Extractive Industries: Legal and Fiscal Regimes, Revenue Management, and Good Governance

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Oil, Gas and Mining Sustainable Community
Development Fund CommDev

• Extractive Industries Legal and Fiscal Regimes,
  Revenue Management, and Good Governance
• May 17, 2007

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What is CommDev?

• A 12 million fund focused on helping
  communities receive sustainable benefits from
  extractive industry (EI) projects.
• Provide funding and knowledge
• Initial geographical focus Africa (60 70)
• Tri-partite approach with key stakeholders
  community, EI investors and local/regional
  governments in order to ensure sustainability.
• Support capacity building, training, technical
  assistance, tool development and information
  clearinghouse
• Draws on breadth and depth of expertise in the
  World Bank Group.

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What is Community Development?

• The process of increasing the strength and
  effectiveness of communities, improving peoples
  quality of life, and enabling people to
  participate in decision making and to achieve
  greater long-term control over their lives.
  Community development empowers and helps
  communities to
• improve their social and physical environments
• increase equity and social justice
• overcome social exclusion
• build social capital and capacities
• involve communities in the strategic, assessment,
  and decision-making processes that influence
  their local conditions
• Source ICMM Community Development Toolkit

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Evolution of Approaches to Community Development
Isolation
Ad hoc philanthropy
Strategic social investment
Strategic integrated community development
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Importance of Local Revenue Management

• Key factors for the sustainability of EI
• the local management of royalties
• the populations perception of the benefits
  generated by EI for their communities
• Lessons learned from Latin America
• Insufficient absorptive capacity
• Unresponsive allocation pattern
• Poor fiscal reporting
• Role of local civil society the demand-side of
  good governance
• Bottlenecks need to be addressed at micro and
  macro level

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CommDev Revenue ManagementProject in Colombia

• Objective
• To improve municipal performance of the use of
  oil royalties in Colombia by helping selected
  local governments incorporate management tools
  and improve their internal organization.
• Intention is to contribute to a more efficient
  allocation and leverage of oil royalties in those
  areas where oil companies operate, which should
  translate into benefits for local communities
• Deliverable
• Replicable module of training for municipal
  royalty management.

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Create Multidirectional Accountability

• Tools for tracking inputs and outputs
• Citizens Report Card
• Community Scorecard
• Participatory Budgeting Tool
• Companies publish what they are paying
  authorities
• Community Development Strategies ME Approach

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Monitoring Evaluation

• If you dont know where youre going, youll
  probably end up somewhere else Yogi Berra
• ME as much about building relationships, trust
  and mutual learning as it is about collecting and
  reporting data.
• Participatory forms of ME include viewpoints of
  all stakeholders - integrate diverse priorities
  and concerns
• ME offers the opportunity to demonstrate a
  company's value in the community
• Participation and engagement of communities are
  key to designing and measuring projects
  adequately
• Good ME Upfront Good Project Design

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Participatory Environmental Monitoring in
Guatemala

• CommDev is funding a community-based monitoring
  committee to conduct water testing.
• Brings together a broad array of stakeholders
• Build capacity within community
• Serves as a model for constructive dialogue
  between local communities and the extractive
  industries throughout Guatemala
• Program was awarded a prize by the Latin American
  Mining Organization as the regions most
  innovative effort to integrate a mining operation
  with its local communities.

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Features of EffectiveCommunity Development

• Community consultation
• Clear understanding of the local context and the
  impact of EI on the community (early baseline
  data)
• Trust, shared ownership processes are key
• Expectations contained by clearly defined roles
  and responsibilities of all stakeholders
• Capacity building build social capital
• Participatory Community Development Strategies
• Resources (companies, govt,etc.) allocated to
  deliver outputs
• ME integral part of programs (measurable goals
  monitor and report on progress)
• Strategic partnerships
• Sustainability

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Most Important Question

• WHO BENEFITS???

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CommDev

• THANK YOU!!