How can Malawi ensure community development agreements are implemented effectively?
Eye on Malawi Extractives with Rachel Phoya
Malawi’s much and long-awaited new mining legislation is likely to include a provision that will require companies to spend no less than 0.45% of their annual gross sales revenue on community development activities as prescribed in community development agreements (CDAs). Companies that hold large-scale mining licences will be required to enter into these agreements with all qualified communities that are within 20 kilometre radius of the licence boundary.
CDAs have evolved as both voluntary and obligatory tools to improve the relations between companies and communities and to help enable mining to contribute to longer-term sustainable development. In theory, they should help to guide mutually-beneficial expectations and set clear roles and responsibilities of companies, communities, and in some cases, government. They are not without their risks. If the process to develop a CDA is not well managed, it can result in discontent and conflict within and between host communities and a lack of ownership. There is also the danger that where communities are not equipped to come to the bargaining table with an equal footing that the resulting agreement may not reflect their needs. Agreements have to be well crafted to ensure that they do not create an unhealthy dependency on a mining project – which will inevitably be of only a limited length – or replace the responsibility of government to its citizens.
Over the last few years, the World Bank and the Columbia Centre on Sustainable Investment, among others, have researched best practice for CDA pre-negotiation, negotiation, and implementation. I will draw on these to highlight some critical recommendations that should be considered as Malawi embarks on introducing CDAs.
- Stakeholder identification is key before negotiations begin. Even if the law is clear, companies that do the best do not limit themselves to the letter of the law but look to identify all potentially affected communities, especially those downstream. Stakeholder identification is also an ongoing process because communities move and change.
- Identification also includes third parties such as non-government organisations and government stakeholders that can/will be involved in negotiations. This process should use a variety of means of research, including participatory impact assessments.
- Determining who will be stakeholder representatives and who will drive the process is vital. Malawi’s draft Mines and Minerals Bill appears to leave most responsibility with companies; the role of government either as third-party observer or facilitator of negotiations must be made clear in subsequent regulations. Ideally, each stakeholder group should be allowed to determine their own representatives, but efforts must be made to ensure that groups that have been excluded in the past are included, such as women and people living with disabilities.
- Capacity assessment and building of identified communities is necessary to ensure meaningful participation. This must be culturally sensitive and contextually relevant. Trusted third parties can be involved at this stage. Ideally these third parties should be identified by communities themselves to ensure ownership and legitimacy.
- Pre-negotiation agreement/memorandum of understanding have been shown to help communities and companies agree on the way to move forward. They can include identification of goals for each negotiation stage, the negotiators, methods of communication, time frame, and funding of the negotiation process.
- Communities should be assisted in establishing their negotiating position in an internal and private manner and this can be a good starting point and help communities to determine mutually-agreed priorities and expectations to bring to the bargaining table. It should be ensured that this internal process is participatory, respects culturally appropriate and traditional decision-making channels, while ensuring that no groups are left behind.
- Both financial and non-financial commitments should be included, such as agreements on business development, employment, infrastructure, and service provision.
- District development plans and other government and non-governmental activities must be considered in designing the CDA to ensure the CDA complements and does not duplicate or replace the roles of government and initiatives of non-governmental organisations.
- The management framework is a central element of the CDA. This establishes how the CDA will be implemented, how finances will be disbursed and projects implemented, who will provide an oversight and audit function, how stakeholders will access information about progress, and the different grievance, feedback, and dispute resolution mechanisms.
- All contracts should include a potential to withdraw clause from the process and the contracts should be public.
- Monitoring of commitments and implementation should be participatory with clear information channels on progress and expenditure. CDA oversight structures and community representatives may require assistance in carrying out their monitoring role as well as communicating with and receiving feedback from the people they represent.
- Monitoring and evaluation frameworks should be holistic and include measurements of human development where possible and not only outputs and activities (e.g. x number of schools built, or x number of women business owners trained). This information must be then used in future CDA implementation.
- Planning for mine closure is important to ensure that the community’s well-being and development is not dependent on the mining project. This means making sure everyone is informed and updated about the mine life and closure, and activities and engagement in the CDA go beyond mining, includes transferable skills, and infrastructure that can be maintained by communities and/or government.
For further information, see:
- Emerging Practices in Community Development Agreements (Columbia Centre on Sustainable Investment, 2016): http://ccsi.columbia.edu/files/2016/02/Emerging-practices-in-CDAs-Feb-2016-sml.pdf
- Mining Community Development Agreements: Source Book (World Bank, 2012): http://siteresources.worldbank.org/INTOGMC/Resources/mining_community.pdf
This piece was initially published in Malawi’s Mining & Trade Review Issue Number 54 (October 2017).
The full edition is available for download here. This monthly publication is edited by Marcel Chimwala.
Thanks for sharing. Keep up the good work. Why 0.45% of gross revenue and not 1% or 5% to fund community development agreements?
I have to say, I am not sure where the figure emerged from – Prof James Otto drafted the law under the World Bank financed project, he also incidentally has written widely on CDAs so I wonder if that is something he has researched or if it was put forward by government. Are there similar provisions in Zimbabwe?
Thanks for the response, it is positive that the development finance for CDAs is calculated from gross mineral sales as profit based calculations are susceptible to Illicit financial flows. In Zim we have community share ownership trusts and the equity model is not a straightforward route to empower communities. I think we should dig more to find out other country experiences on financing CDAs
Definitely. Happy to co-author/co-blog something!