Situating Corporate Social Responsibility in the Africa Mining

Vision: A Perspective by Antonio M.A. Pedro

UNECA

Objectives

• Inform audience about the AMV

• Discuss briefly understanding of CSR

• Outline the nexus between CSR and the AMV

• Centred on the AMV, offer suggestions on the way forward

ECA’s work streams

• Soft and policy oriented

• Focus on: improving the enabling environment (policies, laws and regulations), enhancing institutional capacity, raising awareness and building consensus on emerging issues of interest to the continent, enhancing partnerships, and harnessing the potential of regional integration

The Africa Mining Vision :“Transparent, equitable and optimal exploitation of mineral resources to underpin broad-based sustainable

growth and socio-economic development”

 

The Tenets

• Recognition of important role of NR to Africa’s economies• Transform finite NR capital and transient wealth into

lasting forms of capital beyond the currency of mining• Broader understanding of “benefits” (beyond revenue

streams)• From comparative to competitive advantage: A

developmental, transformative, knowledge-driven and integrated mining sector with downstream, upstream and sidestream linkages

The Tenets 2

• A sustainable and well governed sector: resource rents are well managed; distributed and smartly invested; intergenerational equity, environmental and material stewardship and CSR respected; safe, healthy and advanced; and stakeholders empowered

• Mining as key component of a diversified and globally competitive economy

• Unbundle to bundle: Entry points for localization identified

Tenets (3)

• A sector that anchors the development of a competitive infrastructure base through local and regional economic linkages

• Optimal exploitation of finite resources at all levels (large and small-scale) and of all types (high and low value)

• A sector that puts Africa geopolitically and strategically at its right place in the global international capital and commodity markets

The Process

• Task Force: AUC, ECA, AMP, AfDB, UNCTAD, and UNIDO and UEMOA

• First draft presented at the First AU Conference of Ministers of Mines in October 2008

• Draft informed by outcomes of several meetings and initiatives, including comments from October meeting

• Vision adopted by AU Summit of Feb 2009

Why the AMV ?

• Need to have a African common voice on how to use mineral resources for growth and development

• Africa significant resource endowment: A key comparative advantage to harness

• Top producer of many minerals, but most exported as raw materials: Potential for mineral beneficiation is great

• We can learn from Nordic countries who were successful in promoting RBI

Why the AMV (2)?

• Mining has relatively better rents than other primary sectors. These rents can catalyse growth of the other less competitive sectors

• China and India: Reshaping the ball game; more competition for Africa’s acreage strengthens the continent’s bargaining power

• “Failure” of the Washington consensus opens room for more policy space

• The “Latin America” model (Chile and Peru): Being revisited

Why the AMV (3)?

• Assertive governments: Bolivia, Venezuela, Ecuador, South Africa (Mining Charter)

• Governance gains: CSOs, democracy, APRM• Tri-sector partnerships and public participation:

Being mainstreamed• New age miners: Captains of industry are (slowly)

embracing developmental and transformative approaches; triple bottom line (financial success, contribution to social and economic development, and environmental and material stewardship)

Entry points

• Resource rents: Invested to improve physical, human and social capital and infrastructure

• Expanded physical infrastructure: to open up other resource potential (agriculture, forestry, tourism) and access zones with lower economic potential (densification, SDP)

• Downstream value-addition: To establish resource-processing industries that could provide the feedstock for manufacturing and industrialization

Entry points (2)

• Upstream value-addition: To develop resource supply/inputs sector (capital goods, consumables, services)

• Technology/product development: To incubate niche technological competencies in the resource inputs sector that can migrate laterally to other sectors to produce new products for other (non-resource) markets (e.g. Atlas Copco)

Challenges

• Harnessing resource rents: How to avoid the resource curse and manage price volatility

• Credit crunch• Collateral use of resource infrastructure: Defeating

the Dutch Disease, investing in and maintaining non-lucrative feeder infrastructure

• Downstream value addition: High entry barriers, non-competitive sector due to high costs and non-availability of other factors, breaking TNCs preferences and tradition, lack of competition

Challenges (2)

• Upstream value addition: Centralised procurement by TNCs; lack of competitive domestic business sector to explore opportunities in the sector; poor HRD and skills base to foment development of local knowledge intensive industries

• Sidestream value addition: HRD and technology innovation centred in the West, few technology clusters in the South

The strategies

• Improve the level/quality of Africa’s resource potential data (gm and mineral inventory): It strengthens the continents’ bargaining power

• Fight for more fiscal space: Self-adjusting resource tax regimes to capture windfalls; beware of stabilization clauses

• Introduce innovative licensing schemes to boost competition: Go beyond the “first come and first served” approach; explore competitive auctioning through differentiation of terrains (Liberia)

The strategies (2)

• Boost Africa’s capacity to negotiate contracts and extract better deals (ALSF, UNDP, GTDF Crans)

• Build robust institutions and enhance the capacity to administer the sector (auditing, monitoring, regulating, enforcement (SEA,SIA), fomenting linkages, managing price volatility), plan and build scenarios

• Manage mineral wealth better (APRM, EITI, oversight committees)

The strategies (3)

• Develop junior resource companies

• Address infrastructure constraints (SDP, DCs)

• Promote collaboration and competition among industry players to improve factor advantages and enhance competency, innovation and diversification

• Harness the potential offered by ASM

• Build stakeholder and local business capacity: Support SMEs to enter the supply/procurement chain

The strategies (4)

• Increase private sector confidence and participation

• Establish the requisite enabling markets including local skills development

• Facilitate R&D and build knowledge networks of academia, private sector, government, etc

• % of upstream/downstream/sidestream to be locally retained

Implementation

• Shared vision, but phased (Short, medium and long-term actions) and context specific action (There is no “one size fits all”)

• Phases are not mutually exclusive: Implementation can be fastened depending on internal and external factors

• Political will and proactive government action: Key• Improving natural resources governance: Critical• Collective and concerted action/The African voice:

Indispensable

Implementation (2)

• Capacity building, R&D: Fundamental

• Partnerships: Essential

• Policy space and ownership of the development process: The cornerstone!

• Coordinated action between public, private and community stakeholders

• The “minerals complex” requires a new institutional mindset: Break government silos and departmental rivalry

Implementation (3)

• Regional integration: Harmonise policies, laws, regulations and standards to facilitate factor flows

• Needs assessment: Key

• Don’t be complacent: The game changes fast (Six months ago we were all taking about a “Super Cycle”)

Resource Exploitation & infrastructure phase

Resource Consumables & HRD phase

Resource clusters, R&D, cap. goods & services phase

Lateral migration & diversification phase

Resource Exploitation

Resource Beneficiation (value-addition, market access)

Resource Infrastructure

Densification/generic (SDP) Infrastructure

Unskilled resource labour

Rents from Resource diversification industriesDiverse tax baseResource rents (tax)

Fig 1: Schematic Resource-based African Industrialisation Phasing (relative economic importance)

Resource Inputs production & Lateral migration(diversification)

Increasing skills intensity (HRD) & capacity building

Import of Resource Inputs

Phase 1 Phase 2 Phase 3 Phase 4

Resource R&D. high level skills and tech development

Import of Resource Tecnologies

Policy space, Complex regulation, M&E, governanceContract Law

Contract/license resource & infra (PPP) governance

I

II

III

IV

V

VI

VII

A word on CSR

• EC definition: CSR, a concept whereby companies decide voluntarily to contribute to a better society (beyond mere compliance with legislative requirements)

• The premise: Mining generates both economic and social impacts including to local communities which need to be accounted for and mitigated (adverse impacts) or maximized (positive ones)

A word on CSR (2)

• Challenge areas: Action after mine closure; profiling community needs (alternative livelihoods projects); asymmetric relations and power; legitimacy of community representatives; government regulation of CSR to encourage commitment and compliance; boundary between CSR and social rights; shifting responsibilities from the State to private operators; community legal retribution and legal recourse; voluntary vs mandatory; JRCs; capacity to enforce provisions)

A word on CSR (3)

• Opportunities: New GRI Mining Supplement; making the JSE Socially Responsible Investment Index (benchmarking the triple bottom approach, including contribution to social sustainability) mandatory (???); BBE: Pushing the CSR bar higher???

CSR and the AMV

• The tentative framework for action of the AMV calls for improved public participation in the mining sector (consultation and information sharing/informed decision making/dispute resolution)

• Governments to mainstream and entrench use of Strategic Environmental Assessment (SEA) and Social Impact Assessment (SIA)

• Establishment of platforms for consensus building on priorities and options for the development and management of mineral resources

• Domestication of relevant provisions on public participation of the Aarhus Convention and Equator Principles

CSR and the AMV (2)

• Mining companies to develop, adopt, and implement CSR charters in accordance with the mining supplement of the GRI

• AUC to develop continental CSR codes and standards

• ICMM to enforce members’ adherence to its sustainable development charter

• Chambers of Mines to popularize ICMM’s Community Development Toolkit

Way forward

• As decided by the June AU Summit, AUC/AMP to take lead in the preparation of concrete action plans and milestones in collaboration with UNECA, AfDB, AMP, RECs and other stakeholders

• Develop specific guidelines/templates (including on CSR) to facilitate realization of the Vision

• Publicize and popularize the vision and engage with private sector and CSOs (among other stakeholders) and build coalitions for change at national, sub-regional, and continental levels

• Member states to internalize the Vision in their national development strategies

In Conclusion

• The AMV is a broad aspirational framework to promote the development outcomes of resource-based growth

• CSR initiatives must be part of integrated development plans and contribute to broad-based socio-economic uplifting and empowerment (A key pillar of the AMV): Mainstream SEAs and SIAs

• Think beyond project level and being benefactor to developing effective partnerships for change: Earn a real social license to mine!

Thank You!