DAKAR, 18 April 2008 (IRIN) - Mali and Ghana are Africa's second and third largest gold-producing countries, but with most of the income leaving the country they remain entrenched in poverty.

To counter this, the Economic Community of West African States (ECOWAS) and Oxfam America have launched a new mining code to put in place region-wide social, environmental and business practice standards across the gold-mining industry.

Gold is mined in a number of West African states, including Mali, Ghana, Burkina Faso, Nigeria, Senegal and Côte d'Ivoire.

The mining code, launched in Dakar on 17 April and to be ratified by parliaments in 2009, aims to put in place transparent financial practices, impose strict environmental standards, and make sure more of the revenue from the industry ends up in the hands of governments and communities.

"The benefits of the gold-mining industry are not currently felt by populations... mines can even introduce conflict to countries. This code will… try to recoup more revenue from gold-mining to help the producers themselves," Mamadou Makhtan Gueye, director of the ECOWAS Commission, told journalists at a press conference.

West African gold-producing countries recoup on average just 5 percent of mining revenues, according to Mamadou Bitteye, Oxfam's regional director, which amounts to just 1 percent of national annual budgets.

National mining codes were weakened in many countries in the 1990s when the World Bank pushed governments to deregulate, making companies less accountable, according to Bitteye.

"Isn't it astonishing that Ghana and Mali, which are among the world's six top producers, are respectively 135th and 173rd out of 177 countries on the [UN] human development index? There are big profits to be made in this industry but these countries are not benefiting from them," said Bitteye.

"A race to the bottom"

According to Gueye, countries in the region have not been working together to support each other's standards, but are fighting to lower them in a bid to attract foreign investors.

"In Ghana we were seeing a race to the bottom in terms of mining codes," Daniel Owusu-Koranteng, a community activist from the gold-producing area of Wassa, 35km from Bogoso in Ghana, told IRIN.

Bitteye said: "Through this code we hope to institute common law so that one country cannot accept an offer that is rejected by another."

While the details of the code are currently being worked out, penalties that may be introduced include calling upon investors to post bonds when they open a site so that those who fail to rehabilitate the land after mining it will not get their money back. Other standards will focus on minimum wage requirements, ensuring children are not exploited in mines, and reporting of all financial gains.

Civil society involvement

Oxfam's Bitteye wants to give communities a bigger voice in the process and strengthen their ability to scrutinise financial flows.

But many civil society members are already doing this. Owusu-Koranteng heads up a lobbying group, WACAM, which he helped set up in the 1990s when foreign mining companies started moving into his village and negotiating land deals with village chiefs, leaving peasants landless and unable to argue on their own behalf.

"We realised we needed to build up our lobbying and monitoring capacity if we were going to fight them", he told IRIN. "We hope this code will take our struggle further, by encoding our rights into law."

Balancing act

While advocates of the code do not foresee too many obstacles from West African governments in passing it, mining companies are likely to put up a fight. Financing the regulations may fall into industry hands.

"We need to balance between the need to create revenue and help development in these countries, and meeting investors' interests," said Helene Cissé, the code's legal adviser.

Despite a potential struggle, many activists IRIN spoke to were confident the code will be endorsed. Joana Manu, from Dumase, a village in Western Ghana, told IRIN: ''So many people who actually work in this industry want to see change… companies will have no choice but to listen."

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