Promoting good governance in the mining sector
Title: Promoting good governance in the mining sector in Afghanistan
Commissioned by: German Federal Ministry for Economic Cooperation and Development (BMZ)
Lead executing agency: Afghan Ministry of Mines and Petroleum (MoMP)
Overall term: 2018 to 2020
Afghanistan is rich in mineral resources, such as copper, lithium, iron, rare earth elements, gold and cobalt. The country could become one of the world’s leading mineral exporters by taking a sustainable approach to extraction. The tax revenues derived from mineral extraction would be sufficient to make Afghanistan independent of international donors. To this end, the Afghan Government must manage the extraction and marketing of minerals to ensure that the revenue generated is actually reinvested in the country and used for its development.
In addition to a large number of illegal and informal mining operations, there are shortcomings in the transparent allocation and oversight of exploration licences. State income from minerals is collected by different ministries, which has a negative impact on financial management. The authorities lack knowledge, skills, equipment and business processes for inspecting the extraction sites, as a result of which bottlenecks occur. Furthermore, there is almost no dialogue between the government and the local population. For instance, the government does not inform the population about the awarding of commissions for major extraction contracts or licences. The majority of the population therefore assumes that these licences and contracts are not awarded transparently and that corruption plays a major role.
The Afghan Ministry of Mines and Petroleum manages mining in accordance with the criteria of good governance. Mineral extraction is structured and transparent, enabling government revenue to be channelled into the development of the country and investment in the mining industry to become more lucrative. The population has access to transparent information regarding extraction volumes, government revenue and its use. Increased transparency and participation also result in citizens having greater trust in the government.
The Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH has been advising the Afghan Ministry of Mines and Petroleum on better strategic steering and effective mining supervision on behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ) since 2014. This involves a number of approaches, including instruction and training for the administrative bodies and the mining supervisory authorities, promoting transparency in the extractive sector by introducing international standards, and supporting networking among various government stakeholders.
Community-based monitoring (CBM) is used to analyse the impacts of mining directly and to encourage dialogue between the local population and the administrative bodies.
Since 2009, Afghanistan has been committed to implementing the Extractive Industries Transparency Initiative (EITI) standard. The project supports EITI in promoting cooperation between the extractive industry, the state and civil society. Discussion forums bring key players from civil society, industry and public authorities together. The results are fed into the national debate on the sustainable extraction of the country’s mineral resources.
The technical and administrative training courses in various provinces have equipped 387 mining inspectors with the skills they need to perform their administrative and monitoring duties more proficiently. MoMP employees have also attended further training courses in order to process licence applications correctly and to apply the rules and regulations of the mining sector in accordance with best practice.
A total of 65 inspectors have been acquainted with modern mining companies, contemporary mining practices and mining supervision in Turkey, Iran and South America, and have received further training on sector-specific and engineering-related topics. Twenty inspectors have also been prepared for training tasks in the provinces. Around 70 employees from the middle and senior management tiers at MoMP, a quarter of them women, have also participated in training.
GIZ and MoMP have set up a transparency portal on the internet to promote the publication of ownership structures in the extractive sector. This allows civil society, potential investors and other interested parties to access information. Annual reports on the income from the extractive sector are also prepared.
In addition, the transparency standard for fighting corruption in the mining sector has already been partially implemented. The resulting dialogue and the increased transparency ultimately enhance the population’s trust in the state.