Context
Alongside agriculture, extractives constitute one of the most important economic sectors in a large number of developing countries and emerging economies and are a major source of income. At the same time, the sector poses a social and environmental risk to the local population. The negative side effects of resource wealth (such as armed conflicts and a high level of corruption) are branded the ‘resource curse’.
The extractives sector can nevertheless make a considerable contribution to a country’s sustainable development and thereby help to achieve the Sustainable Development Goals set out in the United Nations’ 2030 Agenda. In 2010 the German Federal Ministry for Economic Cooperation and Development (BMZ) published a strategy paper entitled Extractive Resources in German Development Cooperation, which emphasises the paramount importance of good governance in this sector. Governance affects many different areas of development cooperation including human rights, gender, public finances and sustainable economic development, to name but a few.
Our Objective
German development cooperation actors have new, tried and tested strategies and approaches that can be effectively used in international policy dialogue on good governance of the extractives sector in developing countries and emerging economies, especially in Africa.
Our Approach
Improving governance of extractives is central to BMZ’s development policy portfolio. The programme is working in two areas.
1. National and international positioning on extractives and development
The programme is helping BMZ to position itself on the issue of extractives and development at national and international level, for instance in connection with the 2030 Agenda or jointly with other actors working on international initiatives launched by the Organisation for Economic Co-operation and Development (OECD), the African Union and the Extractive Industries Transparency Initiative (EITI). The programme conducted an impact study financed by BMZ to investigate the extent to which EITI contributes to greater transparency and accountability and enhances the effectiveness of supervisory bodies in partner countries. It is also assisting the Ministry in putting the German Federal Government’s human rights-based approach into practice in the extractives sector.
2. Development policy strategies and concepts for governance of extractives
The programme is advising BMZ on strategy and concept development. It is devising new approaches and instruments and piloting these in many partner countries to make them widely available for German development cooperation activities in future.
The programme is helping the African Minerals Development Centre (AMDC) to put in place a resource-based, socially equitable and sustainable industrialisation and development strategy for Africa. A new reporting standard has been developed in collaboration with the Canadian non-governmental organisation Engineers Without Borders. This standard increases the value added in-country compared with abroad, and thereby has a positive effect on the local economy in resource-rich countries.
The sector programme is supporting the establishment of multi-stakeholder partnerships designed to promote environmental and social standardsility in the sector.
Most recently, the programme has initiated activities addressing climate and extractives, with the particular aim of supporting partner countries in their transition to low-carbon economies so that they can achieve their national climate goals.
Results
BMZ is currently financing measures in 14 projects, mostly in African partner countries. Together with the efforts made by partner governments, these activities are increasing (financial) transparency and supporting sustainable resource management from a social and environmental perspective. German development cooperation work is thereby contributing towards a reduction in corruption and conflicts over mineral deposits.