Javier Aguilar

26 Pages·2009·1.84 MB·English

Enhancing Local Benefits
from extractive industries investments:
the public investment channel
Javier Aguilar, ELB program manager
EI week, Washington DC, March 2009
ELB
E
nhancing managerial and oversight capacities
L
for reaching ocal communities which
B
expect to (should) receive tangible
enefits
from extractive industries investments
Outline
1. The Public Investment Channel: ELB’s framework
2. IFC’s ELB Advisory Program: LAC experience
3. Building blocks: adjustable to country context
1. The Public Investment Channel:
ELB’s framework
• Importance of benefiting communities affected by
extractive industries investments:
- clear macro benefits: taxation, fiscal revenues, exports
- what are the actual/expected local benefits?
• Alternatives: CSR, Procurement, Employment, Fiscal
-
+
outreach
1. The Public Investment Channel:
ELB’s framework
Extractive Industry Companies Yields Benefits to Communities
Amount
invested
depends on the
Community company
Investment
Employment
Suppliers, spin off businesses
Royalties, Revenues and Taxes to Government
1. The Public Investment Channel:
ELB’s framework
• Government (national, subnational) responsibilities:
to provide access to basic services, rural infrastructure
and technical assistance
• Restriccions: mandatory (voluntary), defined public
sector rules (private)
• Source of fiscal revenue: tax, royalty or participation
• Legal foundation: single contract, sectoral law,
decentralization framework
• Design: share, distribution, allocation, administration,
reporting, accountability
1. The Public Investment Channel:
ELB’s framework
The Challenge:
Support EI investments
TThhee 44RR cciirrccllee
in effectively
contributing to local
11.. RReessoouurrcceess
22.. RReessuullttss
development
AAssssoocciiaatteedd ttoo eexxttrraaccttiivvee
IImmpprroovveedd sseerrvviicceess
iinndduussttrriieess’’ ooppeerraattiioonnss
SSaattiissffiieedd bbaassiicc nneeeeddss
44.. RReecceeppttiivviittyy
33.. RReeccooggnniittiioonn
ffrroomm tthhee ppooppuullaattiioonn ttoowwaarrddss
OOff tthhee iimmppaacctt tthhaatt eexxttrraaccttiivvee
EExxttrraaccttiivvee iinndduussttrriieess
IInndduussttrriieess ccaann hhaavvee
2. IFC´s ELB Advisory Program: LAC experience
• Started operations in LAC on March 2005
Enhancing the development
Objective performance of large investments
from oil, gas and mining sectors.
• Focused on extractive industries: Royalties at the
sub-national level
We provide advisory services on:
• Revenue Management: Improve local public
investment performance financed by royalty
transfers.
• Social Accountability: Empower civil society
to help local governments become socially
accountable.
2. IFC´s ELB Program: LAC experience
Evolution of Oil and Mining Royalty Transfers in Colombia and Peru
2,000
Situation of EI in Peru and
Colombia 1,800
Royalties transfers in Colombia Mining Canon transfers in Peru
1,600
High royalties flows BUT local
1,400
poor communities are not
n1,200
benefiting – high potential for o
i
l
l
i1,000
development impact. M

$
S 800
U
• missing opportunity for local
600
development
400
•negative effect on EI 200
investment in the region. 0
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
How we are doing it:
Pilot: Cajamarca (Yanacocha) capacity building/monitoring
Publicize Results: Industry fora/Business Development
Replicate: Peru/Colombia – Several OGM companies
Scale up: Industry Programs in Peru and Colombia/Toolkits
Pilot Project
Example: Baños del Inca, Cajamarca
• Objective: improve local government use of mining royalties for public
investment
Annual Investment at District Municipality of Los Baños del Inca
8
6.7
7
6
n5
o
i
ll 3.6
Mi4

$
S3
U
2 1.4
0.7 0.6
1
0
2002 2003 2004 2005 2006
Results
Municipal investment increased from $1.4 mm (2004) to $6.7
mm (2006).
• # of projects increased from 33 (2004) to 188 (2006).
• Key sectors targeted: health & education (41%), electricity
and infrastructure (21%), local economic development
(28%).