ESTABLISHING GOOD GOVERNANCE:

In response to the call for good governance, what is it that governments are doing

Michael Stanley Senior Mining Engineer World Bank Group

Guiding Sector Principles

• Strengthen governance and transparency • Ensure that extractive industry benefits reach poor people • Mitigate environmental and social risks • Protect the rights of people affected by extractive industry investments Source: World Bank Management Response to Extractive Industries Review also • Strengthen Revenues Management and Benefits Sharing • Mining as a driver for infrastructure development

Establishing Good Governance

(a) Technical Capacity

a government’s

capacity

to effectively manage its resources and implement sound policies by reducing the regulatory burden and increasing administrative effectiveness;

(b) Right Institutions

- creating sound institutions that

respect the rule of mining law

and reduce corruption; and

(c) Transparent / Participatory Processes

- competent authorities ensuring a

stable, transparent processes

in which local affected communities participate in planning and execution of resource development

Macro-Economic Government’s Role in Mining Private sector in Emerging Econs Environment Social Focus

A Transformed Industry

Pre-1995 Late 1990s — 2008

  

Macro/Sector reform Liberalization Some privatization of SOEs



Dominance of Markets



Shrinking State



Decentralization



Regulator/administrator



Owner/operator of mining assets



By-stander in emerging economies



Awakening, acceptance



Benign neglect



Leading force in investment



New responsibilities



Role of NGOs



Fully integrated



Awakening, acceptance

Current Sector Drivers

Continued High Commodity Prices

 impacting what resources are developed and how  reducing the potential for, and leverage of development institutions, while increasing the need for their advice and technical assistance

Access to Mineral Resources

 Multinationals face restricted access to new mineral resources, resurgence of state-owned enterprises

Fair Share

 Countries are questioning their share of resource rents while communities are questioning their (equitable) share of benefit streams

Why Sound Governance Is Critical

Poor macro governance = benefits wasted:

• Government income spent unwisely, used to promote wrong economic policies, booms mismanaged

Poor sector governance = social/environmental harm:

• • Risks outweigh benefits to local community Sector contributing to social conflict (even civil war)

Some proposed remedies:

• Revenue Transparency at all levels with improved Revenue Collection and Utilization/Expenditure Management • Broad based stakeholder involvement for better monitoring, management and mitigation of environmental and social impacts

• • •

At the sectoral level through:

Modern mineral licensing system and institutional framework Satisfactory environmental and social protection legal framework and procedures to protect local communities against negative impacts of mining activities Capacity building to develop strong institutional capabilities to ensure investor compliance with applicable laws and regulations and to protect investor contractual rights

Saturday, March 1, 2008

Plenary Session #2: (RM. 718-B) ESTABLISHING GOOD GOVERNANCE: In response to the call for good governance, what is it that governments are doing.

8:35am - Intergovernmental Sharing/Management of Natural-Resource Revenues

Kai Kaiser, Senior Economist, The World Bank Group

8:55am - Instruments of Taxation and Other Forms for Revenues Sharing

Philip Daniel, Fiscal Affairs Department, International Monetary Fund

9:15am - Negotiation of Contracts

John Williams, Managing Partner, Duncan & Allen

9:45am - Coffee Break 10:15am - Towards Improved Environmental/ Social Governance

Marta Miranda, Senior Program Officer Extractive Industries, WWF/Macroeconomics for Sustainable Development Program Office

10:40am - Establishing Good Governance From the Beginning

H.E. Ibrahim Abel, Minister of Mines, Government of Afghanistan