By Martin Lokanc
Senior mining specialist at the World Bank
The ideal outcome for a mining-rich country is a situation where mining:
- Provides good employment opportunities.
- Is integrated with the rest of the economy through a vibrant local supply chain and downstream industries.
- Attracts foreign direct investment (FDI).
- Generates budget revenues that can be used to finance public investments and high-quality public services that benefit the entire population.
However, many countries struggle to achieve something that even broadly resembles this ideal situation. All too often, mining is not integrated with the rest of the economy, its benefits accrue to a small subset of the population, government revenues are relatively modest, and the environmental and social impacts are largely negative.
Governments that try to better harness the potentially large benefits of mining for sustainable development are often unsure of the main issues to address. And, even if a problem is identified, they are unsure about where to start. This is where the Mining Investment and Governance Review (MInGov) comes in.
MInGov is a newly-developed tool that comprehensively analyzes a country’s mining sector and its context, and identifies sector governance strengths and weaknesses. It pinpoints in detail where the sector is not functioning as it should. Once a MInGov diagnostic has been produced, it can form the basis for sector reforms that bring about a more vibrant mining sector; one that significantly contributes to sustainable development and prosperity for the entire population. It also helps to facilitate the flow of investment by providing a fact-based, impartial view of investment attractiveness.
MInGov looks in detail at the five stages of the mining value chain, starting with contracts and licenses; moving to operations; taxation and state participation; revenue distribution and management; and finally local impact. For each stage the diagnostic tool probes into whether the policies, rules, and regulations in place are consistent with good international practice. It also looks at the implementation of this set of rules, thereby identifying whether it is the rules themselves or their implementation that need attention. The latter typically points to weak administrative capacity.
MInGov also explores to what extent the rules and regulations are designed and implemented in an accountable, transparent, and inclusive way. In addition to the value chain, MInGov scrutinizes the country’s economic and political environment that influences sector performance and in particular the investment climate.
Lastly, MInGov looks closely at the extent to which mining is integrated with the overall economy through development planning, local supplier development, economic diversification, and leveraging infrastructure.
MInGov is neither a rating tool nor is it based on perceptions. Rather, it combines information from three separate data sources—primary data (typically laws, rules and regulations), secondary data (mostly to assess the economic and political environment) and, importantly, data gathered through in-country interviews. In a typical MInGov diagnostic, a team will visit a country for about two weeks and interview a range of stakeholders (government, industry, and civil society) on a wide range of topics. Information provided in interviews is not taken at face value. It needs to be substantiated and backed up by verifiable evidence. All stakeholders are also asked to identify their priorities for sector governance based on a list of the areas covered by MInGov. Once all the data is collected, the review team meets in-country with stakeholders that were involved in the process to validate the data.
MInGov’s end-product is a report that provides a comprehensive picture of a country’s mining sector, including its strengths and weaknesses. Areas for improvement are clearly identified and prioritized. The report also analyzes stakeholder priorities. This information can be very useful in identifying a reform agenda, as it shows areas where all (or most) stakeholders want to see changes. Those areas are probably best tackled first, before proceeding with more controversial issues.
MInGov is an initiative of the World Bank Group. It is funded by the German Development Cooperation, the Extractives Global Programmatic Support (EGPS) Trust Fund, and the Inter-American Development Bank. To date, MInGov has been implemented in eight countries (Botswana, Democratic Republic of the Congo, Ghana, Kenya, Mozambique, Nigeria, Peru, and Zambia) and has generally been well received.
Looking ahead, the World Bank is partnering with IGF to strengthen the MInGov tool and is planning to conduct an additional 12 to 20 country assessments in the next few years. MInGov is eventually expected to evolve into a self-sustained operation that will provide regular assessments (about every four to five years) of all major mining-rich economies.
Further information about MInGov including its methodology, country reports, and data, can be found at www.worldbank.org/en/programs/mingov.