sharing in governance of extractive industries
Governments in Sub-Saharan Africa and other regions are striving to ensure more of the potential economic benefits from mining stay within the borders of host countries. One of the common outcomes of what is termed “the resource curse” – where countries with high production of extractive industry resources paradoxically have worse development outcomes than those without – is that mining operations use little locally produced and supplied goods and services.
In response, many countries have begun to use regulations requiring investing mining companies to purchase goods and services locally. With governments feeling pressure to demonstrate more benefits from mineral extraction, the question is less if local procurement regulations will be introduced by governments, and more so when and how these regulations will be developed.
However, despite the increased use of regulations to pressure more purchasing of goods and services, there has been little in the way of research on the outcomes of these rules. Due to this, the Mining Shared Value venture is excited to release The Relationship Between Local Procurement Strategies of Mining Companies & Their Regulatory Environments: A Comparison of South Africa and Namibia. This report examines the relationship between local procurement regulations and mining company practices in the South African and Namibian mining sectors.
This study is in collaboration with the Canadian International Resources and Development Institute (CIRDI), with contributions from Sustainable Economic Futures (SEF) Canada and the Norman B. Keevil Institute of Mining Engineering at the University of British Columbia.
It is hoped that this report will contribute to addressing the gap in empirical evidence on how mining companies engage with regulations requiring local procurement, in order to inform both the governments of South Africa and Namibia, as well as other countries considering their own regulations on mining local procurement.
Our study shows that:
This report recommends that:
The key messages from our study are that targets in regulation related to local procurement need to be matched with adequate support programs and resources to ensure that suppliers have sufficient capabilities to meet the demands of the mining companies, and regulators need to carefully consider the unintended consequences of regulations that may actually be misaligned with the goals of industrial upgrading.
Originally posted on the Engineers Without Borders Canada blog
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