Conflicts in Africa and their relevance in context of the Supply Chain Act

The recently passed Act on Corporate Due Diligence in Supply Chains (in short: Supply Chain Act) in Germany is considered to be a milestone in human rights and sustainability policy by politicians. From 2023, companies with more than 3,000 employees will be required to issue a policy statement on respect for human rights, to provide risk analysis and prevention management for these, and set up a complaints mechanism for any human rights violations.[1] This applies to the company’s own business operations and direct suppliers. For indirect suppliers, the due diligence obligation is event-driven and includes the preparation of a risk analysis, the implementation of an avoidance and minimization concept as well as preventive measures. From 2024, this Supply Chain Law will also apply to companies that employ more than 1,000 people.

This new regulation presents companies with new tasks in an often little-known terrain. Human rights violations and environmental degradation, which are not present in the wider European public, are a global phenomenon and companies can be confronted with them unexpectedly. The potential conflicts are multifaceted and can manifest themselves in a wide variety of ways. The following article presents examples of conflicts from three African countries where companies are involved and which are related to human rights violations or environmental degradation: Togo, Tanzania and Mozambique. These examples will provide a first insight into the range of relevant cases.

Togo

The first analysis focuses on the West African state of Togo. Various German and international companies attracted attention for their activities in Togo when demonstrations by the Diaspora Togolaise Allemagne, an interest group representing Togolese living in Germany, took place in front of their headquarters in the winter of 2020. On the one hand, they protested against environmentally harmful business and production practices of the companies in the country. On the other hand, the support and legitimization of the authoritarian government through economic activities in Togo was criticized.[2]

In context of the new Supply Chain Act, German companies are required to monitor and analyze human rights violations and environmental problems.  For the aspect of environmental protection, Togo can be used as an example for other countries: Environmentalists and critics of the Togolese government complain that phosphate mining in Togo causes severe environmental damage along the coast. This includes, among other things, coastal pollution and a resulting death of the fish population. In addition, factory workers have been found to have health problems that are believed to stem from phosphate mining.[3] These sustainability deficiencies, which are by no means limited to phosphate mining, may present new challenges for companies in light of the Supply Chain Act.

In addition to environmental and health aspects, the human rights violations of the Togolese government are relevant in regard to the new Supply Chain Act. The ruling Gnassingbé family follows an authoritarian style of government and is directly involved in phosphate mining through the state-owned Société Nouvelle des Phosphates du Togo and its monopoly.[4] In recent years, the Gnassingbé government has also drawn attention to itself by suppressing the opposition and violently repressing protests.[5] A further deterioration of the human rights situation in Togo is quite possible. For businesses, this creates the risk to actually enable or even actively support human rights violations and environmental destruction through cooperation with corresponding companies or through agreements with the government.

Tanzania

Another example of political conflicts with relevance to the new Supply Chain Act can be found in Tanzania. Although the East African state is characterized by political stability and high growth rates compared to other states in the region, its treatment of the LGBTQ+ community appears problematic to the rest of the world.

The Supply Chain Act stipulates that discrimination against individuals on the basis of a wide variety of characteristics has to be prevented. Therefore, the situation in Tanzania is problematic due to both social and political discrimination against the LGBTQ+ movement. In the past, the drastic approach against the LGBTQ+ community caused negative headlines internationally when high-ranking politicians initiated a public wave of arrests against homosexuals in 2018.[6] The call for the public to provide names of alleged homosexuals caused widespread criticism among Western nations and, among other things, resulted in the suspension of development funding.[7] In addition to the potential discrimination by political actors, this discrimination is also perpetuated in Tanzanian society.[8]

What initially had no immediate consequences for international companies has to be reassessed as a result of the Supply Chain Act. Such or similar discriminatory measures could affect companies’ own employees and suppliers. This example illustrates how the new Supply Chain Law forces German companies in apparently stable and inconspicuous states to conduct a deeper analysis of political and social conflicts.

Mozambique

The last example deals with the Cabo Delgado region in Mozambique, which exemplifies the escalation of social conflicts. Former low-intensity conflicts resulted in a violent uprising by Islamist militias that necessitated international military support.

The basis of today’s conflict can be found in the population’s rejection of the state of Mozambique, which is based on the neglect of the region by state institutions and corruption. These conditions created the first favorable premises for political violence and religious extremism in the region, even before it became interesting for economic resource extraction. The region in northern Mozambique gained economic interest through ruby deposits and the discovery of large quantities of offshore natural gas. The raw material deposits have attracted foreign investors over the past decade. Since 2017, however, they have faced an increasingly serious security situation that has prevented economic activity in the region for the time being.[9]

Due to widespread corruption, the ruby deposits have been exploited economically, but there was no significant economic progress or participation in the wealth of resources for the population of Cabo Delgado. A similar situation took place with the natural gas extraction project, which had to be interrupted during the construction phase because the Islamist attacks now also claimed victims among the companies operating there.[10] The implementation of the projects also created potential for conflict with the culture of the local population, since on the one hand graves and on the other families had to be relocated for the extraction of raw materials.[11] The lack of transparency in the decision-making processes and the authoritarian approach of the police in enforcing them are important factors in this multidimensional conflict, which escalated violently for the first time in 2017.

Years of attacks and territorial gains by the militias have plunged the region into deep instability, which an international military mission is now seeking to remedy. Neglect of Cabo Delgado’s civilian population, corruption and other factors are likely to prevent fully safe economic activity for the next few years.

The examples of Mozambique, Tanzania and Togo show in many different ways the relevance of the new Supply Chain Act and why a professional political risk analysis is becoming increasingly important for companies. Conflicts like the one in Mozambique, which are initially characterized by low intensity and then escalate violently, are important for international business and production processes, which could be disrupted as a result. The new Supply Chain Law also affects lower intensity conflicts, such as in Togo. Finally, environmental destruction and discrimination against individual population groups that are part of these conflicts should not be neglected either.

With MBI CONIAS Risk Intelligence, you are fully prepared for the challenges of the new Supply Chain Act. Our decades of experience in monitoring political conflicts below the threshold of war make the MBI CONIAS data unique. The large number of these conflicts and their complex modes of action require a great deal of knowledge in order to identify their impact early. Constant enhancements and additions continuously increase the benefits for our customers. 

From late fall 2021, our MBI CONIAS Academy in Heidelberg will also offer seminars to prepare your employees accordingly. For further information, please contact our Sales Team.

About the authors:
Etienne Limberger & Dr. Nicolas Schwank
CONIAS Risk Intelligence
Michael Bauer International GmbH

[1] https://www.bmz.de/de/entwicklungspolitik/lieferkettengesetz
[2] https://www.stadtpolitik-heidelberg.de/?q=node/3388
[3] https://taz.de/Phosphatgewinnung-in-Togo/!5582284/
[4] https://www.sueddeutsche.de/politik/afrika-das-grosse-schachern-1.3705970
[5] https://www.bbc.com/news/world-africa-41332072
[6] https://www.reuters.com/article/us-tanzania-lgbt-idUSKCN1N90FZ
[7] https://www.bbc.com/news/world-europe-46219356
[8] https://www.hrw.org/report/2020/02/03/if-we-dont-get-services-we-will-die/tanzanias-anti-lgbt-crackdown-and-right
[9] https://www.tagesschau.de/ausland/afrika/mosambik-cabo-delgado-105.html
[10] https://www.aljazeera.com/economy/2021/4/26/total-suspends-20bn-lng-project-in-mozambique-indefinitely
[11] https://www.macaubusiness.com/mozambique-government-failed-to-seek-local-consent-for-gas-projects-activist/

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Effectively implement requirements of the new German law on corporate due diligence in supply chains

Integration of MBI CONIAS data into the VertiGIS solution

Supply chain visibility with MBI CONIAS Risk Intelligence Data

On June 11, 2021, the German parliament passed the “Act on Corporate Due Diligence in Supply Chains”. The new Supply Chain Act obliges companies above a certain size to better meet their responsibilities in the supply chain with regard to respecting internationally recognized human rights. It will be binding for companies with more than 3,000 employees from January 1, 2023, and for companies with more than 1,000 employees from 2024.

New law demands transparency and risk management along the entire supply chain

Many companies perceive the new Supply Chain Act as a major challenge: It requires transparency and risk management along the entire supply chain and, at the same time, special knowledge about the status of human rights violations and environmental offenses on site. Failure to comply with the new requirements on minimum social and environmental standards within the supply chain could result in loss of image, loss of sales, fines and exclusion from federal procurement procedures.

The upcoming law confronts companies with new tasks and obligations for which there is often too little in-house expertise. Risks have to be identified, analyzed and appropriate measures taken. The lack of transparency within fragmented supply chains in particular makes risk management difficult for companies. Obtaining data involves a great deal of effort and assessing the situation is associated with great uncertainty.

Solution for the analysis and visualization of risks supports risk minimization

This is where the joint approach of MBI and the VertiGIS companies comes in. MBI CONIAS data is integrated into the risk management and business continuity solution of VertiGIS. This provides an effective and globally applicable solution that enables the analysis and visualization of risks along the entire supply chain. Risks can be identified, evaluated and suitable countermeasures can be taken. In this context, indicators and further information on the human rights situation as well as the environmental situation can be shown for locations worldwide, risks can be anticipated and mitigated through appropriate measures.

CONIAS has its origins in the early detection of conflicts: This means that it not only shows where there currently are violations of the Supply Chain Act, but also where human rights violations and climate damage measures are improving or worsening. This creates transparency in the supply chain and sustainability is already achieved in the procurement process. The CONIAS data is continuously updated. In the event of changes in the characteristic values, users are informed in detail and measures are recommended. Risks can be reduced or avoided altogether through foresighted risk assessment and adequately coordinated catalogs of measures.

The detailed article, published in the VertiGIS [email protected] magazine 2021, is available in German here. For further information, please contact our Sales Team.

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The assessment of political risks – Orientation and security through MBI CONIAS Risk Intelligence

It’s a paradox: Political risks, including wars and political violence, are consistently ranked among the biggest risk factors for business managers[1]. Supply chains can be disrupted, inventories can be destroyed, sales markets can disappear. Nevertheless, the area of early detection and warning of political risks receives little attention from internationally operating companies. It is often assumed that crises and wars are too complex to be effectively predicted – but the scientifically based CONIAS approach was developed for precisely that purpose. One of the basic methods used to understand and more quickly classify the multi-layered risk situations is pattern recognition[2].

Pattern recognition is derived from general human approaches

For the complex field of political risks, pattern recognition is so well suited because it closely resembles general human behavior. An example of this is the following scenario: Two people, 20 and 50 years old, start their new job in a small company with ten employees on the same day. While the younger of the two tends to be quiet and reticent about the new situation, acting rather defensively and preferring to listen rather than speaking himself, the older one benefits from many years of professional experience and several job changes. Having experienced this situation many times before, the older person can therefore better and more quickly assess people he encounters in the new situation. He compares their behavior, their body language, the sound of their voice, but also their position with people he met on earlier “first days at work”. In doing so, the older person recognizes patterns that give him orientation in the new situation and derives conclusions for his behavior.

The MBI CONIAS database records non-violent early phases and other conflicts

People make use of pattern recognition – no matter whether through their own experience or through experience acquired through telling or reading – and thus orient themselves in new situations.  The CONIAS approach and the CONIAS database are also committed to this idea. Unlike conventional conflict databases, which only record wars or violent phases of conflict, the CONIAS database also records the non-violent early phases of these later wars[3]. In addition – and this is what makes the CONIAS approach so special – other conflicts that begin similarly to later wars but ultimately take a peaceful course are also recorded. Only in this way is it possible to make statements about the vulnerability of certain conflict constellations. This can be explained as follows: It is true that a large proportion of the few interstate wars since 1945 have been fought over territory. Examples include Iraq’s invasion of Kuwait (1991) or the conflict between Armenia and Azerbaijan over the Nagorny Karabakh region (2020). Nevertheless, conversely, it would be wrong to say that territorial or border disputes lead to war particularly frequently. Currently, there are about 120 recorded border disputes between states, almost all of which are settled without violence only at the diplomatic level. Other sources speak of an even higher number of unresolved border disputes[4].

Only a comprehensive collection of data allows to properly assess the risk potential of border disputes

In total, the CONIAS conflict database contains information on the course of more than 1,900 intra- and interstate, violent and non-violent conflicts since 1945. A large number of indicators are recorded for each conflict and actor involved, reflecting all dynamic changes in conflict resolution, but also in the socio-economic environment[5]. Thus, the CONIAS database provides millions of data points supplying statistical information on global conflict behavior. One of the most important findings of empirical conflict research can also be confirmed by CONIAS: Democracies do not wage wars against other democracies[6]. We have already integrated this “law” of democratic peace into our thinking to such an extent that, for example, even the most severe low blows in bilateral relations between Germany and the U.S. did not cause any fear of war even among the greatest pessimists.

Especially in areas not illuminated by other conflict databases, the CONIAS database reveals more points of reference

The database has shown, for example, that culturally driven conflicts have become significantly more important since the end of the Cold War in 1990 and especially after 9/11/2001[7]. At the same time, however, the CONIAS database shows that over time, it is not the number of different religions in a country that makes it vulnerable to intrastate violence, but the number of different languages spoken in the country[8].

The CONIAS conflict database is continuously maintained, and current conflict events continue to be recorded. Every quarter, knowledge about the evolution of conflicts around the world grows by tens of thousands of data points. Currently, the CONIAS team is working to better understand the links between political conflicts, human rights violations, and damage or destruction to natural livelihoods. The new supply chain law, as well as an ever-growing sense of responsibility for human rights and the environment, requires companies and ultimately every individual to act carefully in this regard. We would be pleased not only to provide you with points of reference, but also to support you with our comprehensive know-how and long-standing expertise. If you are interested, please contact our Sales Team.

About the author:
Dr. Nicolas Schwank
Chief Data Scientist Political Risk
Michael Bauer International GmbH

References:
[1] Allianz (Ed.): Allianz Risk Barometer, Various Years. Last 2021
[2] Trappl, Robert (Ed.) (2006): Programming for peace. Computer-aided methods for international conflict resolution and prevention. Dordrecht: Springer; Schrodt, Philip A. (2000): Pattern Recognition of International Crises Using Hidden Markov Models. In: Diana Richards (Ed.): Political complexity. Nonlinear models of politics. Ann Arbor: Univ. of Michigan Press, pp. 296.
[3] Schwank, Nicolas (2012): Konflikte, Krisen, Kriege. Die Entwicklungsdynamiken politischer Konflikte seit 1945. Baden-Baden: Nomos (Weltregionen im Wandel, 9); Schwank, Nicolas, et al. “Der Heidelberger Ansatz Der Konfliktdatenerfassung.” Zeitschrift Für Friedens- Und Konfliktforschung, vol. 2, no. 1, 2013, pp. 32–63.
[4] https://www.cia.gov/the-world-factbook
[5] Schwank, Nicolas (2012): Konflikte, Krisen, Kriege. (vide supra)
[6] Small, Melvin; Singer, J. David (1976): The war-proneness of democratic regimes, 1816-1965. In: The Jerusalem journal of international relations.  1 (4), pp. 50–69.
[7] Croissant, Aurel (2009) et al.: Kulturelle Konflikte seit 1945. Die kulturellen Dimensionen des globalen Konfliktgeschehens. 1st edition. Baden-Baden: Nomos (Weltregionen im Wandel, 6). Stiftung, Bertelsmann (2010): Culture and Conflict in Global Perspective. The Cultural Dimensions of Global Conflicts 1945 to 2007. Guetersloh: Verlag Bertelsmann Stiftung.
[8] Ibid.

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