Christopher Sheldon Senior Mining Specialist Mining Policy Division The World Bank Group Integrating Local Economic Development into World Bank Mining Projects. _________________________________________ Integrating Local Economic Development into World Bank Mining Projects. _________________________________________ The World Bank Group Mining Department January 10, 2005

Local Economic Development and Mining Leverage mining investment to achieve better local economic development. Use local economic development to grow and diversify the economy in Mine Closure affected communities. Utilize the LED Strategic Approach (The 5 Stages) Typically use lending to: Help Local Government take the lead. Involve other stakeholders Support strategy development Fund strategy implementation Monitoring and Evaluation

Project Examples Mauritania Mining Sector Capacity Building TA Project  Leveraging the mining sector for broader development  $18 million with $6.5million for Local Economic Development of Mining Areas to: (i) diversify the local economic base by seeking alternative economic activities, (ii) fund a small grants program to provide necessary funds to small businesses and entrepreneurs seeking to increase or diversify their productive capabilities (including support through advisory services); (iii) strengthen the capacity of local authorities for the delivery of social services; (iv) develop hydrogeological studies and works to improve the availability of water in the region; and (v) strengthen the regional development management capacities, especially in the environmental and social areas.

Project Examples Romania Mine Closure, Environmental and Socio- economic Regeneration Project.  Supporting communities affected by mine closure.  Specific Investment Loan $120 million with $60 million for socio-economic regeneration.  Initial approach was “social mitigation”. Job Creation in Mining Regions. (From 1 st Mining Project). Scaled up to $24.3m. Employment and Training Incentive Scheme Workspace Centers and New Business Services Micro Credit  New approach to communities for Capacity Building and Local Development $30 million.

Romania Mining: Additional New Approach to Communities $13.5 million Municipal Infrastructure $13.3 million Social Development Scheme $2.6 million Small Grants Scheme Strategic Planning Community Capacity Building $0.64 million

Practical Implications for Lending Bank likes to fund something that is defined. LED is a process. The activities that come out of this process are not yet known. What can been done? 1) Funding a process to develop a strategic plan 2) Mechanisms to fund or support funding of LED program. Need to establish some boundaries of what will and will not be financed. Environmental and Social Safeguards Emphasize using Bank finance to leverage other development funds.e.g. feasibilities studies to access other development funds (such as EU funds). 3) Manage expectations.

Practical Implications for Lending (continued). Frameworks.  Operational Manual  Safeguard Frameworks – Environmental and Social (e.g. and Involuntary Resettlement)  Example: Municipal Infrastructure Environmental Framework. What types of infrastructure will or will not be funded. Procedures for compliance with national environmental legislation How the Bank safeguard policies will be met, including consultation, disclosure and environmental assessment. Institutional arrangements and capacity Funding Mechanisms  Funds allocated through a demand driven, participatory process.  Covered by an operating manual with clear selection criteria.  Ensure sufficient capacity to implement. E.g. PIU and RSDF

Other Issues Project Life  Typical Bank project is 4 to 5 years. Too short for full development and implementation of a Local Economic Development Strategy.  BUT sufficient to organize the effort, develop a strategy, implement (or commence) key actions and build capacity for post project.  Therefore need to build sustainability into the design. Compatibility of Bank Procedures to Other Donor Procedures  EU has large funds available for infrastructure but requires local participation. Bank could fund local contribution if EU and Bank procedures compatible (work currently in process). Finding Our Niche  LED component in a sectoral operation.  Using Bank Funds to leverage more assistance. E.g. Planning process, Feasibility studies, Counterpart funding