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

May 17, 2007May 17, 2007

Oil, Gas and Mining Sustainable Oil, Gas and Mining Sustainable Community Development Fund Community Development Fund

CommDevCommDev

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What is CommDev?What is CommDev? A $12 million fund focused A $12 million fund focused

on on helping communities receive helping communities receive sustainable benefits from sustainable benefits from extractive industry (EI) projects. extractive industry (EI) projects.

Provide funding and knowledgeProvide funding and knowledge Initial geographical focus: Africa (60 – 70%)Initial geographical focus: Africa (60 – 70%) Tri-partite approach with key stakeholders – Tri-partite approach with key stakeholders –

community, EI investors and local/regional community, EI investors and local/regional governments – in order to ensure sustainability. governments – in order to ensure sustainability.

Support capacity building, training, technical Support capacity building, training, technical assistance, tool development and information assistance, tool development and information clearinghouseclearinghouse

Draws on breadth and depth of expertise in the Draws on breadth and depth of expertise in the World Bank Group.World Bank Group.

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What is Community Development?What is Community Development? The process of increasing the strength and The process of increasing the strength and

effectiveness of communities, improving peoples’ effectiveness of communities, improving peoples’ quality of life, and enabling people to participate in quality of life, and enabling people to participate in decision making and to achieve greater long-term decision making and to achieve greater long-term control over their lives. Community development control over their lives. Community development empowers and helps communities to empowers and helps communities to improve their social and physical environmentsimprove their social and physical environments increase equity and social justiceincrease equity and social justice overcome social exclusionovercome social exclusion build social capital and capacitiesbuild social capital and capacities involve communities in the strategic, assessment, and involve communities in the strategic, assessment, and

decision-making processes that influence their local decision-making processes that influence their local conditionsconditions

Source: ICMM Community Development ToolkitSource: ICMM Community Development Toolkit

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Evolution of Approaches to Evolution of Approaches to Community DevelopmentCommunity Development

Isolation Isolation

Ad hoc philanthropyAd hoc philanthropy

Strategic social investmentStrategic social investment

Strategic integrated community Strategic integrated community developmentdevelopment

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Importance of Importance of Local Revenue ManagementLocal 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 the populations’ perception of the benefits

generated by EI for their communities generated by EI for their communities Lessons learned from Latin America:Lessons learned from Latin America:

Insufficient absorptive capacityInsufficient absorptive capacity Unresponsive allocation patternUnresponsive allocation pattern Poor fiscal reportingPoor fiscal reporting Role of local civil society – the demand-side of Role of local civil society – the demand-side of

good governance good governance Bottlenecks need to be addressed at micro and Bottlenecks need to be addressed at micro and

macro levelmacro level

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CommDev Revenue ManagementCommDev Revenue ManagementProject in ColombiaProject in Colombia

Objective: Objective: To improve municipal performance of the use of To improve municipal performance of the use of

oil royalties in Colombia by helping selected local oil royalties in Colombia by helping selected local governments incorporate management tools and governments incorporate management tools and improve their internal organization. improve their internal organization.

Intention is to contribute to a more efficient Intention is to contribute to a more efficient allocation and leverage of oil royalties in those allocation and leverage of oil royalties in those areas where oil companies operate, which should areas where oil companies operate, which should translate into benefits for local communitiestranslate into benefits for local communities

Deliverable:Deliverable: Replicable module of training for municipal Replicable module of training for municipal

royalty management.royalty management.

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Create Multidirectional Create Multidirectional AccountabilityAccountability

Tools for tracking inputs Tools for tracking inputs and outputs:and outputs: Citizens Report CardCitizens Report Card Community ScorecardCommunity Scorecard Participatory Budgeting Participatory Budgeting

ToolTool Companies publish what Companies publish what

they are paying they are paying authorities authorities

Community Development Community Development Strategies M&E ApproachStrategies M&E Approach

EI Compani

es

Communities

Civil Society

Local/Regional

Government

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Monitoring & EvaluationMonitoring & EvaluationIf you don’t know where you’re going, you’ll probably end up somewhere If you don’t know where you’re going, you’ll probably end up somewhere

else – Yogi Berraelse – Yogi Berra

M&E as much about building relationships, trust and M&E as much about building relationships, trust and mutual learning as it is about collecting and mutual learning as it is about collecting and reporting data.reporting data.

Participatory forms of M&E include viewpoints of all Participatory forms of M&E include viewpoints of all stakeholders - integrate diverse priorities and stakeholders - integrate diverse priorities and concerns concerns

M&E offers the opportunity to demonstrate a M&E offers the opportunity to demonstrate a company's value in the community company's value in the community

Participation and engagement of communities are Participation and engagement of communities are key to designing and measuring projects adequately key to designing and measuring projects adequately

Good M&E Upfront = Good Project DesignGood M&E Upfront = Good Project Design

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Participatory Environmental Participatory Environmental Monitoring in GuatemalaMonitoring in Guatemala

CommDev is funding a community-based CommDev is funding a community-based monitoring committee to conduct water testing.monitoring committee to conduct water testing.

Brings together a broad array of stakeholdersBrings together a broad array of stakeholders Build capacity within communityBuild capacity within community Serves as a model for constructive dialogue Serves as a model for constructive dialogue

between local communities and the extractive between local communities and the extractive industries throughout Guatemala industries throughout Guatemala

Program was awarded a prize by the Latin Program was awarded a prize by the Latin American Mining Organization as the region’s American Mining Organization as the region’s most innovative effort to integrate a mining most innovative effort to integrate a mining operation with its local communities.operation with its local communities.

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Features of EffectiveFeatures of EffectiveCommunity DevelopmentCommunity Development

Community consultationCommunity consultation Clear understanding of the local context and the Clear understanding of the local context and the

impact of EI on the community (early baseline data)impact of EI on the community (early baseline data) Trust, shared ownership – processes are keyTrust, shared ownership – processes are key Expectations contained by clearly defined roles and Expectations contained by clearly defined roles and

responsibilities of all stakeholdersresponsibilities of all stakeholders Capacity building – build social capital Capacity building – build social capital Participatory Community Development StrategiesParticipatory Community Development Strategies Resources (companies, govt,…etc.) allocated to Resources (companies, govt,…etc.) allocated to

deliver outputsdeliver outputs M&E integral part of programs (measurable goals; M&E integral part of programs (measurable goals;

monitor and report on progress)monitor and report on progress) Strategic partnershipsStrategic partnerships SustainabilitySustainability

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Most Important Question…Most Important Question…

WHO BENEFITS???WHO BENEFITS???

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CommDevCommDev

THANK YOU!!THANK YOU!!