Saturday, June 11, 2011
Barrick Gold's Failure to Engage Local Communities
Barrick Gold has interestingly managed to escape relatively unscathed in the mainstream media thus far for its complicity in the massacre that is unraveling in its Tanzanian operations. Although several people have died and dozens have been injured and/or wrongfully imprisoned, the media seems to be quite silent in covering the story. Those who have paint the local community trespassers as “invaders” implicitly sympathizing with the corporation’s perceived innocence, quoting the apparently shocked executives as saying phrases like “highly disturbed”, “deeply distressed”, and “regret the loss of life”.
Barrick’s response thus far has been textbook PR demonstrating remorse for the events that have unfolded and deferring all investigations to the supposed independent local police force. But more interesting is the discrepancy between Barrick’s account of the events and information emerging on the ground. One Barrick executive said, “North Mara regularly faces illegal intruders who are armed and aggressive, and many are linked to organize crime”. But Mobhare Matinyl, writing for The Citizen in Tanzania, asked how it was possible for 1500 people to “meet, plan and carry out such an operation without the authorities noticing something unusual”. Most striking perhaps is Canadian journalist Geoffrey York’s correspondence in Africa where he interviewed a number of these supposed “invaders”. He found compelling evidence suggesting that the police and Barrick’s security forces were out of line in their attacks on the people uncovering a rather pervasive discrepancy between what Barrick is saying in terms of citizen attack on the police and what witnesses and the police themselves are saying, including the regional police commander who said that the “seven injuries among the police were all caused by stones”.
But clouded behind Barrick’s PR rhetoric and the details on the ground is the fact that what is happening in Tanzania is a symptom of a greater systemic problem that Barrick has chosen to ignore for some time. First, it’s important to consider how Barrick’s western ideology influences their judgment on how to operate in an environment like this. Based on what we teach in business and economics textbooks, Barrick appears to be the innocent victim in all of this. They are considered by many to be a company going about its business of extracting gold for export. It’s not their problem that the surrounding communities are living in extreme poverty and that public services are virtually non-existent. They are not breaking any laws and they have full approval from the Tanzanian government to extract the gold. They pay royalties and taxes that are meant to be filtered down to the local communities. It’s not their problem that the government isn’t doing their job to pass on these royalties or is corrupt. On top of all this, Barrick has an impressive CSR program that contributes resources for schools, hospitals and infrastructure…something that is beyond the law. So this is a problem that should be addressed by the Tanzanian government and local authorities so that companies like Barrick are encouraged to invest in these regions on an ongoing basis. (See Wente's column for this very misguided and outdated perspective)
Although this discourse continues to be plastered in business schools, it is becoming quickly outdated especially in the global south . Since the 1990s, we’ve seen example after example of intense foreign direct investment and supposed economic growth having little, no, or an exacerbating effect on social inequity. In fact, there are countless examples of companies operating under this philosophy and facing huge financial backlash as a result. Shell’s infamous Niger Delta debacle is very similar to Barrick’s reaction here where they are relying on existing institutional infrastructure to solve the problem. This is their first mistake. Companies operating in this region should not be under the false impression that there is a reliable institutional infrastructure to which to defer these issues. By institutional infrastructure, I’m referring to a reliable and objective police force whose priority is for the long-term welfare of local communities, a proper legal system with due process that addresses community issues and a democratic system that ensures those in power are accountable to the citizens who put them there. Deferring to the police force may be appropriate in the West but in many locations in this part of the world such a strategy is akin to handing the investigation over to the mob. And who can blame the police force for being corrupt when they too see millions of dollars leaving their countryside in the form of gold while they are making pennies a day.
But beyond this incident is the fact that a weak institutional environment implies substantial voids in public service for surrounding communities. By public services, I mean access to health care, education, water, proper infrastructure and, more importantly, opportunity for capacity building, entrepreneurship and grassroots economic growth. Combined with the export of rich natural resources like gold that sell for an amount that local villagers earn in three years (USD $1600), it’s no wonder why revolt ensues. This places companies in a very unfamiliar position where they must engage in political activity to fill voids in public services and to help build local governance structures to deal with poverty issues. While Barrick has been quite active in the corporate social responsibility arena by building schools and hospitals, they chose not to engage in a more systematic, long-term community building strategy that would ultimately prevent these sorts of instances from taking place (see this article for a description of the difference). In my view, the privilege of operating in this region along with the benefit of extracting rich natural resources at low cost means that companies must get involved politically to prevent what Hilary Clinton calls New Colonialism. This is not a nice thing to do but a must do!
For too long companies have been at odds with their local communities, keeping roles separated as they presume government agreement parallels local community acceptance rather than looking for opportunities to collaborate locally. A couple hundred kilometers north of the North Mara mine is a small village called Magadi in Kenya. Tata Chemicals Magadi (previously called Magadi Soda Ash) operates a large soda ash plant surrounded by 30,000 Masai who, after a massive drought in the 1990s, imposed similar pressure on the company as we’re seeing on Barrick today – albeit without the presence of gold. The company underwent a 5-year process of building close relations with the surrounding community and instituting a platform through which multiple stakeholders (senior chiefs, elected officials, NGOs, company representatives, community-based organizations) work together to address public service issues with the ultimate objective to reduce poverty through a self-sustained and informed community governance system. In effect, the company helped create a local governing body that encompassed all actors in the region emulating the very principles of sustainability – inclusion, interconnectedness, and equity.
But most companies like Barrick resort to exclusive and disconnected approaches to helping communities resulting in power imbalances, dependency inequality, corruption, and an unsustainable community situation. Building schools and hospitals and then touting on your website all that you’ve spent and built may address public service gaps in the short-term but doesn’t address the need for community capacity, integrity, and dignity that fuels grassroots economic development. What is happening in Tanzania is very sad but it is not inevitable. For-profit companies have a choice on how they deal with highly complex situations such as the extraction of a rich substance from an impoverished region. The easy way is to throw money at high-profile initiatives to create the impression that you’re a good company not there to merely take resources and to leave the rest to government. The hard way is to challenge corrupt governments and to build relationships, local capacity and local governance systems involving multiple stakeholders making decisions collaboratively for the long-term welfare of the community. Only then will companies begin to understand what sustainability means.
Photo acquired from Amnesty International reproduced under Creative Commons