Executive Summary – Thematic Review of Development Partnerships with Extractive firms in Peru, Burkina Faso and Ghana

The findings, conclusions, considerations and lessons listed below are those of the consultant and do not necessarily reflect the views of Global Affairs Canada (GAC) or the Government of Canada. Global Affairs Canada does not guarantee the accuracy of the information provided in this report. Global Affairs Canada will take into consideration the conclusions, lessons, and observations of the review in the development of any new programming with the private sector and civil society organizations in this area. The Government of Canada has not provided official development assistance to mining companies for international development projects. It provided funding to non-government organizations who, in the context of the policy framework at the time, wanted to pilot partnerships with mining companies.

Rationale and Purpose of the Review

Co-funding development projects with the extractive sector and civil society constitutes a new approach for GAC. The main purpose of this review was to assess the experience of partnerships established between non-governmental organizations (NGOs) and extractive firms on specific development initiatives.

GAC’s development cooperation experience in the extractive context is relatively recent and three of the five initiatives reviewed were pilot projects. Therefore, the review provides considerations—not recommendations—and lessons to guide development partners and decision makers.

Specific Objectives of the Review

• Examine and describe each development partnership between the extractive firms, NGOs, and other project partners
• Assess the value of the partnership to the partners and how these partnerships influence poverty-reduction initiatives
• Assess the effectiveness and efficiency of the projects
• Assess the relevance and sustainability of project results
• Assess the degree to which the cross-cutting issues of gender equality, environmental sustainability and governance have been integrated into the projects and partnerships.

Conclusions, lessons and considerations flowing from this comparative analysis are intended to inform future similar investments, whether by GAC or other entities.

Development Context

Following the launch of the 2009 Building the Canadian Advantage: A Corporate Social Responsibility (CSR) Strategy for the Canadian International Extractive Sector, the Minister for International Cooperation convened five roundtables with the extractive industry and civil society organizations. This triggered interest from both the mining companies and the NGOs to explore partnerships. GAC has since incorporated into its programming elements that will enhance the capacities of developing countries to manage their natural resources for the purpose of reducing poverty. For example, the Americas Branch had been working in the extractive sector for over a decade. It recently, launched the Andean Regional Initiative (ARI), through which 14 initiatives have been identified (at the time of the review). In similar fashion, the Partnerships for Development Innovation Branch (KFM) also approved three pilot projects designed to help countries manage their natural resources through support to NGOs that received co-financing from extractive firms.

Development Intervention

The poverty-reduction projects examined during this review adopted different partnership approaches and varied in design, sector and geographic focus. Yet, they all featured partnerships between NGOs and extractive firms. Three of the five projects were located in Peru. One was located in Ghana and the other was located in Burkina Faso. List of projects included in the review:

1. CARE Canada/Barrick Gold - Promoting Local Economic Development with Transparency and Dialogue between Communities, Local Governments and the Mining Company in Peru

March 2012-December 2014
Total value: $1.556 Million
GAC source of funding: ARI

This project sought to improve the income of approximately 8,250 individuals from 2,000 families in 20 communities located in three provinces of La Libertad region, located in Peru’s northern region. To achieve its objective, the project was to foster the agricultural and livestock farming sectors, as well as other derived productive activities; and to build local institutional capacity to promote and transparently manage related public investments.

2. World Vision Canada /Barrick Gold - Building Collaboration for Sustainable Economic Growth in Peru

June 2011 – December 2014
Total value: $1 Million
GAC source of funding: KFM

The goal of the project was to improve economic and social development in the district of Quiruvilca in the La Libertad region of Peru, with a particular emphasis on women and youth. World Vision Canada worked with the municipal government to improve public policy with the goal of achieving sustainable community development in Quiruvilca, the municipal district surrounding a mine owned by Barrick Gold. The project had a micro-finance component, targeting over 500 families to support the diversification of income-generating activities to increase the income and standards of living of men, women and youth.

3. World University Services Canada /Unión Andina de Cementos - Promotion of Youth Entrepreneurship and Employability in Southern Lima, Peru

March 2012 – March 2015
Total value: $1.433 Million
GAC source of funding: ARI

This project aimed at improving the economic status and living conditions of 650 youth from five impoverished districts located in Southern Lima (Villa María del Triunfo, Pachacamac, Lurín, Villa El Salvador, and San Juan de Miraflores). This objective was to be achieved by offering youth greater access to quality technical/vocational training in order to integrate them into the formal labour market, and by building entrepreneurial skills and promoting the creation of youth businesses.

4. Plan International Canada/IAMGOLD - Building Youth’s Human Capital for economic Growth: A Canadian Public-Private Partnership in Burkina Faso

August 2011 - July 2017
Total value: $7.575 Million
GAC source of funding: KFM

This project aims to develop the capacity of approximately 6,400 youth through vocational training centres and 3,390 youth through non-formal basic-education centres to develop job skills that met local labour market needs in communities in the southwest and north-central regions of Burkina Faso. It also involves building the capacity of the Ministry of Education by training instructors, developing curriculum and promoting better CSR practices for extractive industries in Burkina Faso.

5. World University Service of Canada /Rio Tinto Alcan - Bibiani- Anhwiaso-Bekwai District Assembly Development Project in Ghana

January 2011 – March 2014
Total value: $838 Thousand
GAC source of funding: KFM

The project aimed to improve the knowledge, coordination and overall capacity of the Bibiani-Anhwiaso-Bekwai (BAB) District Assembly for enhanced governance and service delivery to the residents of the district. More specifically, it sought to improve quality of education and access to clean water through teacher training, skills transfer and improved water services in 12 target communities, some of which were in the zone of influence of the former Rio Tinto Alcan mine. Economic growth and job creation was also sought through skills training and entrepreneurship in various areas for 325 youth, with a view to diversifying the local economy.

Review Approach and Methodology

The review used a case-study approach to answer the review questions, with the projects as the unit of analysis and comparison. While each project was unique, they all shared some key characteristics that could be compared and contrasted to assess commonalities and differences.

The review was qualitative, and involved primary and secondary data sources. Primary data were collected largely through key informant interviews, focus-group discussions with beneficiaries, and field observations in the localities where the selected projects were implemented. Secondary data were gathered through a review of project documents, such as logic models, performance-measurement frameworks, monitoring reports and reports on outputs and outcomes, etc.

Key Findings

Key findings of the review include the following.

What do the different actors bring to these partnerships?

The partners contributed significant financial and human resources, including in-kind resources, as well as experience and reputation.

In terms of financial resources, in four out of the five cases, GAC and the extractive firms contributed similar amounts of money and the NGOs contributed mostly in-kind resources to manage the relationships and the projects.`

What do they bring to the specific poverty-reduction projects?

In all of the projects reviewed, the NGO partners were the key project implementers and were primarily responsible for project results. The role and involvement of the extractive firms and GAC varied across projects.

In the majority of cases (three of five), the extractive firm acted mostly as a donor, after the design stage was completed, providing oversight and advice. In two projects, the extractive firms were directly involved in implementation, and opened doors to other local extractive firms and the private sector for their partner NGOs. In Burkina Faso, GAC was involved in one project component, helping to set up a national CSR network, with the assistance of the Canadian Extractive Firm.

According to the partners (Canadian and local), having DFATD as a partner brought rigour to their projects, in terms of results-based management, as well as visibility. DFATD financial participation also allowed for an increased scale of the initiatives. As well, some of the projects may not have proceeded without the DFATD funding.

The partners were also able to leverage each other’s experience and expertise, particularly that of the NGOs, which possess significant experience in poverty-alleviation projects, in engaging communities, and in building local capacity.

Local partners were both implementing partners and beneficiaries of the projects. As partners, they all contributed their experience and knowledge of the local context.

How did partners define goals? Was there joint decision-making and mutual accountability?

The NGOs consulted the extractive firms throughout the project. Ultimately, any decisions regarding changes or adjustments to the projects required GAC agreement.

In all of the projects reviewed, the NGOs and the extractive firms were jointly involved in designing the project. However, in three cases, the project was implemented by the NGO with little participation by the extractive firm.

In each project, the partners consulted one another when important changes in the project design or implementation were needed.

What were the roles in establishing partnerships and the strategies to maintain and nurture the partnerships?

Most of the extractive firms and NGOs involved in the partnerships had established relationships. In all cases, the partnerships were nurtured and maintained through regular, open and transparent communications and trust.

The expertise and capacity of the NGOs to implement capacity-development projects was valued by all partners at all levels (extractive firms at the HQ and national levels, as well as the local implementing partners). In addition, GAC’s financial contribution was valued, as it leveraged the extractive-firms’ resources and allowed the implementation of projects at larger scales than would have otherwise been possible.

Were cross-cutting themes (gender equality, environmental sustainability, and governance) integrated at the partnership level?

The cross-cutting themes were taken into account at the various stages of project design and implementation.

Assessment of the Poverty Reduction Projects

• Effectiveness

The projects reviewed had achieved or were on track to achieve the anticipated results. The review did not find evidence of unintended results in any of the projects reviewed.

• Sustainability

In all of the five projects, the review team concluded that the sustainability of the results achieved over time is uncertain, in large part due to the short duration of the projects and the complexity of the issues addressed, which require longer timeframes. In addition, in most cases it was not certain that the local governments would have sufficient resources available locally to sustain the project results over the longer term.

In four of the five cases, the review concluded that the projects needed more time to ensure institutionalization of the results. In these cases, the local governments, although they are supportive of the initiative, indicated in interviews that they did not necessarily have sufficient long-term resources to ensure that the results would be maintained over time. However, by design, the projects were not intended to have long time-frames.

• Relevance

In all of the projects reviewed, the objectives were relevant to the needs of the beneficiaries and the communities in their various contexts, as employment and poverty-alleviation are priorities in Peru, Burkina Faso and Ghana.

What were the strengths and weaknesses of the partnerships?

A key strength highlighted by all the partners was trust, as well as open and transparent communications.

However, the linkages and relations that exist between extractive firms and NGOs at their Canadian headquarters are not always maintained at the country and field levels.

Would the partners engage in similar partnerships with or without the GAC funding in the future?

Based on their experience to date, the extractive firms and the NGOs indicated that they were open to partnering again to implement poverty-alleviation projects. They did not indicate specific conditions other than that the right opportunity has to present itself. Most of the extractive firms involved indicated that in the future they would likely fund projects that are geographically closer to their mines.

The partners did not stipulate specific conditions to partner again. However, from the perspective of the NGOs, projects that aim to address complex poverty issues require durations of at least five years. The extractive firms indicated that they would prefer to implement future development projects closer to the mine footprint.

For the extractive firms, leveraging GAC funds was attractive as it permits the implementation of larger-scale initiatives than would otherwise be possible. Likewise, GAC representatives indicated that engaging extractive firms in the development process was motivated by the potential to leverage the resources of the private sector in a global environment, where it is valuable and appropriate to secure funds in addition to Official Development Assistance (ODA).

Key Conclusions

The key conclusions of the study include the following.

Assessment of the Partnership

The key conclusion regarding the partnerships between NGOs, extractive firms and GAC is that all of the partners committed either financial and/or human resources. As well, the level of collaboration, communications and trust was generally high, with a few exceptions.

In most cases, trust was based on the fact that the partners had previously worked together in smaller but similar projects, mostly financed by the extractive firms. The existence of the Devonshire Initiative Forum in Canada, where exchanges take place among NGOs, extractive firms and government officials, was also a major contributing factor to building trust between the NGOs and extractive firms. The fact that in most cases each partner had carried out a due-diligence process also contributed to a high level of trust.

The above notwithstanding, the review team noted that sometimes the levels of trust, communications and collaboration characteristic of the Canadian partners were not as evident at the country level. Often local staff operated more or less independently, and did not always view the collaboration as positively as the Canadian headquarters staff.

In general, the partnerships leveraged existing experience and expertise. The NGOs involved all have track records in the recipient countries in implementing transformative processes, which they applied to the initiatives under review. Extractive firms are key economic actors, influential at the national, regional and local levels, and can open doors for their NGO partners with local private and public actors.

In all the cases, the partners designed the projects together and the initiatives were relevant to the needs of the local population. However, in three cases the NGO implemented the project on its own with little participation from the extractive firm or GAC, aside from project monitoring. However, the review concluded that in all cases, the partnerships made significant strides towards achieving the expected results.

As a donor, GAC gave these projects greater visibility, credibility, and brought rigour in terms of achieving results. Its financial participation increased the scale of the initiatives, and the leveraging of resources.

Assessment of the Poverty Reduction Projects

The key conclusion regarding the effectiveness of the partnership projects implemented by NGOs in partnership with the extractive firms and GAC is that, as for any other project, many factors influence outcomes, including context, scope, strategies, experience, local ownership, duration, etc.

Given the challenges that the initiatives experienced, particularly the short duration of most of the projects in relation to the complex issues addressed, the sustainability of the results over the long term is far from certain. It must be acknowledged, however, that three of the initiatives were pilot projects.

Based on the findings of the review, the review team concluded that the NGOs and extractive firms would likely partner again, but the scope of the partnership projects would depend on the resources available and the nature of the project.

Key Lessons

The lessons generated from the study include the following:

Conditions that Facilitate Effective Partnerships

Effective partnerships require effective relationships between people.

The partnership projects explored in this review demonstrate that the individuals responsible for building and maintaining the partnerships were at least as important as the organizations themselves. Indeed, several projects suffered when individuals with whom relations had been built left.

Effectively Addressing Challenges and Opportunities

The need to plan effectively from the outset for complex, multi-stakeholder initiatives involving HQ in Canada and the developing country as well as local offices near or at the project site was identified as a key lesson.

Advice from those involved in the projects reviewed suggests the importance of governance structures such as: overarching strategies, steering committees, formal Memoranda of Understanding, communication plans, etc. These take on added significance when bringing together the diverse expectations and interests involved in this type of partnership.

Transformative change requires a long-term commitment.

For a partnership project to be truly transformative, the partners need to be committed for the long term, and ideally the funding has to be available to ensure continuation of activities. For the projects to result in transformative change, both the extractive firm and the community must be committed and involved in the change process.

In the future, GAC could give consideration to developing and providing guidance on the requirements of a transformative development process for similar types of partnerships that may be undertaken with support from GAC.

Demonstration Partnership Projects are a way of influencing the extractive companies

Demonstration CSR projects can have an impact on other mining firms in their geographic area, in terms of influencing their approach to CSR.

Circumstances under Which Partners Should Develop New Projects

Partnerships should be used to develop new projects when their potential contributions to the project are complementary.

Aside from the issues of shared vision and values mentioned above, partners should also have unique and complementary skill sets. The ability to draw on the strengths of each partner in a public-private partnership has been a success factor for most of he projects reviewed for this study, while the inability to do so has been detrimental to some.

Mitigation of Problems

Open and ongoing communication is paramount, particularly in times of crisis.

Given the relative novelty of such partnership arrangements, and the sometimes arduous environments in which they work, challenges should be anticipated and planned for.

Key Considerations

A key consideration for GAC, if it wishes to engage in similar partnerships in the future, is to develop a clear strategy that provides guidelines for GAC, extractive firms, NGOs, local governments, the private sector and communities on how to engage in a planning process that will promote a shared vision of what will lead to sustainable, positive outcomes for the population.

The guidelines should integrate the characteristics outlined in the International Council on Mining and Metals (ICMM’s) Opportunities for Mining and Poverty Reduction and the characteristics of the transformative initiatives presented in the methodology section of the Review.

One area that one project tried to address is building the capacity of local groups to develop sustainable businesses that can be part of the mine supply-chain. This responds to the need in many mining communities to diversify their economies and ensure that revenue streams will exist when the mine finally closes. It would be useful to explore and learn from successful practices in supply-chain development in mining environments.

The importance of fully appreciating the local operating context is a valuable consideration for any similar future partnership initiative, as is matching commitment and resources with the scale and complexity of the issues to be addressed. This would be particularly true for extractive firms that operate in the context of structural poverty and weak governance.

It would also be useful to review the lessons identified from these partnerships regarding external communications with the media and between NGOs and extractive firms.

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