Extractives and development

Project description

Title: Extractives and Development sector programme II
Commissioned by: German Federal Ministry for Economic Cooperation and Development (BMZ)
Country: Worldwide
Overall term: 2015 to 2021

Artisanal mining in the eastern province of Kono (Sierra Leone)

Context

Alongside agriculture, extractives constitute one of the most important sources of income in a large number of developing countries and emerging economies. With their potential for economic development, extractives can directly contribute to achieving the goals set out in the 2030 Agenda. Yet this is only the case if the money from the resources also reaches people at a local level, such as through taxes, added value or wages. In many countries around the world, the extractives sector has negative effects on the environment, human rights, peace and security. These negative side effects of resource wealth, such as armed conflicts and a high level of corruption, are branded the ‘resource curse’.

Curbing trade in conflict minerals and establishing more responsible extraction of raw materials are some of the challenges in this area of development policy. The German National Action Plan for Business and Human Rights (NAP) provides guidelines for fair supply and value chains. The 17 Sustainable Development Goals and the three pillars of the Marshall Plan with Africa – economic activity, trade and employment; peace, security and stability; and democracy, rule of law and human rights – provide points of reference.

Objective

German development cooperation (DC) actors have useful strategies and approaches for good governance of the extractives sector which can be used in international policy dialogue.

ASM workers in the eastern province of Kono (Sierra Leone)

Approach

Providing policy advice is the project’s main task. Together with the Federal Institute for Geosciences and Natural Resources (BGR), the programme supports the German Federal Ministry for Economic Cooperation and Development (BMZ) with short-term enquiries relating to current issues as well as by analysing trends in the international debate on extractives governance and resource efficiency. The advice on the global Extractive Industries Transparency Initiative (EITI) plays a central role in this process.

The project also develops new approaches and tools for good extractives governance and tests these in cooperation with GIZ’s international projects and additional partners in DC partner countries.

A key area of focus is the question of how supply chains can be designed more sustainably. Responsibility along the supply chain is becoming increasingly important worldwide. Environmental and climate protection considerations also play a crucial role in the extraction of raw materials. They need to be taken into account from the planning right through to the closure of mines. Another focus of the project is incorporating renewable energy use into mining in order to make raw material extraction more climate sensitive. The project therefore supports the exchange of expertise with other actors to promote social and environmental standards in the sector.

Opencast mine Garzweiler of RWE Power. Wind rims in the background

Results

  • The project has identified human rights risks in the extractives sector in Mauritania and is helping the projects at local level address these risks.
  • A risk assessment tool has been developed to tackle the abuse of internal transfer pricing in the mining sector. As a result, tax authorities can quickly evaluate the risks of illegal transfer pricing transactions.
  • As part of the multi-stakeholder partnership Women’s Rights & Mining, the programme also helps to encourage interest groups in the mining sector to engage with the issue of gender equality more heavily and therefore to safeguard the rights of women and girls in the industry.
  • Working in partnership with the Canadian non-governmental organisation Engineers Without Borders, a new tool has been developed called the Local Procurement Reporting Mechanism which increases the value added in-country compared with abroad and thereby has a positive effect on the local economy in resource-rich countries.
  • In collaboration with the Revenue Development Foundation, a new online platform (Customs Verification Portal) has been created to combat illegal money flows within the gold trade. The portal offers a cross-border approach which makes it easier for customs authorities to prevent illegal gold smuggling.

Further information