Switzerland-based commodity trading firms are behind a much larger proportion of African governments? oil sales than previously thought, new research from the Natural Resource Governance Institute (NRGI), the Berne Declaration and SWISSAID has shown.
Their joint report ?released in New York on Monday, says Swiss traders like Arcadia, Glencore, Gunvor, Mercuria, Socar Trading, Trafigura, and Vitol purchased approximately $55 billion worth of oil from national oil companies (NOCs) in the top 10 sub-Saharan oil-producing countries from 2011 to 2013. This sum is equal to more than ten percent of the countries? combined government revenues, and is double what they received in foreign aid. Government health expenditures across the ten countries were less than half the amount collected from Swiss traders, the researchers found.
?We knew Swiss traders did big business in Africa, but the scale of these deals still came as a surprise,? said Alexandra Gillies, head of governance programs at NRGI and one of the authors of Big Spenders: Swiss Traders, African Oil and the Risks of Opacity. ?A handful of companies are buying public oil that?s worth 10, 15 or 20 percent of government revenue, and only a very small circle of insiders know about the transactions.?
According to the authors, the striking lack of transparency poses significant risks for the development of the exporting countries, where revenues from oil sales could finance health and education, but are often lost to corruption or mismanagement. The very difficulty with which the authors excavated the report?s data speaks to the secrecy around the sale of these public assets, the authors say.
Findings about specific countries illustrate the scale of Swiss oil buys. In the period of study, Glencore bought 100 percent of the oil sold by Chad?s government, and in 2013 made payments equivalent to an estimated 16 percent of total government revenue. In Equatorial Guinea, Swiss traders Arcadia, Glencore, Trafigura and Vitol bought oil worth a total of $2.2 billion from the government in 2012?payments equalling 36 percent of state revenue. In Nigeria, Swiss companies bought oil worth $37 billion over the 2011-2013 period?an amount equal to more than 18 percent of the national government?s revenues.
One reason for concern, according to the authors, is that the Swiss federal government indicated last month that its forthcoming transparency legislation would exempt the trading activities that dominate the Swiss commodities sector. This would be a step in the wrong direction and is at odds with EU and US regulations that have taken aim at opacity in the sector, the researchers maintain.
?The Swiss government has acknowledged the risks that the sector poses for Switzerland?s reputation and the importance of transparency,? said Berne Declaration senior researcher Marc Gu?niat, who co-authored the report. ?However, it?s proposing a bill that does little to guard against Swiss trading companies contributing to the ?resource curse?. African citizens need information about the sale of their countries? valuable resources, and how much their governments received in return.?
?The Swiss government should take immediate steps to require disclosure of all trading-related payments to governments made by Swiss commodity companies,? said Lorenz Kummer, a policy advisor with SWISSAID and a co-author of the report. ?This should include, among other aspects, the volume, grade, date and amount paid for each individual purchase. Otherwise, huge revenue flows like the ones discussed in our report will remain secret.?
The report analyzes sales made by the national oil companies in Angola, Cameroon, Chad, Republic of Congo, C?te d?Ivoire, Equatorial Guinea, Gabon, Ghana, Nigeria and South Sudan.
Source: ?Natural Resource Governance Institute (NRGI)
