Can Extractive Industries Contribute to Sustainable Development

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Can Extractive Industries Contribute to
Sustainable Development Improved Governance
An Emerging Public Private Partnership in the
Congos Katanga Province

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Presentation Outline

• Country Context
• Goal of the EIA GDA
• Summary of Objectives
• Activities and Success Stories
• Sustainable Development
• Governance
• Regional Development Fund
• What is Next
• Questions for the Nigeria Global Compact

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Artisan mining can be highly lucrative. It can be
difficult to identify economically attractive
alternatives
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Country ContextChallenges Loom Large

• Huge country vast resources
• Governance
• Peace process
• Election, rule of law, decentralization
• Social issues
• Limited social development, infrastructure,
  livelihoods
• Corruption and transparency
• Conflict, human rights and security
• Business and investment framework
• Mafia controls most of DRC mining sector

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CSR from HBR

• Motivators for companies (Porter Kramer 12/06)
• moral obligation,
• sustainability,
• license to operate
• Reputation
• Co-creation of new products, services,
  relationships between private sector NGOs
  (Brugmann and C.K. Prahalad, 2/07)

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Goal of EIA GDA

• To promote sustainable and equitable economic
  recovery and improved governance in Katanga and
  the Democratic Republic of the Congo

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Objectives of the EIA

• Implement sustainable and participatory community
  development projects
• Support improved governance, tax and royalty
  transparency and socially responsible investment
  in the mining sector
• Establish a regional development fund

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Objective 1 Sustainable Development Activities

• Community Mobilization
• 32 communities reached in Dikulushi Region
• 29 workshops organised with participatory tools
  in villages / localities
• Three-year Social Development Plans created in 30
  communities (draft form)
• 24 Village Development Committees 1 City
  Development Committee operational
• 22 Committees trained on project management and
  conflict resolution

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Sustainable Development Activities Cont.

• Success Story Community Organized Fishing Ban
• Lake Moero (Kilwa)
• Community has prioritized voluntary
  re-introduction of rainy season fishing ban to
  re-populate fish

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Sustainable Development Activities Cont.

• Infrastructure
• Village committee manages projects with maximum
  local employment--15 minimum local contribution
• School classrooms, markets and toilets in
  construction
• 1 bridge complete
• 1 large water project in progress in Pweto
• 1 visitation hall for patient relatives at Kilwa
  hospital
• Assistance to Kilwa hospital to improve
  management for long term management
• 2 nutritional centers
• 1 water extension project in Kilwa

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Sustainable Development Activities Cont.

• Agricultural Extension
• 31 farmers contact groups established
• 924 farmers reached
• 3 Gardeners association assisted in three
  villages (52 members)
• 2 3-round training sessions organized for farmers
  
• 19 tons of seeds distributed on credit basis as
  end of November (peanuts, bean, soybean,
  sunflower, and vegetable seeds)
• 3 seed multiplication sites established with
  volunteer farmers (Base seeds inputs cash
  credit provided and training organised for seeds
  farmers)
• 7 villages identified for husbandry improvement

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Sustainable Development Activities Cont.

• Small and Micro-enterprise (SMEs)
• SME activities in progress
• 7 types of business plan are in study
• 2 transport projects
• 2 hardware projects
• 1 wood work
• 1 chicken breeding (broilers and layers)
• 1 peanut and sunflower oil extraction project
• 1 rice hull machine project
• 2 maize mills projects

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• Success Story Kawama Gravel Co-op

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Sustainable Development Activities Cont.

• Womens Empowerment
• WORTH is a womans program that fosters
  grassroots development, increased family income,
  and local control of resources.
• Pact organized 10 womens groups with a total of
  315 members.
• Local teachers (women) recruited and trained
• Saving started (100 300 Fc/member/week).
• First month saving amount 162,000 Fc
• Potential microfinance for equipment (400,000
  loan portfolio guaranteed by USAID and Trust
  Merchant Bank funds)

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Objective 2 Governance Activities

• Transparency
• Getting royalties back to territoires and
  provinces, with policy at national, provincial,
  territorial levels capacity building pilot
  implementation
• Two companies ready to publish what they have
  paid
• Companies trying to figure out how to assist
  institutional capacity building of local and
  territorial government to absorb tax and
  royalties and to identify donors to build
  capacity during the interim

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Human rights and security present enormous
challenges in the Congo
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Governance Activities Cont.

• Human Rights and Security
• Voluntary Principles
• Ongoing Security Managers Network and Meetings on
  VP--requesting GDRC to pay train Mine Police
  offer to finance
• VP audits on request and as needed for Pact due
  diligence
• Technical assistance for risk assessment and
  company training in VP, especially
• Assuming risk management for communities, not
  just the company
• Informing all authorities of potential human
  rights abuses
• How to limit liability where VPs required to
  assure that no known abusers of human rights
  are used in security

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Informal mining sector provides huge employment
4 of population directly, up to 20 indirectly
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Governance Activities Cont.

• Artisan and Small-scale Mining
• May employ and enable survival of over 2 million
  people directly
• Ituri gold 100,000 growing
• Kivus tin, coltan 250,000
• Katanga heterogenite 120,000
• Kasai diamonds 1,000,000
• Most activity is technically illegal
• Feeds traffickers and illegal trade routes
• Currently extremely hazardous and socially
  disruptive
• No protection for the miners
• Feeds economic oligopoly militia of all kinds,
  including pay for GDRC police military

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Governance Activities Cont.

• Artisan and Small-scale Mining
• Analysis of options for companies
• IFC Equator Principles
• Voluntary Principles
• Negotiation mediation with all stakeholders
• Creation of alternatives--at least to give hope--
• Livelihoods
• Public worksroad rehab/maintenance
• Supplier SMEs to mines
• Vocational training

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Success Story Mutoshi (Kolwezi) Pit
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Options for positive relations between companies
and artisan miners are being explored. In some
cases, artisan mining can be an efficient way to
exploit a commercially marginal resource
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Objective 3 Regional Development Fund

• Evolving higher level linking
• Companies concern to reduce in-migration
• Donors interest in support for
  provinces/territories to manage royalties
• GDRC figuring out how to manage its own royalty
  funds
• In process

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Important to sense of personal / national control
of minerals resentment that concessions granted
to foreign companies
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What is Next

• Who is in, do we keep pillagers out, what about
  aspiring members?
• Transfer ownership
• Support community structures
• Capacity of local NGO partners
• GDRC involvement/commitment
• Expand and modify to other mining areas of DRC
• Not clear if Mafia and corrupt GDRC can be
  influenced enough . . . .

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Questions Relevant to Nigeria Global Compact

• How will you define CSR?
• Who will help companies?
• How can companies civil society work together
  on sustainable development, human rights
  transparency/anti-corruption?
• How can we compare CSR outcomes?
• In fragile/transition states can CSR help if
  governance does not improve?

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Merci!