Diagnosing Corruption in Ethiopia - Ethiomedia

Corruption in the Mining Sector: Preliminary Overview 385
decorative dimension stones, and gemstones. These exports contribute
7–10 percent of Ethiopia’s total export foreign currency earnings.
As of 2010, 13 licensing authorities (one federal, nine regional, and
three city) were responsible for issuing prospecting, exploration, and mining
licenses. They are also responsible for inspecting licensed mines to
ensure that the companies are complying with license conditions and that
all mining revenues are being paid.
The sector is undergoing a rapid expansion. In 1998, only three
exploration licenses and one mining license were issued. By early 2009,
however, the federal Ministry of Mines and Energy 2 had issued 160
licenses 3 involving 99 foreign companies, 50 joint ventures (of foreign
and Ethiopian companies), and 11 Ethiopian companies. Just over a
year later, in April 2010, another six exploration and two mining
licenses had been issued. This growth means that the amount of money
at stake in the sector will increase and, with it, the corruption risk in
monetary terms. In addition, the government will need to significantly
increase resources to manage this growth. Inadequate management, in
terms of both number of staff and ability of staff, can lead to increased
corruption.
The Legislative and Institutional Framework for Mining
in Ethiopia
Legislative Framework
The Ethiopian mining sector has a well-defined process for controlling
mine licensing and operations. Detailed mining laws and regulations govern
license issuing, license conditions, mining operations, mining revenues,
and the functions of the licensing authorities, as follows: 4
License issuing. Under Ethiopian law, a license is required to prospect,
explore, or mine in Ethiopia (although Ethiopian nationals do not
need prospecting licenses). The license types include discovery certificates,
prospecting licenses, exploration licenses, and mining
licenses. There are three types of mining license: artisanal, smallscale,
and large scale. People who satisfy the license requirements
have the right to acquire a license provided they are suitably qualified
and possess the required financial resources, technical competence,
and professional skill and experience necessary to fulfill the
license obligations.