Extractive Industries: Legal and Fiscal Regimes, Revenue Management, and Good Governance May 17, 2007 Oil, Gas and Mining Sustainable Community Development Fund CommDev

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

3 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 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 improve their social and physical environments increase equity and social justice increase equity and social justice overcome social exclusion overcome social exclusion build social capital and capacities build social capital and capacities involve communities in the strategic, assessment, and decision- making processes that influence their local conditions involve communities in the strategic, assessment, and decision- making processes that influence their local conditions Source: ICMM Community Development Toolkit

4 Evolution of Approaches to Community Development Isolation Ad hoc philanthropy Strategic social investment Strategic integrated community development

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

6 CommDev Revenue Management Project in Colombia Objective: 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. 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 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: Deliverable: Replicable module of training for municipal royalty management. Replicable module of training for municipal royalty management.

7 Create Multidirectional Accountability Tools for tracking inputs and outputs: Tools for tracking inputs and outputs: Citizens Report Card Citizens Report Card Community Scorecard Community Scorecard Participatory Budgeting Tool Participatory Budgeting Tool Companies publish what they are paying authorities Companies publish what they are paying authorities Community Development Strategies M&E Approach Community Development Strategies M&E Approach EI Companies Communities Civil Society Local/Regional Government

8 Monitoring & Evaluation If you don’t know where you’re going, you’ll probably end up somewhere else – Yogi Berra M&E as much about building relationships, trust and mutual learning as it is about collecting and reporting data. M&E as much about building relationships, trust and mutual learning as it is about collecting and reporting data. Participatory forms of M&E include viewpoints of all stakeholders - integrate diverse priorities and concerns Participatory forms of M&E include viewpoints of all stakeholders - integrate diverse priorities and concerns M&E offers the opportunity to demonstrate a company's value in the community M&E 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 Participation and engagement of communities are key to designing and measuring projects adequately Good M&E Upfront = Good Project Design Good M&E Upfront = Good Project Design

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

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

11 Most Important Question… WHO BENEFITS???

12 CommDev THANK YOU!!