WE BLUNDER, THEY PLUNDER!

Why are we always crying that Western countries are plundering Africa, yet it is the same you who was celebrating that the foreign company is investing millions of dollars in your country?

Who is inviting those companies to come and plunder Africa?

Isn't it our own leaders across the global south who are boasting every day about how many millions of dollars of foreign investment they have brought into the country and how many jobs you will be getting?

So our own governments in the global south are happily enabling plunder, and we are happy when we hear how much investment is coming, and how many jobs we are getting, but what we do not check is what percentage of the profit are we sharing in the partnership agreements that our governments sign with these corporations.

That is where the big plunder of Africa is happening.

Let me tell you what plunder means. Plunder simply means you are the idiot who has been conned.

If the African leader shows off foreign investment that he or she is bringing to the country, immediately ask what the country's percentage of the profit is. And if the foreign corporations also show off the millions of dollars that they are investing in Africa, do not celebrate. First immediately ask what the profit sharing percentage is as well.

Because that is where Africa is being swindled.

Now, when it comes to negotiating these partnerships, here are two major mistakes that our governments make, which create outright plunder and loss to Africa.

We do not establish the value we bring to the table. Period!

Recently, I talked about how African countries should consider the entire estimated value of their mineral resource as part of their share in partnerships with foreign corporations because that resource's value is the central part of the project. If that value didn't exist, the foreign partner wouldn't be talking to us to do business. They are not here to help or engage in charity. They are going to make money from our resource, and we should as well.

So, the mineral resource itself, be it oil, gold, diamonds or copper, is what Africa is putting on the table in the partnership, and the profit shares should therefore be about comparing the foreign investment amount versus the value of the resource. The value of the resource is even more than a hundred times the investment the company is making in the country, and that should determine how we share the profits.

We tend to negotiate as if the resource isn't something that we are bringing to the table, and foreign corporations are happy to negotiate as if the mineral resource doesn't belong to anyone from the onset. That's where the plunder begins.

Now a second important aspect where Africans have a huge problem, is that the profit from exports of natural resources is many times divided 70/30 for example, meaning that 70% of the profits goes to the foreign investor. When you ask why it is not a mutual 50/50, The investor says that the 20% extra is for recovering their investment, and that once that investment is recovered, then the profit share will go progressively down.

The question is, why would it even be a 50/50 profit sharing at that later time when the African country would have paid back the total investment share of the foreign company? Basically, why would an African country which would have been getting less revenue for years because it is paying the foreign company's investment, still end up sharing 50/50 later when mathematically speaking, the foreign investor should be having no remaining investment share in the project by then because the African country has paid them back their investment in full, right?

What I am depicting here is a major problem across Africa, and our failure to address this abuse is brought about mostly by our corruption and poor negotiation skills. 

As a continent that has been kept poor through exploitative partnerships, we need to establish into law a negotiation model across the continent so that poor African countries are not cheated and exploited going forward. We must have a coherent understanding of how a foreign company's investment risk is what is tantamount to their partnership share and their profit share.

Remember this well! The foreign company's investment is the risk they are taking, and their risk is their profit share compared to the total value of the resource to be exploited.

So if a company has no investment anymore in the project because it was all paid back to them over time from the projects profits, then they no more have any share in the business or its profit, and the entire project should now be 100% the property of the African country, and those working on the project can now be considered employees working for the African government for a monthly salary. Not for a share of the profit.

If that is not the case, then the African country has been had as they say. It is a bad deal, and the foreign company is really plundering Africa.

That's all we need to understand and the put laws that underpin the basic logic behind a fair partnership model, and implement it consistently for Africa's own faster development.

For example, Uganda signed this kind of partnership with Umeme Limited in electricity distribution. In the end, the company handed 100% of the project to the government after being paid back their investment progressively for the last 20 years. Why aren't we as Africans doing the same in all partnerships on the continent?

We have wasted too much time being used, abused, and kept in poverty out of our own ignorance, not knowing what value we bring to the table, taking 100% of the project risk without taking 100% ownership of the project, and not establishing minimum standards of profit sharing into law.

If anything, African governments should be hiring an expert consultant, then taking a loan and investing in the resource extraction ourselves. Why not? Especially when we are taking millions of dollars of loans every year for things that nobody sees and which do not add anything to our economies except more useless debt to repay?

We must have an honest discussion with African and Global South leaders about a new understanding of the value we bring to the table, and the percentage we deserve when we take 100% of the risk behind investment partnerships.

Written by Mr. Lumumba Amin

Son of the late President Idi Amin Dada

Uganda 🇺🇬 East Africa