Improving resource governance in the extractive sector

Project description

Title: Improving resource governance in the extractive sector in Mali
Commissioned by: German Federal Ministry for Economic Cooperation and Development (BMZ)
Country: Mali
Lead executing agency: Ministère des Mines
Overall term: 2013 to 2015

Context

Mali has a wealth of mineral resources. The south of the country in particular has large gold deposits and in the last decade Mali has become Africa's third largest gold exporter. Even during the political and security crisis of 2012-2013, Mali's mining sector consistently accounted for almost 70 per cent of exports and 25 per cent of the national budget. This means the sector has the potential to make important contributions to Mali's ability to finance the national budget with its own resources as well as to economic growth and efforts to achieve long-term stability in the country. Its significance is set to continue growing in future with the prospect of oil and metal ore deposits. Despite the significant raw material deposits, Mali remains one of the world's poorest countries; under current conditions, the mineral resources only make a minimal contribution to the country's sustainable development. The sector also only accounts for an eight per cent share of the gross domestic product (GDP). Mali is faced with the challenge of further developing the mining sector in a way that enables the income it generates to benefit the entire population.

Objective

The conditions for using Mali's mineral resources to support the country's sustainable development have improved.

Approach

The project team supports the Ministry of Mines as well as the national mining and mineral oil authorities in their efforts to improve conditions in the extractive sector so that the entire population benefits from it. With this goal in mind, the project team advises the Ministry of Mines on awarding mining licences more efficiently and transparently. This is achieved through a variety of measures, including the establishment of a new licence management system within the mining authority, which makes it possible to map all revenues from the extractive sector more precisely and in greater detail. The users are given training in how to use the software. The project also provides support with revising the procedures for awarding licences, from the initial enquiry by a company to the granting of an extraction permit by the authority. This helps to establish a more secure investment climate.

The project team works with the Extractive Industries Transparency Initiative (EITI) to improve the system of public finances in the extractive sector. It is advising EITI Mali on the development of a comprehensive communications strategy to provide the entire population with access to the complex data on government revenues from the extractive sector and a basic understanding of these data. This also involves working with the civil society organisations represented in the EITI process that are tasked with raising the population's awareness of important issues relating to the extractive sector.

The project team brings together the various authorities operating under the Ministry of Finance and the Ministry of Mines to enable them to collaborate more closely on the implementation of integrated inspections in the mining sector.

To ensure that the proceeds from the extraction of raw materials benefit the people in villages and communities throughout the country, the project team cooperates with local authorities and companies from the mining industry. The project aims to persuade the companies to coordinate their social security contributions with the local development plans of the communities in the mining areas.

Results

A functioning licence management system has been established, which makes it possible to precisely map and project all revenues from the extractive sector associated with the relevant licences, including fees, dividends and taxes. In future, the authorities operating under the Ministry of Finance, such as the tax and customs authorities, as well as the cadastral office of the Ministry of Land Administration will also be able to access this information and take it as a basis for calculating the levies they need to collect from mining companies. This promotes cooperation and coordination between the various authorities and also enables better and more timely planning of government revenues from the extractive sector. Mali has been a member of EITI since 2009. The EITI process is also benefiting from access to the information from the licence management system because this makes it easier to document and compare levies on companies and government revenues.