Companies, in manufacturing as well as the extractive industries, are no strangers to allegations of human, economic and environmental rights abuses. Weak regulatory capacity and economic and political policies designed to accommodate Ethiopia's developmental ambitions has left gaps that exposed employees to abuse. Christian Tesfaye, Fortune's Op-Ed Editor, sits down with Solomon Dersso (PhD), chairperson of the African Commission on Human & Peoples’ Rights, to opine on current human rights conditions in the economic sphere and the way forward. Solomon is former head of the Peace & Security Council Report at the Institute for Security Studies and non-faculty assistant professor of human rights at Addis Abeba University.

Fortune: The most famous example that is brought up in order to argue against wide-ranging, political and human rights is the success of China. China lifted 800 million people out of poverty, and they did it within just three decades. Does the argument that this is what matters at the end of the day hold water?

Solomon Dersso (PhD): This is a very long debate that has been ongoing here in Africa, [since] immediately after independence. The rise of China has brought back that debate again. In Asia, countries like Singapore, and its very famous leader Lee Kuan Yew, are associated with the idea that human rights are not good for economic growth. It is important to deconstruct this idea on the relationship between human rights and economic growth.

The China or Singapore example looks at the relationship between human rights and growth only from one perspective. One that says economic growth helps human rights, basically because with economic growth, millions of people will be lifted from poverty and therefore will be able to live a more dignified life. This is part of human rights.

Certainly, with economic growth, education will expand, and with the expansion of education and health, the living standard of people would also improve. And this is also good for human rights and indeed it forms part and parcel of human rights. This is one aspect, and a very important aspect at that.

But that is not the only correlation that economic growth and human rights have. The other one is: what is the impact of human rights on economic growth? Now China or Lee Kuan of Singapore made this argument that if you observe human rights, you wouldn’t be able to achieve economic growth.

Human rights affect economic actors in various ways. The first thing we need to say about human rights and economic growth is that human rights are good, normatively speaking, on their own. That’s what Amartya Sen, the famous Nobel Prize winner in economics, says. Human rights and freedoms are intrinsically good on their own, but he also shows that they are [an] instrumental value for economic growth as well.

There is no country in the world that respects freedom of expression that will also, for example, have at the same time, a famine. This is based on research that Amartya and people like him have undertaken. But freedom of expression and information are key for economic growth, because they fight asymmetry of information, imperfect information, and in the process, they promote competitiveness. With competitiveness, we know what kind of values come in the economic sphere of society.

But the other way of looking at this, studies conducted on this question show that it is possible to argue that human rights, for instance, relating to freedom of expression and association enables you and me to organise, pull our resources together and engage in economic activities that contribute to economic growth. The fundamental importance of rights like freedom of association is key. Beyond and above that, there are things like respecting property rights.

Now, if you violate human rights, what happens? What happens is, basically, with the violation of rights, unpredictability and uncertainty, emerge. With that unpredictability and uncertainty, long-term investment and a return on long-term investment would not be there.

In the economic sphere, rule of law and protection of property rights are a prerequisite for attracting foreign investment. When you do not have these, what happens? People will not come here.

Yet the other way of looking at this thing is that it is possible, as various research has shown, that human rights may not have any impact instrumentally speaking. Human rights are important intrinsically, in their own right, irrespective of their contribution to economic growth.

But human rights also do not have a significant negative impact if you do the analysis over a longer duration. Now, there could be tensions. And those tensions relate to this question. How fast can, for example, decision making be made? When you have the rule of law, when you have to respect due process of the law, where you have to respect the rights of others, what normally happens is, decision making would not be as quick, and that may slow down the speed with which you can implement, particularly if it is big development projects.

What do you think of India’s economic growth compared to China?

Q: Not comparable to China’s.

Not comparable to China, but they have achieved a significant amount of growth, right? You find India on the other side of the spectrum. It is the largest democracy in the world. So is it about whether you respect rights or not, or does it have to do with many other areas?

So, the single variable for the respect of human rights should not be considered as having a negative impact, a significant negative impact, on its own, on economic growth. There are many other variables in between. One of those variables would be the question of whether or not a particular government has the opportunity to stay in power for so long to be able to experiment and pursue a particular economic policy. That enables it to implement an economic policy over a long period of time without disruption.

That is what India’s example shows you. Congress Party was there for a significant number of years. That is the most important aspect of the variable, rather than just the fact that we have to respect human rights and therefore that would have a significant negative impact on growth. It is not that black and white.

Q: There have been cases in Ethiopia where licenses and concessions were suspended in some regions of the country. And this is in an environment where the institutions are not doing their homework or do not have the institutional capacity. The mix of weak institutions and having to apply those human rights laws is bound to have huge negative consequences when it comes to attracting investment. How is it possible to attract investments while at the same time dealing with human rights’ issues when we yet do not have the infrastructure to do it properly?

The extractive industries are one of the major areas of investment on the continent. It is a sector that mobilises a large amount of money. It is also a sector in which big, multinational companies are engaged in the extraction sector. The problem is that this sector by its history is associated with a number of negative issues, particularly in terms of whether or not the extracting industries have been engaging in an environment where they respected, for example, issues relating to tax responsibilities, fiscal responsibilities, which are key.

What are their bargaining powers compared to weak countries? These companies amass a huge amount of wealth, more than the GDPs of some of these countries. They have huge social influence and economic influence and are increasingly having political influence.

Of course, across the continent, the history of extracting industries is one of imposing that level of influence because they do not want to be regulated effectively. The result has been a human rights vacuum, basically as if human rights did not apply to them. The result has been extremely devastating.

Yes, there has been money that went into the coffers of government, but the money that they were able to take out of the continent is far higher and nowhere near the money that was left behind. Even that money that is left behind does not cover the cost that relates to externalities, such as the environment. In affecting the environment, it can affect water resources. It can affect land, and the impact would undermine the livelihoods of people living in that neighbourhood, in that territory. What happens is that people, instead of benefiting from the operations, they become worse off.

That is what we call the phenomenon of the resource curse. It is not just the economic power imbalance between the extractives and the countries that is the source of the problem. Most importantly, it is the fact that there is an extremely weak or poor regulatory regime and therefore institutions. These extractive industries are able, for example, to benefit from tax breaks, duty-free benefits and privileges. And on the tax that they pay, they still use trade misinvoicing and various other tax plots to evade their fiscal responsibilities.

That is why you have what we call illicit financial flows on the African continent to the tune of over 63 billion dollars. That is a huge amount of money that is going out of the continent. Ethiopia is one of the victims of that kind of illicit financial flows on the continent. And this is exactly the result of weak laws, weak institutions and lack of enforcement in those institutions. In our engagements, what we have done is ask what the problems are and where are the weaknesses?

The weaknesses relate to the laws themselves, because the laws have to regulate the entire cycle from the start of negotiation for granting licenses to the conclusion of operations. At different stages, there are different things that need to happen, so in the negotiation process you answer the question, why do you need to give tax brakes and duty-free exemptions?

If you allow these institutions to operate in a certain way, and it creates animosity between these operations and the people living in the area, it is a matter of time before the crisis hits. For the time being, these companies may be able to extract and make a profit, but it will catch up with them, because of the lack of good relationships between the community and the extractive industries.

This should have been done from the very beginning. You should not start to do it when the crisis starts, because there are international standards that enable you to enforce these standards from the very beginning. And to that end, you need to have, of course, effective institutions. These institutions include regulatory institutions, which make sure that these extractive companies observe, not only the terms of the license you agree with, on the basis of which they operate, but that they also comply with the laws of the country. And this would include the rights that are guaranteed in the Constitution and other international instruments by which Ethiopia is bound. The institution must be able to do that.

There has not been effective monitoring of those things, and capacity has been lacking in that respect. But this example has demonstrated that you actually suffer more by the time the crisis hits. If you do it from the very beginning, then you do not have to run into this trouble.

Q: Would it be more effective to fight for these human rights by lobbying not the government but instead consumers? There are instances in the US where companies have been punished after negative news coverage about them surfaced. Maybe now you have these human rights advocates and human rights organisations, instead of going to governments, approaching consumers of these products and saying, “Look, these companies are doing this and that, so you need to punish them, because they’re likely to hear you more, because they are going to feel it in their pockets than they are likely to listen to the government.”

That depends on whether or not the companies’ operations in those oppressive conditions get disclosed. Is it always the case that it gets disclosed? More importantly, you also often have them say, “Look it’s not me as the institution, it may be some contractor that has been assigned a certain task.” Deniability is another challenge that you basically face in this kind of environment.

You’re right in one sense. All kinds of strategies need to be in place. The strategies that come from the people who are affected, by organising themselves, by exercising their right to freedom of association and organising and campaigning for respect for their rights, by media houses shedding light on the kind of people that operate in these kinds of environments. That is also an important strategy.

While all of these things are well and good, human rights by their very nature, first and foremost, impose obligations on governments. That is in the nature of human rights. The responsibility of government is not one you can shift to anybody. That is very important. That does not mean that others would not have responsibility. For example, we also see another development that relates to what we call the self-regulation of companies themselves. Companies voluntarily assuming certain responsibilities. It comes in the form of, for example, corporate social responsibility. Observing a certain minimum standard in their operations; obviously, this depends on the extent to which the company is self-respecting and honest.

Voluntary commitment depends on your will and ability to live up to your commitment. It does not depend on external enforcement. So when there is no external involvement, as it often happens, particularly in an environment where there are no major society organisations … for instance, in Ethiopia, do you know any major society organisation that operates in extractive industries?