Oil, Gas and Mining Sustainable Community Development Fund (CommDev )

Oil, Gas and Mining Sustainable Community Development Fund (CommDev) ANSA Practitioner Conference, Ethiopia Veronica Nyhan Jones vnyhanjones@ifc.org

What is CommDev? • $12 million fund focused onhelping communities receive sustainable benefits from Extractive Industry (EI) projects • Supports IFC/World Bank clients/companies who want to collaborate with govt and civil society to go above and beyond compliance with social/environmental safeguards. • Provides public goods for all stakeholders on community development in extractive contexts. • Offers capacity building, TA, tool development and information sharing through on-line clearinghouse. • Global, but emphasizes Africa (60 – 70%)

What is Community Development? Community development empowers communities to: • improve their social andphysical environments • increase equity and social justice • overcome social exclusion • build social capital and capacities • engage in the strategic assessments and decision-making processes that influence their local conditions Source: ICMM Community Development Toolkit

Community Development Strategy Communication Help organize vehicles to continue company-community-local govt dialogue on implementation Train community, company and governments to participate in on-going monitoring and evaluation of programs Assist company in implementing select community development programs with local partners Stakeholder Engagement IncreaseParticipation JointStrategy Development • Establish Participatory Planning Mechanisms • Multi-stakeholder involvement • Identify actionable and measurable interventions • Increase quality of participation • Facilitate design of community development strategy • Provide toolkits, case studies and best practice documents • Identify measurable impact of community development actions Help build awareness and engage stakeholders across all sectors and create an association for consultation and dissemination of information. Implementation Participatory Monitoring

The Extractive Industry Project Cycle BCS & CommDev 5

Community Development => Social Investment Treating community development as an investment that yields returns for the community and the company. Productivity Gains Risk Mitigation Global Reputation Above and beyond compensation and mitigation. Responsibility and accountability!

Features of Effective Community Development • Community and local government participation:Clear understanding of local context and impact of EI on the community (early baseline data) • Sustainability:Shared ownership, strategic partnerships and capacity building • Project management and accountability: Measurable goals, clearly defined roles, resources allocated to specific outputs, frequent monitoring and progress reports • Multidirectional communications: frequent, transparent, honest

Key Themes for CommDev • Stakeholder Engagement • Participatory Planning and Long-term Strategies • Local Economic Development & Supply Chains • Local Revenue Management • Capacity Building for Govt, Companies, Communities • Monitoring & Evaluation (Participatory) • Communication & Information Sharing • Artisanal and Small-scale Mining (w/ CASM) • Gender • Influx

Participatory Monitoring & Evaluation • As much about building relationships, trust and mutual learning as it is about collecting and reporting data • Includes viewpoints of all stakeholders — integrating diverse priorities and concerns • The opportunity to demonstrate a company's value in the community • Rely heavily on participation and engagement of community and local govt stakeholders Who measures matters!

Example:Participatory Environmental Monitoring in Guatemala • Community-based monitoring committee to conduct water testing • Brings together a broad array of stakeholders; builds capacity and trust within community • Community results were the same as company’s • Program was awarded a prize by the Latin AmericanMining Organization as the region’s most innovativeeffort to integrate a mining operation with its local communities

CommDev-Funded Projects • Participatory Environmental Monitoring around Mine, Guatemala • Framework for Sustainable Development around Mining, Guinea • Capacities of Traditional Authorities and Local Government for Community Development, South Africa • Alternative Livelihoods for Artisanal & Small-Scale Miners, DRC • Social Accountability to Improve Impact of Mining Canon, Peru • Municipal Capacity to Manage Oil Royalties, Colombia • Regional Development Foundation in Anosy, Madagascar • Indigenous Business Development, Bolivia More projects under development in Tanzania, Colombia, Ghana…

CommDev Learning Products • Participatory Planning & Monitoring for Companies and Communities (BCS) • Local Conflict Management Toolkit (ERM) • Indicators for Monitoring Corporate Community Development Investments (IFC) • ASM & LSM Good Practice Guide w/ CASM • Foundations for Community Development

Information Clearinghouse www.CommDev.org

Information Clearinghouse (cont’d) • A resource for global good practices, tools, training programs and methodologies for supporting community development in mineral extractive environments • Over 1,500 selective resources available • Resource Center organized into 20 key topic areas • Set of toolkits to guide users implementing community development projects • Case studies, current news and events, glossary, external links and more…

Indicators of Community Investment • Evaluate six common dimensions:Education, Health, Infrastructure, Livelihoods, Stakeholder Engagement, Capacity Building • Go beyond inputs and outputs: Quantitative & qualitative indicators to track Inputs, Outputs, Outcomes, Local Development Impacts, and Company’s Return on Investment • Solicit diverse local participationin designing community investment programs, setting criteria for success and tracking progress

Indicators for Community Investment...Education

Quantitative, Qualitative, Participatory… Quantitative: Captures change in terms of numbers, amounts, percentagesQualitative: Measures a behavior, perception; seeks to capture the quality of the change and, ideally, information explaining how and why the change occurred. Qualitative methods allow for open-ended questions/issues to arise that the researcher did not antcipate. Participatoryapproaches enable the population to help design the questions/issues that should be covered—the criteria of success (ex Community Scorecard).

Participatory planning and monitoring in community development related to extractive industries A SELF-LEARNING MODULE Concepts, tools, benefits and risks 18 18

Common characteristics of the local extractives context Weak local governance Legacy of conflict Struggles over distribution of the benefits of extraction Uncertain land tenure Perceived lack of legitimacy of the laws and regulations which govern multinational corporate mining activity Varied institutions of culture and history in isolated areas Complicated network of relationships within communities Population migration into economic zone of opportunity Companies as de facto governance and/or service providers 19 19

Multiple actors in the extractives context Local-Global Interactions Local Media, internet Partner Corporations State company Operating company Financing institutions Federal Ministry Intl media, bloggers Local businesses Economic Society Environment Local government Local NGOs Traditional Authority Donor Community Other - individuals Community people Internatl Stake- holders Migrants 20

Common problems for local communities in the extractive context • High expectations, but few jobs after construction phase, and these usually for skilled migrants. • High inward migration in expectation of work – leads to social change which is unsettling for local communities. • National government may receive revenues, but not always returned to the local level. • Where share of revenues is returned to local level, often lack of capacity to manage effectively – money wasted, corruption. • Lure of resources can bring external actors and violent conflict. • Local environmental degradation. • Human rights violations associated with security forces. • Concerns that companies don’t deliver on commitments made. • Investment in development, but historically paternalistic, not participatory 21

Common problems for companies in extractive sector development • Potential for disruption at local level – demonstrations and protests, legal action, sabotage and hostage taking etc. • Potential for reputational damage globally – due to increasing ability for local communities to network globally with NGOs based elsewhere. • In the past, companies often isolated themselves from the local community ‘behind the perimeter fence’. Technological change – the information and communication technology revolution has: • Enabled local communities to network with global civil society. • Changed power dynamics – old model of very powerful company and relatively powerless local community has shifted – actors in local communities now have more parity vis-à-vis companies due to their ability to share information globally that may result in reputational damage. • Increasing recognition of the concept of ‘social license to operate’ as distinct from a legal license to operate 22

Key concepts for participatory planning and monitoring Participation Participatory approaches Engagement Accountability Social license to operate Corporate community investment These concepts have special relevance to the multiple actors in the natural resource context. 23 23

Social License to Operate • Social license to operate – an ongoing process of implicit and explicit approval from communities where companies operate, which permits the relevant company(ies) to operate with legitimacy. • Potential areas of focus: • Employment • Infrastructure • Sourcing and procurement • Intra-household dynamics • Environnment 24

Implications for companies & communities Participatory approaches mean a shift in: Corporate culture and roles Community channels of communication Strategic thinking Business practices and communication To achieve: Jointly defined problem and solution Shared resources, risk and responsibilities Leveraged cash, expertise, systems and networks 25 25

Features of participatory approaches Distributed source of expertise Community opinions as important as that of technical experts. People determine for themselves what they need and they know better than development professionals. Values learning and growing. Time scale of parties May slow down company schedules in the short-term Accommodates changing conditions, changing needs, priorities and changing expectations. Actions and implementation are collaborative; responsibility is shared Multi-party ownership and multi-party monitoring. Companies cannot just pay taxes and relinquish responsibility; communities must live up to their side of promises, including active participation. Long term process, but indicators of progress and co-monitoring can demonstrate achievements. 26 26

Benefits of participatory approaches for companies Productivity: Enhance employee morale and retention, reduce absenteeism Ensure more effective use of corporate resources Local knowledge can complement and enhance technical expertise Prospect of faster permitting and approvals Risk Mitigation: Reduce risk of conflict and delays / ensure stable operating environment Help meet regulatory requirements for local benefit from extraction Improve / maintain local social license to operate Global Reputation: Help obtain project financing Reduce risk of global criticism and reputational damage Increase attractiveness to socially conscious shareholders 27

Benefits of participatory approaches for communities Greater voice in planning and decision-making. More likely that development outcomes meet the needs and aspirations of local communities. Sustainability and increased self reliance Strengthened local institutions over time Access to resources, new ideas, technology, skills. Potentially stronger economic base, which could contribute to rural capital formation. 28

Risks and challenges in using participatory approaches For companies Building shared understanding requires significant investment of time and resources Relinquishing control over how resources are allocated can be counter-intuitive and uncomfortable Higher cost outlays which may not be recoverable Obligation schedules/timing and procurement concerns Different expectations and language Requires skills and capacity for working across cultures and with communities • For communities • Building shared understanding and trust requires significant investment of time • Expected benefits are not clear, and are usually only realized after many social and economic costs have already been borne by communities • Risk of being ‘co-opted’ into appearing to support something they do not • Changing power relationships • Losing independence and ability to criticise • Different expectations and language • Requires skills and capacities to engage with companies 29 29

Spectrum of Community-Company Engagement Spectrum ofactions Identify and work together on areas of mutual interest and complementary capacity Control and responsibility to take decisions and act jointly to change the context for mutual benefit Active disengagement; isolation, barriers to avoid contact; ignorant about communities, history, local knowledge Provide information about activities and rights in ways that are understandable to the public More open flows of information: some listening and some information giving Elicit information from and participation by community Violent tactics: involuntary resettlement, destruction of livelihoods, environment By theCompany Share perspectives and priorities. Provide information about what is needed (claims to rights?) Identify ways to work with company in ways that bring local knowledge, perspective and skills to bear on issues, plans and actions Giving information in a responsive mode; still limited choice in type and amount of information to give or receive Control and responsibility to take decisions and act jointly to change the context for mutual benefit Active disengagement; refusal to negotiate; or inaction arising from powerless-ness or lack of information Naming, blaming, shaming based on information accessed Violent tactics: sabotage, destroy property, hurt people By theCommunity Each party is communicating with the other, but in an ineffective manner Attempts by one party to communicate with another; mostly one-way communication; partially effective Beginnings of constructive joint action Co-planning, co-monitoring and Multi-directional Accountability

Range of participatory tools & mechanisms Participatory Planning Community Forums Good Neighbor Agreements Community Suggestion Boxes Participatory Budgeting Citizen Report Cards Community Scorecards Grievance Mechanisms Activities integral to using these tools: Monitoring and Measurement Training and capacity building Access to information 31

Participatory planning and monitoring approaches at different stages of the project cycle

Tools and mechanisms: 1. Participatory Planning • Members of local communities contribute to plans for company activities potentially relating to business and to local development. • Builds trust when company is responsive to community inputs • Provides easy and direct way to increase likelihood of benefit from business activities to communities—placement of roads, extending feeder roads, electricity access, building designs, as well as employment and procurement policies and practice. • Creates multi-stakeholder ownership and responsibility. • Improves outcomes and provides access to local knowledge. 33

Short examples – Participatory planning, Nigeria • Participatory planning for community-directed development • 1998 Statoil and BP formed alliance for development in Niger Delta. • Partnership with Pro-Natura, international NGO, to coordinate the concerns of 180,000 people who live in the Akassa area. • The community manages the Akassa Community Development Program (ACDP), with support from Pro-Natura. Five main areas: human resources development; natural resources management; poverty alleviation/micro-credit; infrastructure/micro-projects; and institutional development/ capacity building. • Several stakeholder groups incorporated in the funding, management, and operations of the ACDP program. • Oil companies support the project through financial contributions and by monitoring finances. Pro-Natura provides training and group facilitation. • Other community stakeholders form smaller interest groups which give input and participate in the programs that the ACDP develops and implements. Separate groups for fishermen, fish-smokers, traders, dancers, etc. The groups save small sums of money, and lend to their own members. 34 BCS & CommDev

Tools and mechanisms:2. Good Neighbor Agreements / MOUs • Good Neighbor Agreements are co-produced commitments constructed and agreed between companies and communities. • With specific performance targets and timeframes, they can be limited to certain issues such as pollution, or apply to a wider range of community concerns. • Often there is historic traditional basis for such agreements and social sanctions and enforcement capabilities may exist within a host community. • Transparency can strengthen the degree of accountability on the part of all stakeholders. 35

Tools and mechanisms:3. Community Forums • Single or multi-stakeholder community groups gathering voluntarily for discussion on a previously agreed upon topic, to provide information and receive feedback, or for other relationship-building activities that are made explicit. Effective communication strategies are required to ensure balanced participation. • Include company and community representatives as well as other actors including local government and NGOs. Focused efforts are required to ensure inclusion of low-power holders such as women, youth, or certain ethnic groups. • Could provide an excellent platform for participatory planning, often moving on from looking at isolated project decisions to co-planning a longer-term strategy for local and regional development. 36

Tools and mechanisms: 4. Community Suggestion Boxes • Suggestion box placed in an easily accessible public location. Members of a community may submit anonymous complaints, suggestions or questions. Box is opened publicly at pre-determined times (such as weekly) and a response is provided to each suggestion. • Especially helpful when there is a good grievance mechanism already in place. • Prompt and genuine responses build shared understanding and trust. • Informs the company about issues of concerns to stakeholders. • Provides a safe way for stakeholders to communicate with the company. • Where appropriate, may be supplemented with hotlines, internet forums and/or interactive radio discussions. 37

Tools and mechanisms:5. Participatory Budgeting • Processes by which citizen-delegates decide on or contribute to decisions regarding the allocation and monitoring of expenditures of all or a portion of public resources. Also applicable to company resources allocated for community development. • Ensures funds are spent in ways that benefit local people according to their own priorities. • Disclosure of funds available and engagement in the decision-making process builds realistic expectations of resources and possibilities. • Local ownership promotes civic engagement and controls corruption. • Representation is key, and other tools such as the community scorecard and citizen report cards may be used to ensure legitimacy of representatives. 38

Tools and mechanisms:6. Citizen Report Cards • Short surveys with questions developed through participatory discussion and used to measure perceptions of adequacy and quality of public services. Potentially applicable to the extractive industry context. Survey responses are supplemented with a qualitative understanding. • Based on feedback directly from the population intended to benefit. • Provides a widely accepted type of measure of effectiveness that is quantifiable. • May be repeated to show progress. • Can build trust and shared understanding as results are disclosed in language and format that is widely accessible. • Process can take time (months) and survey questions need to be well grounded in community discussions. 39

Short example -- Household surveys • Household surveys – • Oxiana, Australian gold, copper company hired external consultants to conduct biennial household surveys at its operations in Laos. • Oxiana has been producing gold there since December 2002, and putting a small portion of profits into a trust fund. • In 2006, the Oxiana Trust Fund spent US$0.66 million on activities aimed at improving living standards for communities and developing sustainable industries not dependent on extractive industries. • Based on initial work, Oxiana realized that results would be better focused with direct local input. Household surveys were more appropriate than community forums because of the political dynamics of the area. They hired an external consultant to conduct the surveys. • Based on results of the survey, increased expenditure was directed to build schools, improve medical facilities, provide training and micro-finance credit. Ideally would follow up with citizen report card. 40 BCS & CommDev

Tools and mechanisms:7. Community Scorecard • Focus groups identify indicators of success for a given project or service. Target beneficiaries and service providers rate the effectiveness of service based on the agreed upon indicators. • Provides quick means to assess effectiveness of a service. • Draws on the knowledge and experience of both recipients and service providers. • Facilitates joint development of plans to address outstanding issues and to expand successes. 41

Short examples – Co-monitoring • Participatory biodiversity monitoring – • Hunt Oil built a 400-km natural gas pipeline through the Amazon and Andes in 2002-2003. The pipeline project went through four ecological regions and several political regions. • Half of the identified area of influence has primarily indigenous populations comprising around 68,000 inhabitants. Communities rely heavily on natural resources and agriculture for their livelihoods. • Hunt formed partnership with Peru’s National Council for the Environment to fund projects in line with Peru’s national biodiversity strategy. • The partners held participatory rural workshops, focus groups and one-on-one interviews to tailor the Biodiversity Action Plan to the needs of the 70 communities along the pipeline right of way. 4,500 participants identified priority species and existing community resources to initiate or continue conservation and monitoring work. • 2005, Hunt initiated Environmental Social Impact Assessment using communities' input and paid for community members to conduct water quality testing and surveys of key flora and fauna to check species’ health. 42 BCS & CommDev

Training and capacity building • Active and meaningful participation and monitoring on the part of company representatives and members of local communities requires skills and knowledge. • Examples of areas covered in such skills and knowledge development include financial literacy, participatory methods, and understanding of the impacts of extraction and lessons from other places. • Investing in these skills and knowledge can enhance the ability of all stakeholders, including the company, to participate constructively in decision-making. 43

Access to information • The widely accepted Extractive Industries Transparency Initiative (EITI) calls for companies and governments to disclose information about revenues and benefits in an understandable way, and to have the information verified by a third party. • Disclosing information about revenues and benefits is one of the most powerful ways to manage expectations. • When communities are able to scrutinize budgets, revenues and payments, they are also able to negotiate better for longer term and realistic solutions. • Transparency also promotes trust among companies, governments and communities. 44

Monitoring and measurement • Identification of measures and co-monitoring with multiple stakeholders increases company credibility and builds trust. • There are several examples of communities, companies and other actors jointly agreeing targets and indicators of progress. • Trust and credibility in the monitoring process is often enhanced by allowing local communities to take the lead in data collection and analysis. • Targets, tracked through agreed-upon indicators and metrics, ensure that company, community, government and other parties are all held accountable to their targets. 45

Tools and mechanisms in the project cycle • Information meetings • Co-monitoring • Contract negotiations Exploration Co-monitoring, measurement and verification Legacy Partner of choice • ESIA • Sourcing Feasibility • Company responsibility for unforeseen consequences • Co-identification of issues and indicators • Co-target setting: hiring, sourcing, training • Roles responsibilities agreements • Closure planning • Information sharing • Local skills training programs • Contract and concessions negotiations • Advocacy tools, accountability tools, and community capacity to hold company accountable for unforeseen consequences Expansion Divestment • Environmental restoration • Sustainable livelihoods • Transfer of assets Construction • Employment and training • Sourcing and procurement • Infrastructure access Operations • Employment and training • Sourcing and procurement • Community monitoring • Community reviews • Good neighbor agreements • Suggestion box • Interest group committees and forums • Community scorecard • Participatory sustainability planning and budgeting • Citizen report card • Co-budgeting • Support community forums • Company scorecard • Evaluation • Citizen report card 46

Success factors for co-planning Shared understanding and building legitimacy and trust may be accomplished through: Mutual respect Understanding the many actors Working within a dynamic community context Finding shared language Using appropriate communication styles Learning to work with shifts in power relations and changing levels of control Equity participation 47 47

Capacity Bldg: Workshop Objectives Convene teams composed of companies & local stakeholders to strengthen on-going community development plans; Provide an environment in which all parties can discuss openly their hopes and constraints; Pilot the application of new learning modules produced by CommDev and partners; Gather good practices and case examples from across the projects represented; Design practical next steps for each team to implement back at home; and Establish a regional community of practice to share experiences and provide peer mentoring.

Sponsors of recent Ghana workshop

Agenda Team Presentations Participatory Planning & Monitoring Local Conflict Mitigation Quantitative & Qualitative Indicators Open Space Discussions—you lead topics Field Training: Tarkwa Community Scorecard Action Planning in Teams Evaluation

Oil, Gas and Mining Sustainable Community Development Fund (CommDev )