Improving resource governance in the extractive sector

Project description

Title: Strengthening good governance in the extractive sector, Mali
Commissioned by: Federal Ministry for Economic Cooperation and Development (BMZ)
Country: Mali
Lead executing agency: Ministère des Mines
Overall term: 2017 to 2019

Mali. Training course on mine decommissioning © GIZ

Context

Mali’s extractive sector makes an important contribution to the country’s economy. Gold is Mali’s main export, accounting for 70 per cent of export earnings and almost 30 per cent of tax revenue. To better tap the potential offered by gold, the government has implemented radical reforms, including a revision of Mali’s Mining Act. This is designed to raise income and make a sustainable contribution to socially equitable economic growth. Efforts to date are not, however, sufficient in view of the numerous challenges the country faces. Shortcomings can be seen firstly in terms of efforts to make the sector efficient, effective and transparent and to put in place participatory structures. There is also still scope for improvement regarding the bodies responsible for monitoring and control in the sector.

Objective

The provisions of the African Mining Vision have been implemented, enhancing transparency and control. The prevailing conditions for using Mali’s natural resources to foster the country’s sustainable development have been improved.

Mali. Participatory planning for territorial inventory in Faléa. © GIZ

Approach

To date the project has helped improve the general conditions for getting the extractive sector involved in Mali’s sustainable development. The revenue accruing to the state from the extractive sector in particular has been raised by introducing and operationalising an administrative system for the mining registry. Training provided for key stakeholders in the extractive/mining sector – including the mining authorities, tax and finance authorities, and local government bodies – have helped achieve a better understanding of the administrative structures in the sector. Civil society has also been able to take part in the various political reform processes in an effective way thanks to the Extractive Industries Transparency Initiative (EITI). Partly though improved expertise and capacity development for decision-makers in the target municipalities, public accountability has been achieved in five municipalities, covering the inhabitants of 146 villages.

The results of these actions will be further pursued and consolidated, especially in terms of expanding taxation and strengthening monitoring and control structures in the extractive sector, as well as enhancing transparency and the role of civil society in the sectoral reform processes. A database for the extractive sector is to be established, the value added at local level increased and accountability improved.

To make the sector more professional, the percentage of tax assessment cases coming before the courts is to be reduced from 80 to 25 per cent. A minimum of 20 tax inspectors are to be trained to ensure that extractive sector revenue is taxed, and the EITI is to receive support to draw up a communications strategy. Complete sets of data are to be collected on income trends, employment and value added locally in mining regions.

Mali. Handing over IT materials to project partners. © GIZ

Results

The introduction of an administrative system for the mining registry has reduced the percentage of taxes and other levies related to mining and oil extraction licenses not collected from 75 per cent to 25 per cent.

All mining permits are managed transparently using an information system that is accessible to the general public. In April 2017, 404 valid permits had been issued. 166 requests for permits had yet to be issued, 114 requests had been released and 74 requests had been approved.

In two  municipalities economic, social and cultural development plans have been produced with the support of the project, thus making a contribution to strengthening good governance at local level.

In Faléa the percentage of tax collection rose from 24 per cent in 2014 to 81 per cent in 2015; a rise of 57 percentage points. In Bafoulabé tax collection rose by 35.4 percentage points, from 24 per cent to 59.4 per cent.

A study was conducted in cooperation with International Alert to analyse the impacts of mining activities in Kayes Region. The results were disseminated in the mining regions, so that numerous inhabitants are now informed about the risks and the economic and social impacts.

A strategy paper on natural resources policy has been produced by the Ministry of Mining in cooperation with the private sector and civil society. Implementation is intended to contribute to sustainable, inclusive economic growth, thus encouraging stability and peace in Mali.