The mining sectors of countries like Mali and Burkina Faso have undergone substantial changes over the last 20 years. Burkina Faso has made a shift from dominant state intervention to a sector giving ample room to private companies.
In this process of liberalization, tasks of the state, NGOs, and private corporations have been redefined. I think that a marriage of the public-private partnerships between CIDA, NGOs, and Canadian mining companies has to be assessed in relation to the institutional setting in which the mining operations and development initiatives are taking place.
I fully agree with Professor Bebbington, who made a statement in your committee on February 29 that the link between mining and development cannot be determined on the basis of individual projects. Exploration and large-scale mining operations in countries such as Burkina Faso trigger complex processes of social change. Whether these social processes can be seen to help or hinder development is a major issue. This question is at the heart of the debate about whether resource endowment is a curse or a blessing for developing countries.
Even researchers collaborating closely with the International Council on Mining and Metals, the ICMM, emphasize that structural arrangements are crucial to preventing developing countries from getting trapped in the resource curse. Dr. Dan Haglund, working for Oxford Policy Management, portrays the situation for a country like Burkina Faso this way: “In Burkina Faso, the mining sector accounted for 2% of exports in 2005, but by 2010 its share had risen to 41%.”
This resource dependence is, of course, a challenge, and may generate wealth, but it is also risky. A rapid surge of revenue can only lead to development if, first, state institutions have sufficient capacity and discipline, and second, if mining can be connected to other economic activities so as to trigger multiplier effects. This would prevent, say, Dutch disease and real exchange rate problems.
In this situation, development is foremost a matter of institutional development, and this entails proper strengthening of state structures and strategies for spinoff into other sectors of the economy. These requirements force us to think about partnerships and mining companies in relation to two issues: first, institutional development and division of responsibilities, and second, the relationship between mining and economic development.
I'll talk about institutional development and division of responsibilities first.
The current trend in foreign direct investment in mining in developing countries has changed the relations and tasks of corporations and host states. As owners of subsoil resources, states are the authorizing instance. The state organizes access and monitors mining—ideally, that is. A report by Dr. John Ruggie called “Protect, Respect and Remedy: a Framework for Business and Human Rights” makes a convincing case that many developing states have weak governance structures. They often lack capacity to regulate and survey the corporations they host. There is a governance gap between the weakness of states and the impact of strong economic forces and global actors that has to be accommodated in the country.
In many cases, reinforcing these structures is far from simple and is hindered by political cultures marked by corruption and patrimonialism. In a recent report on the political economy of the mining sector in Burkina Faso, Oxford Policy Management again gives a rather gloomy image of the political elite of Burkina Faso. The mining sector is linked by control, co-option, and corruption into the hegemonic government, a category into which the World Bank labels this situation in Burkina.
I think the current discussion in Canada on public-private partnerships should pay special attention to how these initiatives affect the relation with, and the position of, the host state. If we agree that development is institutional development, then capacity-building for the host state should remain high on the agenda. In my view this could require, first of all, a clear division of tasks and responsibilities.
In particular, in countries such as Burkina Faso, in which the history of large-scale mining is still young, governance capacity-building should be centre stage.
However, mining companies that have to be authorized and monitored by that same state cannot do this. Support for institutional capacity-building should be organized in bilateral public-public partnering. In this light we have to ask whether the current forms of partnering between CIDA, NGOs such as Plan Canada, and mining companies do not risk being counterproductive. If institutional development is the central goal, these partnerships may blur boundaries, responsibilities, and identities even further.
So far I've argued that mining companies should keep a distance from responsibilities assigned to public authorities of the host state. In what follows I will emphasize that such a distance should be matched by the closest possible commitment to their responsibility in and for the local setting in which they operate.
Now I'll turn to my second point, which is the relationship between mining and economic development. Here I will turn to the partnerships in Burkina Faso and in Canada.
The partnership of CIDA, Plan Canada, and IAMGOLD in Burkina Faso and the public-private partnership in Ghana deserve to be elaborated upon, but for time reasons I will confine myself just to the latter.
In Ghana, CIDA works together with World University Service of Canada and Rio Tinto Alcan in a project to train community members to strengthen governance structures. In the meantime, however, the Rio Tinto Alcan mine associated with this project was sold to a Chinese company. In a question and answer leaflet given out by the World University Service of Canada, it is argued that this situation proves the partnership's integrity. It states that Rio Tinto is no longer working in Ghana and does not stand to profit financially from its support to this project. However, this situation implies that the current partnership is disconnected from responsibilities directly linked to the mining operation, which is now in new hands.
This broadening of involvement—