic form, but always in conjunction with elements other than bauxite ore. And nowhere is there more ore containing aluminum than here in Guinea.

Trucks for the transport of bauxite: There is a real boom in Guinea – but hardly any of it matters to people. (Deutschlandradio / Benjamin Moscovici)
For some years now there has been a real bauxite boom in Guinea. Why is none of this popular with the population? It’s worth taking a look at the semi-governmental Guinean mining company CBG. The company started work in 1963. The Guinean state is the most important shareholder with 49 percent. Other shareholders are the American mining company Alcoa, the Australian mining company Rio Tinto and the DadcoAlumina company, which is based in a tax haven in the English Channel.

The list of former CEOs of the CBG makes one sit up and take notice. Until 2010, the Guinean mining company was headed by two Australians, two French, six Canadians and seven Americans. It wasn’t until 2010 that the first Guinean came to the top of the company. Kemoko Touré. I meet Touré in one of Conakry’s luxury hotels on a terrace with a sea view. He explains to me what the problem is with the foreign company bosses.

"The international investors were always co-owners and customers at the same time."

Kemoko Touré, first Guinean to head the Guinean mining company CBG (Deutschlandradio / Benjamin Moscovici)
This allowed investors from the United States and Canada to simply move costs and profits between the CBG and their own companies. Kemoko Touré describes how it went and what contracts he found when he took over the management of the CBG in 2010.

"There were deals with the partners on the details of the deliveries. It was about the aluminum content in bauxite. The requirements were very high at the beginning and the CBG was able to deliver the appropriate quality because the first mines at Sangaredi had an enormously high aluminum content. But the investors stuck to their requirements, even when the CBG had to expand its activities over the years to less rich mining areas and could no longer meet the conditions. CBG has therefore paid its investors 20 million dollars a year in contractual penalties."

Questionable company deals

In other words: A company, such as the American mining company Alcoa, buys shares in the Guinean CBG, then installs one of its people as the head of the CBG, who in turn signs an acceptance contract with Alcoa, which sets out unattainable contractual goals. And the CBG then has to pay millions in contractual penalties to Alcoa every year.

"Since Guinea holds 49 percent of the CBG and has the right to tax the CBG, a profit for the CBG is always a profit for Guinea. 65 percent of the profits go to the Guinean state. So if the CBG loses $ 20 million, it means that the Guinean state is missing 65 percent of its $ 20 million revenue."

$ 13 million. Per year. In Guinea that would be enough to pay a good 7,000 teachers.

Value creation outside of Guinea

Another problem: Because the Guinean mining company CBG remained exclusively a raw material supplier and buyer-investors like Rio-Tinto and Alcoa took over the processing of the raw material to bauxite, the lion’s share of the value chain remained outside of Guinea. While bauxite with slight fluctuations costs around 40 euros per ton, customers pay around 2,000 euros for a ton of aluminum. The costs of aluminum smelting are enormous, the technical challenges are high. But the profit margins differ considerably. Kemoko Touré, former CBG board member, says:

"I am assuming that the transformation from bauxite to aluminum can make up to 10 times more profit than the mere extraction of bauxite."

And he adds: "If a country always takes the easiest way to make money, it will never develop."

In fact, the next step in development is imminent. The first plants for aluminum smelting in Guinea are to be built soon. However, not from the CBG, but from a player who is still quite new to Guinea.

The SmB Winning Group was founded in Guinea in 2014. A complex consortium that is almost entirely funded by the China Hongqiao Group, a Chinese state-owned company. In 2015 the SmB exported the first ton of bauxite and in 2017 the Chinese company based in Conakry had already overtaken the Guinean CBG with 31 million tons a year. And exports should continue to grow. At the end of 2018, the SmB announced that it would build an aluminum refinery in Guinea. Does this make Guinea’s dream of own aluminum production come true? Yes, but the dream could become a nightmare. I meet JingJing Zhang, a Chinese lawyer who is investigating the environmental sins of Chinese mining companies and is currently on a research trip through Guinea. In China, Zhang has successfully sued mining companies on several occasions.

"My research shows that SmB’s mining activities in Guinea have a serious impact on the environment. In particular, there is enormous dust production, noise and pollution of water."

China exports environmental problems

Zhang also knows why China suddenly has an interest in building aluminum factories in Guinea: Environmental policy has become a huge issue in China in recent years, and environmental protection requirements have been strict. The reason for this policy change in China was the extreme air pollution in major Chinese cities. One way to reduce emissions: outsource aluminum smelting. Because the melting of aluminum oxide to aluminum is extremely energy-intensive and the electricity required for this is primarily generated in environmentally harmful coal-fired power plants.

"Now Chinese companies like SmB are trying to move aluminum smelting to countries like Guinea because they know they can pretty much do what they want there. In plain language, this means that China exports its pollution."

But pollution isn’t the only reason why Chinese involvement in Guinea could ultimately prove to be of little benefit to the local population. In Guinea there is actually a so-called "Code minier", a kind of basic law of mining. This code minier provides that Guinea should hold at least fifteen percent in every mining company. In doing so, the state wants to guarantee that Guinea also benefits from the activities of foreign companies. The profits should then be invested in the expansion of development projects. In the case of the SmB, however, the state made an exception. The participation of the Guinean state is only ten instead of fifteen percent. How this regulation came about remains unclear. But it is clear that Guinea is one of the most corrupt countries in the world. And JingJing Zhang explains:

"China has a law that bribes politicians and civil servants abroad, but so far not a single Chinese businessman has been prosecuted for corruption abroad in Chinese courts."

Ex-CBG boss Kemoko Touré knows the principle only too well.

"A minister’s salary here is just around $ 1,000 a month. Now someone comes and gives him maybe $ 20,000 or $ 50,000 for signing a specific contract. That’s a lot for a minister in Guinea. And so he signs a contract that is absolutely not in the interest of his country. Even if the state loses billions. The is this Bad thing about corruption."

But it is not just disadvantageous contracts with foreign corporations that corruption harms the country. It’s also about that money, that flows into the state coffers despite everything. Abdoulaye Keita is a journalist for a local radio station in the Boké mining region and specializes in the mining sector.

"The deficits in the administration range from the government down to local politics. Despite all the expressions of will and reforms, the problems on the ground have not changed so far and the reason for this is simply the mismanagement."

Come to exploit

Abdoulaye Keita sees the situation soberly: "Mining companies do not come to a country to develop it. They come to exploit the raw materials. They come to produce and sell. Development comes only from the state, which manages and reinvests its share of the profits. And that just doesn’t make Guinea enough. Has the hospital increased its capacity since the mining boom started here? No. So what is the Minister of Health doing? Has the environment minister stepped up reforestation or invested in environmental protection? No! Has the Ministry of Energy increased electricity capacity for the general public? The state simply does not do its job here."

How can this state failure and rampant corruption be explained? One of the reasons is right behind Berti’s café. Between 1961 and 1984, the notorious Camp Boiro torture camp was located behind a high wall. This is where conspirators, putschists and everyone who somehow got the accusation ended "Enemies of the people and the revolution" to be.

First colonial rule, then arbitrary regime

Guinea had freed itself from French colonial rule by referendum in 1958. All other French colonies had accepted President Charles de Gaulle’s offer, part of a so-called "french community" to become, which, although not autonomy, promised privileges and good relations with the French mother country. Guinea is different. France paid back the freedom elections to the country, tried to destabilize the young state through secret missions. The other colonies should see that independence is not worth it, that a country like Guinea would sink into chaos without the help of France. In return, Paris did not shy away from sending secret agents to neighboring Senegal, smuggling weapons to Guinea from there and building, training and equipping underground militias. When Guinea finally launched its own currency, the Guinean franc, France even printed counterfeit money and flew to Guinea to plunge Guinea’s economy into inflation. Everything is documented by committees of inquiry in the French parliament, letters, telegrams and the memoirs of those involved.

The historian Djibril Tamsir Niame was one of the first to come to Camp Boiro in 1961. (Deutschlandradio / Benjamin Moscovici)
France wanted the new president >
"It’s no exaggeration to say that Camp Boiro was a genoz >
There is no official information on the number of those killed. However, it is estimated that around 50,000 people were killed in the 26 years of Sekou Touré’s rule. Abbas Bah is one of the camp’s survivors. He spent seven years at Camp Boiro.

"Anyone who had a good education was murdered, anyone who came from a good family was killed." With devastating consequences.

"It is always said that Guinea is a geological scandal. Every student learns that. There is gold, diamonds, bauxite. Everything. But it takes human resources to extract the natural resources. And Sekou Touré killed everyone who could have helped the country. Engineers, doctors and professors. They were all murdered."

The destruction of the intellectual elite is one of the aftermath of Camp Boiro, another problem is that there was never justice later. The crimes of the Sekou Touré era were never dealt with. Even when there was a massacre of demonstrators by the military government in 2009, there was no persecution of the judiciary. The lack of justice has created a general atmosphere of impunity. And that is the origin of corruption, explains Abbas Bah.

A country in a swamp of lawlessness?

Everyone for himself and the state against everyone. If you can, help yourself. People see how international corporations make billions with Guinea’s raw materials and how politicians put money in their own pockets. Everyone knows that the police do not ensure security, but take people for their money at every opportunity, that the army is not used for defense but for the brutal retaliation of demonstrations and should only go to court if you know a judge. Citizens’ trust in the state has been completely destroyed. People no longer have a nation, nothing in common, no idea for which it is worth working together.

Abbas Bah visits the remains of Camp Boiro (Deutschlandradio / Benjamin Moscovici)

Abbas Bah, himself a victim of the dictatorship, is convinced: "As long as Guinea does not care for national reconciliation, as long as the country does not speak about its past, nothing will change. The state must acknowledge its mistakes."

But Guinea is still a long way from that. A critical reappraisal of the Sekou Tourés era is not in sight, the horrors of Camp Boiro are largely hushed up.

Guinea is a special case in the region in many ways. But at the same time, the country also represents many things that go wrong in many African countries. No continent on earth is so rich in resources and none at the same time so poor. The rampant corruption, the disastrous education system and the total loss of trust of the citizens in the state are phenomena that can be observed in most African countries. This provides the gateway for international corporations who want to secure lucrative raw material rights with some bribes and for countries that want to outsource their environmental sins.

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