Resource governance in the extractive sector
Many developing countries have a wealth of mineral deposits. GIZ promotes the responsible use of these resources.
The extractive sector plays an important part in the 2030 Agenda (the Sustainable Development Goals/SDGs). It has an impact both directly and indirectly on many different aspects of the Agenda, including state revenues, economic development, the fight against poverty, peace and security, and climate change mitigation and environmental protection.
On behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ), GIZ supports governments in creating the necessary conditions for a responsible extractive sector. The core topics are:
GIZ supports partner organisations in tailoring taxation systems to the extractive sector. This generates income for sustainable development.
If revenues from raw materials are used for development, this improves the relationship between citizens and the state. GIZ advises partners on administering revenues in a way that is fit for purpose and represents intergenerational fairness, such as for pension funds and environment funds.
Transparent revenues are important for a sustainable extractive sector. For this reason, GIZ promotes the Extractive Industries Transparency Initiative (EITI). Working through the CONNEX initiative, it also helps to ensure the extractive sector is based on fair investment contracts.
GIZ supports its partner countries in making use of the extractive sector to strengthen their economies. Key to this is the creation of jobs, both in mining and in processing. Increasing numbers of countries are adopting regulations on local content. This means not only that they supply commodities, but also that a share of the processing must take place in the country of origin.
Commodities are often extracted through small-scale mining. While this is an important source of revenue, most mining is carried out under precarious conditions. GIZ supports approaches to formalising the sector.
Mineral raw materials bring a substantial potential for conflict, as revenues from their extraction and trade feed into armed conflicts. Tensions often arise over illegal small-scale mining and the use of water resources. GIZ promotes certification to strengthen legal mining and trade. It also supports solutions that avoid distribution conflicts at an early stage.
Mitigating climate change and protecting the environment - sustainable supply chains
The extractive sector has a major influence on the achievability of the Paris climate targets. To take pressure off the climate, the extraction of fossil fuels needs to be reformed. Due to the energy transition, some primary raw materials, such as platinum, lithium and rare earths, will become more important. GIZ is assisting partner countries to prepare for the economic and social impacts of the boom in these ‘new’ commodities.