had poorly managed funds were generally re-elected; moreover, the system did not secure the possibility of long-term planning: in addition to a smaller proportion of the funds going to the local village councils after the 2009 reform, the levels of royalties to be paid by the logging companies were in fact reduced at the time, as the central government sought to soften the impact of the global financial crisis on the companies.107 Probably the best-known international effort of that sort is the Chad–Cameroon Petroleum Development and Pipeline Project. Initiated in 2001, the project was launched with significant support from the World Bank, which provided loans both through the International Finance Corporation and through the International Bank for Reconstruction and Development. The Bank, however, made its support conditional on the use of a portion of the revenues generated by the project to social development objectives, in the areas of health and education in particular. A monitoring mechanism was established (the Petroleum Revenue Oversight Committee, including members of both the Chadian government and civil society) to ensure that the oil revenues given to Chad would benefit the population. A Future Generations Fund, tasked with funding health, education and other development projects, and a fund to compensate the communities living in the region where the oil was extracted were also set up to that effect. In 2006 however, Chad unilaterally announced its intention to amend the Petroleum Revenue Management Program (PRMP), which was meant to ensure that the oil revenues would serve poverty reduction, leading the Bank to freeze the funding to Chad. Though subsequent negotiations allowed the collaboration with the World Bank to be prolonged, after the Future Generations Fund was replaced in 2008 by a general stabilization fund, it had become clear that Chad was unwilling to comply with the monitoring scheme: the Bank announced its retreat from what had been portrayed, in 2001, as the most significant investment ever on the African continent, and as setting a precedent for the use of natural resource exploitation revenue for positive change.108 The failure was due to the choice of the Chadian government to prioritize investing in security forces, as it faced the threat of a guerilla movement on its territory, rather than in poverty reduction. But part of the reason why the system initially agreed failed, was that the price of oil rose significantly between 2001 and the years 2006-2008, so that the initial calculations on the basis of which the allocation was designed became entirely unrealistic.109 The lesson is not that such attempts to ensure that revenues from the exploitation of natural resources are channelled towards human development objectives are doomed to fail. Appropriate procedural safeguards should be put in place, however, to ensure that the redistribution of the revenues will effectively take place, and that the authorities shall be held accountable to the population if the revenues do not support the right to development of the population.110 Moreover, any arrangement should strike the right balance between the requirement of stability (allowing for the planning of social 107 P.O. Cerutti, G. Lescuyer, S. Assembe-Mvondo and L. Tacconi, "The challenges of redistributing forest-related monetary benefits to local governments: a decade of logging area fees in Cameroon", International Forestry Review, vol. 12(2) (2010): 130-138. 108 The statement of the World Bank read: "Over the years, Chad failed to comply with key requirements of [the] agreement. A new agreement was signed in 2006, but once again the government did not allocate adequate resources critical for poverty reduction... Regrettably, it became evident that the arrangements that had underpinned the Bank’s involvement in the Chad/Cameroon pipeline project were not working" (World Bank statement on Chad-Cameroon pipeline (Washington, DC: The World Bank Group, 2008)). 109 Though they were less publicized, similar issues arose with respect to Cameroon, also a party to the project. Cameroon failed in its bid to have modifications made to the initial contract, though its conditions (negotiated on the basis of the low price per barrel at the time) had become extremely disadvantageous to the country by the late 2000s, with transit costs of only US$ 0.41 per barrel. 110 For instance, following his mission to Cameroon in July 2012 as the Special Rapporteur on the right to food, this author recommended as regards revenues from forest exploitation: "(a) guaranteeing the transparency of transfers, for example by requiring councils and local committees to publish figures on the royalties paid to villages, informing citizens in radio broadcasts about how the money has been used and publishing a list of expenditures at the end of the budget year; (b) building the capacities of local communities, especially women and indigenous communities, to participate in taking decisions about the use of tax revenue; (c) encouraging investment of this revenue; and (d) strengthening monitoring, appeals and sanctions mechanisms" (Report of the Special Rapporteur on the right to food, Olivier De Schutter, Addendum: Mission to Cameroon (16-23 July 2012), cited above note 104, para. 59). 25

Select target paragraph3

Connect to a paragraph
Connect to an entity
Disable highlights
Add to table of contents