Regional resource governance in fragile states of West Africa

Project description

Title: Regional resource governance in fragile states of West Africa
Commissioned by: German Federal Ministry for Economic Cooperation and Development (BMZ)
Country: Member states of the Mano River Union: Côte d’Ivoire, Guinea, Liberia, Sierra Leone
Lead executing agency: Ministries of Mines of Côte d’Ivoire, Guinea, Liberia, Sierra Leone
Overall term: 2015 to 2018; in Liberia and Sierra Leone since the end of 2009

© GIZ

Context

The mineral deposits in Liberia, Sierra Leone, Côte d’Ivoire and Guinea provide these countries with huge opportunities. However, they are often more of a curse than a blessing. The struggle for diamonds and other mineral resources was one of the main causes of the civil wars in Liberia and Sierra Leone. Exploitation of diamonds, iron ore, oil and gold still has a destabilising effect on the region. The state continues to battle with institutional weaknesses and corruption, while the social and environmental costs of mining lead to discontent and conflicts among the population.

The four member states of the West African economic organisation the Mano River Union have rich mineral deposits at their disposal. The revenue earned from mining does not, however, benefit the population. The extractive industries have not yet made any appreciable contribution to prosperity and sustainable development. The state, civil society and mining companies are seeking to change this situation with the support of GIZ. They wish to better organise the mining sector so that they can become less dependent on foreign aid in future. The African Mining Vision adopted by the member states of the African Union serves as the basis for reforms.

Objective

The state, mining companies and civil society enact the provisions of the African Union’s African Mining Vision in the Mano River Union region.

Approach

GIZ is advising key institutions in the partner countries on how they can manage their mineral resources efficiently and sustainably by transforming the political, economic and legal framework. Partners include local, national and subregional government institutions, civil-society organisations and the private sector.

The advice is based on the African Union’s African Mining Vision and national poverty reduction strategies. The project is strengthening the skills and efficiency of individuals, institutions and networks while at the same time advising on policy.

Work is being carried out in four areas:

  1. Increasing revenue and driving transparency: The project is helping governments to efficiently manage the extractive industries and transparently administer public revenue. The state can make use of revenue to reduce poverty and encourage sustainable development. Revenue transparency and accountability reduce the incentives for corruption.
  2. Legal framework: The project helps partners to design and put in place modern legal frameworks for the extractive industries. Strategies, laws and guidelines must take into consideration and reconcile the legitimate interests of all stakeholders, thereby contributing to peaceful development.
  3. Socio-economic development at local level: Neighbouring communities are particularly badly affected by the negative impact of mining, but generally benefit less from the increase in state revenue and job opportunities. The project is helping partners to develop and implement systems that will reduce the potential for conflict and promote socio-economic development.
  4. Regional cooperation: GIZ is helping the Mano River Union to initiate regional dialogue and share experiences in the governance of raw materials.

In Liberia, the project is cofinanced by Australia.

Results

Since 2009, partners have achieved a number of successes with the support of the project. For example:

  • Liberia is setting up a unit within its tax authority specifically to inspect mining operations. Initial inspections led to payment notices for over USD 10 million in additional taxes and duties.
  • Sierra Leone has created a licence management system that covers 857 mining licences. An accompanying online database provides open access to information about public revenue earned from these licences. In the 2010/11 tax year alone, the system enabled the authorities to collect USD 5 million in outstanding licence fees from the mining industry.
  • Following the example of Sierra Leone, the Liberian Government has also introduced a new system to manage the granting and administration of mining licences. The increased reliability of the system meant that in 2014 the government was able to lift a moratorium on granting exploration licences that had been imposed in 2013 as a result of weaknesses in the issuing process.
  • Liberia and Sierra Leone have started to merge the electronic systems for managing mining licences with those used by their tax authorities. This will ensure that they are able to efficiently monitor mining companies’ payment liabilities at all times.
  • Due to the positive developments in its management of the mining industry, the Board of the Extractive Industries Transparency Initiative (EITI) rated Sierra Leone as EITI compliant in 2014. Liberia received international recognition for setting up debating clubs as part of its EITI compliance process, where more than 400 school students took part in debating competitions on issues relating to resource governance.
  • Liberia is modernising its mining legislation and developing appropriate implementing regulations. The introduction of clear standards provides an incentive for investors and generates added value for society.
  • Five public information centres have been set up in Liberia and Sierra Leone, providing access to academic publications on the mining industry and resource governance. Sierra Leone’s largest university has developed a module on resource governance as part of a degree course in peace and conflict research.
  • 70,000 residents living in conflict-affected mining regions in Liberia and Sierra Leone have participated in drawing up local development plans. On the basis of these plans, the Sierra Leonean Government has devised a standard procedure for local development planning in mining areas (known as Community Development Agreements). GIZ is supporting the implementation of this procedure.
  • The member states of the Mano River Union have incorporated specific, development-related objectives for the mining industry into its Strategic Plan 2010-2020. The member states have designated focal points who are entrusted with the implementation of this plan.