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/Sector reform  Liberalization  Some privatization of SOEs  Owner/operator of mining assets  By-stander in emerging economies  Awakening, acceptance  Benign neglect  Dominance of Markets  Shrinking State  Decentralization  Regulator/administrator  Leading force in investment  New responsibilities  Role of NGOs  Fully integrated  Awakening, acceptance Macro-Economic Government’s Role in Mining Private sector in Emerging Econs Environment Social Focus Pre-1995Late 1990s — 2008 A Transformed Industry

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

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 11:05am - Town Hall Discussion Moderator: Michael Stanley, Senior Mining Engineer, The World Bank Group 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.