CSR and the AMV maputo UNECA

Situating Corporate Social
Responsibility in the Africa Mining
Vision: A Perspective
by Antonio M.A. Pedro
UNECA


Objectives
•
•
•
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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 resourceprocessing 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 (nonresource) 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 nonavailability 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 longterm 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”)


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

Phase 2

Phase 3

Phase 4

Resource Beneficiation (value-addition, market access)
Resource Exploitation

I

Densification/generic (SDP) Infrastructure

II

Resource Infrastructure

III

Increasing skills intensity (HRD) & capacity building
Unskilled resource labour
Rents from Resource diversification industries
Diverse tax base

IV

Resource rents (tax)

V

Resource Inputs production & Lateral migration
(diversification)
Import of Resource Inputs
Resource R&D. high level skills and tech development

VI
VII

Import of Resource Tecnologies
Policy space, Complex regulation, M&E, governance
Contract Law
Contract/license resource & infra (PPP) governance
Resource Exploitation
& infrastructure phase

Resource Consumables &
HRD phase

Resource clusters, R&D, cap. Lateral migration &
goods & services phase
diversification phase


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)