MACIG Connect Series
The Canadian International Resource and Development Institute (CIRDI) explains how it is working with the Ethiopian Ministry of Mines to develop the country’s mining sector.
CIRDI is an organization created with the support of the federal government of Canada that has projects in Latin America, Asia and in Africa. What is the organization’s mandate and how does the SUMM project help to achieve that objective?
CIRDI is an expression of Canada’s evolving role in developing countries through the sharing of Canadian expertise and experience to governments that request support for global and systematic reforms of their natural resource sector to result in sustainable natural resource management. CIRDI’s mission is to exchange knowledge and expertise with developing countries that enables leading-practice natural resource governance, environmental stewardship, gender equality and ultimately, poverty reduction.
Our projects are designed and delivered collaboratively to meet the needs of our developing country partners in alignment with the following three focus areas:
- Improving Public Sector Capacity and Governance
- Strengthening Integrated Resource Management
- Transforming Artisanal and Small-scale Mining
The SUMM (Supporting the Ministry of Mines) project is a direct response to a request from the Ethiopian government to assist with strengthening its capacity to sustainability manage and govern its natural resources for long term growth and prosperity in a systemic way through fundamental reforms. The SUMM project is CIRDI’s primary project under the public sector capacity development focus area.
The SUMM project in Ethiopia is a five year initiative. During that time, what approach will CIRDI take to assist the Ethiopian government in improving the outlook of the nation’s mining sector?
The SUMM project was designed in collaboration with its funder, Global Affairs Canada, but also is the result of a very inclusive and participatory process that ensured the Ethiopian Ministry partners were in the driver’s seat. Following initial planning and discussions, the project was designed to align with Ethiopia’s national regulatory framework and national strategic plans and policy documents, which is a very central piece to the approach and the request of the Ethiopian partners.
Regarding the regulatory environment in Ethiopia, what have been identified as key areas for reform?
Through the process of discussion and assessment with the Ethiopian authorities, the SUMM project has been designed around four key components. The first of these is a thorough reform of the mineral licensing sector. This includes a review of all the norms and standards that are applicable to the entire mining cycle, from mine exploration to closure. A consistent, predictable and transparent licensing system including an enhanced cadastre system and web portal will be developed to increase the transparency and performance of mineral licensing and administration. The second component is related to developing the capacity of the Ministry at institutional, organizational and individual levels to manage the new legal and regulatory environment that will be created through the SUMM project. The third component is related to holistic reform and consolidation of the geoscience sector including the Geological Survey of Ethiopia, to support promotion and development of the Ethiopian mineral sector. This includes development of a geospatial database management system to collect, analyze, manage and disseminate geoscience information. The fourth component is related to development of knowledge and skills toward strategic management of the sector. This will occur through provision of more accurate and useful information on a regular basis. None of these components necessarily signifies readopting laws, but it will require some changes or adjustments to either the Ministry’s rules or accepted norms to fill the gaps. The overarching goal is to establish more coherence within the sector and for this coherence to be reflected by the delivery of effective and efficient services within the sector which will enable a positive environment for investment.
What can a private company interested in investing in Ethiopia expect when they arrive, and what is the attitude towards foreign investment from the government?
Ethiopia has a rich endowment of mineral resources including gold, gemstones and industrial minerals. As the country’s mining sector is still in the early stages, the mineral sector represents an area of untapped potential. The government has set a goal within its national strategic plan to increase the industry’s contribution to GDP from 1.5% to 10%. As such, companies entering the mineral sector in Ethiopia will find there is a great deal of information available, as well an open approach from the government. This reflects Ethiopia’s desire to be an equal and trusted partner with the international investment community. However, information and services are not currently provided through a one-door policy, which is something the Ministry wishes to create to support investors. The consolidation of information related to geology and the mineral potential of Ethiopia is also available but has not yet been translated into concrete, user-friendly tools and services. It is therefore difficult for investors to see the country’s full potential. At the same time, Ethiopia is one of the most ancient countries in Africa with a history of independence. As such, its approach is to retain its sovereignty in the way it governs and engages with international companies. In addition, despite recent political unrest in the regions, Ethiopia remains one of the most stable and predictable governments in the region, if not the continent.
Which regions in Ethiopia are the most relevant for mining operations?
There are some regions that have not had much exposure to the mineral extractive sector that are interested in gaining an enhanced understanding of their environment. We see four regions where there is particular interest. These include: Oromia, which currently has the largest potential for mining; Somali, which has seen recent exploration of natural gas; the Southern Nations, Nationalities and People’s Region (SNNP), which have been very vocal in expressing the need for better organization of the sector; and Tigray, which has also been quite active.
How can CIRDI assist the private sector in navigating a relationship with Ethiopia?
One of the difficulties in the extractive sector is that enterprises have a tendency to hold one-on-one discussions, or seek only privileged access to decision-makers. However, the reality of the sector requires greater transparency and that discussions take place through proper channels. The Ministry has requested that CIRDI organize stakeholder meetings that will enable opportunities to hold discussions with the Ministry resulting in a more open and clear line of communication and clarity on how to follow laws and regulations at the federal and regional level. The SUMM project is also addressing ways to assist the Ministry of Mines and enterprises that are seeking to establish fair and durable community agreements as they move forward with the exploration process. Our goal is to support the development of an enabling environment and to provide clarity on the rules enterprises must follow as they interact with the communities in order to result in a win-win situation for all stakeholders. SUMM is seeking better cohabitation between the ASM and larger scale mining operations.
Looking to the future of the sector, what message would you send about the direction you see the government taking the extractives industry as it continues to develop?
Ethiopia, as a newcomer to the mining sector, wishes to approach the organization of the industry in a proper and systemic manner. Ethiopia tends not to flaunt itself as a country. Its people are traditionally humble and pragmatic – they want to do things right. The government is trying to build a transparent and functional environment that levels the playing field for everyone and would like to develop the capacity to define its own destiny. This means that the mineral sector must be developed in a fair and balanced way so that it is profitable and equitable for foreign enterprises, while still ensuring development of the local supply and value chain.