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It would be a lot more efficient and effective when main of what extractive industries operating in developing countries (where land is mostly owned by State) contribute for social investment in the form of royalty in respect of the market value of minerals produced, payable to the Governments in charge of the affected communities and it is the responsibility of the local communities and their Governments to take charge of the social investing for the benefit of generations in the community.

 Extractive industries should contribute as much as they produce and local communities and their Governments should be expected to do all what they can to support the industries for more production and more royalty in return. Extractive industries shouldn’t contribute in the form of donations and/or the management of social investments on behalf of the communities and their Governments because this would escalate chronic dependency on the unsustainable aid and care provided by the extractive industries which won’t be around forever.

I know an Australian farmer who is very comfortable with the royalty he gets in respect of the produce of sapphires mined from a deposit which was discovered on a farm he owns and thought communities in developing countries should also be very comfortable earning it in the same way.

It is the responsibility of communities and their Governments to ensure the royalties they earn from extractive industries on their lands are wisely spent in the development of foundation infrastructures like in water, power, education and health to support economic activities within the communities for generations and in so doing grow by becoming more and more less dependent on alien donations and care in their life’s.

You are right on the spot Musiime. Social investment should and must go beyond cash or in-kind donations to communities who must resettle due to the presence of an extractive project. Companies should take into account the communities' needs at the moment, but also in the long term. 

Furthermore, companies should ensure that their investment in these communities is transparent, and sustainable. The problem with cash or in-kind donations is that most of the time, they do not last very long. Communities should benefit from long lasting benefits such as training programmes.

The IPIECA provides 7 key principles that should be applied to organizations that wish to implement good practices when it comes to their social investment: 

http://www.boreal-is.com/en/2012/07/social-investment-what-makes-it-sustainable/

Thought compensation to cover disturbance and resettlement costs and a resonable share of the profits generating from the alien owned business activities like mining which would take over the traditional lands of affected communities are what should be prescribed to the affected communities.