Mining In Africa - World Bank
Mining in Africa
Mining in AfricaAre Local CommunitiesBetter Off?Punam Chuhan-Pole, Andrew L. Dabalen, and BryanChristopher Landin collaboration with Michael Lewin, Aly Sanoh,Gregory Smith, and Anja TolonenA copublication of the Agence Française de Développement and the World Bank
2017 International Bank for Reconstruction and Development / The World Bank1818 H Street NW, Washington, DC 20433Telephone: 202-473-1000; Internet: www.worldbank.orgSome rights reserved1 2 3 4 20 19 18 17This work is a product of the staff of The World Bank with external contributions. The findings, interpretations,and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board ofExecutive Directors, or the governments they represent, or the Agence Française de Développement. The WorldBank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations,and other information shown on any map in this work do not imply any judgment on the part of The World Bankconcerning the legal status of any territory or the endorsement or acceptance of such boundaries.Nothing herein shall constitute or be considered to be a limitation upon or waiver of the privileges andimmunities of The World Bank, all of which are specifically reserved.Rights and PermissionsThis work is available under the Creative Commons Attribution 3.0 IGO license (CC BY 3.0 IGO), http://creativecommons.org/licenses/by/3.0/igo. Under the Creative Commons Attribution license, you are free to copy,distribute, transmit, and adapt this work, including for commercial purposes, under the following conditions:Attribution—Please cite the work as follows: Chuhan-Pole, Punam, Andrew L. Dabalen, and Bryan ChristopherLand. 2017. Mining in Africa: Are Local Communities Better Off? Africa Development Forum series. Washington,DC: World Bank. doi:10.1596/978-1-4648-0819-7. License: Creative Commons Attribution CC BY 3.0 IGOTranslations—If you create a translation of this work, please add the following disclaimer along with theattribution: This translation was not created by The World Bank and should not be considered an official World Banktranslation. The World Bank shall not be liable for any content or error in this translation.Adaptations—If you create an adaptation of this work, please add the following disclaimer along with the attribution:This is an adaptation of an original work by The World Bank. Views and opinions expressed in the adaptation arethe sole responsibility of the author or authors of the adaptation and are not endorsed by The World Bank.Third-party content—The World Bank does not necessarily own each component of the content contained withinthe work. The World Bank therefore does not warrant that the use of any third-party-owned individual component or part contained in the work will not infringe on the rights of those third parties. The risk of claims resultingfrom such infringement rests solely with you. If you wish to re-use a component of the work, it is your responsibility to determine whether permission is needed for that re-use and to obtain permission from the copyright owner.Examples of components can include, but are not limited to, tables, figures, or images.All queries on rights and licenses should be addressed to World Bank Publications, The World Bank Group,1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2625; e-mail: pubrights@worldbank.org.ISBN: 978-1-4648-0819-7eISBN: 978-1-4648-0820-3DOI: 10.1596/978-1-4648-0819-7Cover layout: Critical StagesCover photo: Michael Swerdlyk. Used with the permission. Further permission is required for reuse.Library of Congress Cataloging-in-Publication Data has been applied for.
Africa Development Forum SeriesThe Africa Development Forum Series was created in 2009 to focus on issuesof significant relevance to Sub-Saharan Africa’s social and economic development. Its aim is both to record the state of the art on a specific topic and tocontribute to ongoing local, regional, and global policy debates. It is designedspecifically to provide practitioners, scholars, and students with the mostup-to-date research results while highlighting the promise, challenges, andopportunities that exist on the continent.The series is sponsored by the Agence Française de Développement and theWorld Bank. The manuscripts chosen for publication represent the highestquality in each institution and have been selected for their relevance to thedevelopment agenda. Working together with a shared sense of mission andinterdisciplinary purpose, the two institutions are committed to a commonsearch for new insights and new ways of analyzing the development realities ofthe Sub-Saharan Africa region.Advisory Committee MembersAgence Française de DéveloppementGaël Giraud, Executive Director, Research and KnowledgeMihoub Mezouaghi, Deputy Director, Research and KnowledgeGuillaume de Saint Phalle, Head, Knowledge Management DivisionFrançoise Rivière, Head, Research DivisionWorld BankAlbert G. Zeufack, Chief Economist, Africa RegionMarkus P. Goldstein, Lead Economist, Africa Regionv
Sub-Saharan AfricaIBRD39088
Titles in the Africa Development Forum SeriesAfrica’s Infrastructure: A Time for Transformation (2010) edited by Vivien Fosterand Cecilia Briceño-GarmendiaGender Disparities in Africa’s Labor Market (2010) edited by Jorge Saba Arbache,Alexandre Kolev, and Ewa FilipiakChallenges for African Agriculture (2010) edited by Jean-Claude DevezeContemporary Migration to South Africa: A Regional Development Issue (2011)edited by Aurelia Segatti and Loren Landau* Light Manufacturing in Africa: Targeted Policies to Enhance Private Investmentand Create Jobs, «L’industrie légère en Afrique : Politiques ciblées pour susciterl’investissement privé et créer des emplois» (2012) by Hinh T. Dinh, VincentPalmade, Vandana Chandra, and Frances Cossar* Informal Sector in Francophone Africa: Firm Size, Productivity, and Institutions,«Le système d’approvisionnement en terres dans les villes d’Afrique de l’Ouest :L’exemple de Bamako» (2012) by Nancy Benjamin and Ahmadou Aly Mbaye* Financing Africa’s Cities: The Imperative of Local Investment, «Financer lesvilles d’Afrique : L’enjeu de l’investissement local» (2012) by Thierry Paulais* Structural Transformation and Rural Change Revisited: Challenges for LateDeveloping Countries in a Globalizing World, «Transformations rurales etdéveloppement : Les défi s du changement structurel dans un monde globalisé»(2012) by Bruno Losch, Sandrine Fréguin-Gresh, and Eric Thomas WhiteThe Political Economy of Decentralization in Sub-Saharan Africa: A NewImplementation Model (2013) edited by Bernard Dafflon and Thierry MadièsEmpowering Women: Legal Rights and Economic Opportunities in Africa (2013)by Mary Hallward-Driemeier and Tazeen HasanEnterprising Women: Expanding Economic Opportunities in Africa (2013) byMary Hallward-DriemeierUrban Labor Markets in Sub-Saharan Africa (2013) edited by Philippe DeVreyer and François RoubaudSecuring Africa’s Land for Shared Prosperity: A Program to Scale Up Reforms andInvestments (2013) by Frank F. K. Byamugisha* Youth Employment in Sub-Saharan Africa, «L’emploi des jeunes en Afriquesubsaharienne» (2014) by Deon Filmer and Louis Foxvii
viiiTITLES IN THE AFRICA DEVELOPMENT FORUM SERIESTourism in Africa: Harnessing Tourism for Growth and Improved Livelihoods(2014) by Iain Christie, Eneida Fernandes, Hannah Messerli, and LouiseTwining-Ward* Safety Nets in Africa: Effective Mechanisms to Reach the Poor and MostVulnerable, «Les fi lets sociaux en Afrique : Méthodes effi caces pour ciblerles populations pauvres et vulnérables en Afrique» (2015) edited by Carlo delNinno and Bradford Mills* Land Delivery Systems in West African Cities: The Example of Bamako, Mali,«Le système d’approvisionnement en terres dans les villes d’Afrique de l’Ouest:L’exemple de Bamako» (2015) by Alain Durand-Lasserve, Maÿlis DurandLasserve, and Harris SelodEnhancing the Climate Resilience of Africa’s Infrastructure: The Power and WaterSectors (2015) edited by Raffaello Cervigni, Rikard Liden, James E. Neumann,and Kenneth M. Strzepek* Africa’s Demographic Transition: Dividend or Disaster? «La transition demograpique de lAfrique» (2015) edited by David Canning, Sangeeta Raja, and AbdoS. YazbeckThe Challenge of Fragility and Security in West Africa (2015) by Alexandre Marc,Neelam Verjee, and Stephen MogakaHighways to Success or Byways to Waste: Estimating the Economic Benefits ofRoads in Africa (2015) by Ali A. Rubaba, Federico Barra, Claudia Berg, RichardDamania, John Nash, and Jason RussConfronting Drought in Africa’s Drylands: Opportunities for Enhancing Resilience(2016) edited by Raffaello Cervigni and Michael Morris* Reaping Richer Returns: Public Spending Priorities for African AgricultureProductivity Growth (2017) by Aparajita Goyal and John NashMining in Africa: Are Local Communities Better Off? (2017) by PunamChuhan-Pole, Andrew L. Dabalen, and Bryan Christopher Land* Available in FrenchAll books in the Africa Development Forum series are available for free /2150
ContentsForewordAcknowledgmentsAbout the AuthorsAbout the ContributorsAbbreviations1 OverviewIntroductionA Framework to Measure How Local Communities Capture BenefitsThe Approach to Assessing the Local Effects of MiningAre Mining Communities Seeing Welfare Gains?Assessing the Role of GovernmentPolicy Priorities for Addressing the Local Impacts of 2931312 Local Impacts of Resource Abundance: What Have We Learned? 33IntroductionTheory and Evidence on the Impact of Resource Abundanceat the Country LevelAssessing the Local Impacts of Resource AbundanceConclusionAnnex 2A: Schematic Model of Resource Endowment ChangesNotesReferences33343956575860ix
xCONTENTS3 Insights from Three Country Case StudiesIntroductionCountry Backgrounds: Gold Mining in the Case Study CountriesChannel 1: Employment, Linkages, and Positive SpilloversChannel 2: Government RevenueNegative Externalities: The Costs Borne by Mining AreasOutcomesConclusionsNotesReferences4 Socioeconomic Effects of Large-Scale Gold Mining:Evidence from Ghana, Mali, and TanzaniaIntroductionGold Mining in Ghana, Mali, and TanzaniaEmpirical MethodologyEvolution of Trends in Mining and Nonmining AreasLivelihoods and OccupationsHousehold Accumulation of AssetsChild HealthAccess to Infrastructure for Welfare BenefitsControlling for Mine-Induced MigrationSummary of ResultsAnnex 4A: Variable Definitions for Demographic andHealth Surveys and Outcomes for Variables from SyntheticControl Analysis in Mali and TanzaniaNotesReferences5 Does Mining Reduce Agricultural Growth? Evidence fromLarge-Scale Gold Mining in Burkina Faso, Ghana, Mali,and TanzaniaIntroductionRemote Sensing and Economic ActivityDataGrowth Model and 05118121131133137139145145147147148151154165
CONTENTSAnnex 5A: District-Level Growth Pattern .21.33.14.14.2Environmental and Health Issues in Gold Mining AreasWhat Is a Mining Community?How Remote Sensing Informs Agricultural ProductionArtisanal and Small-Scale MiningSmall-Scale Mining Poses Challenges for IdentifyingImpacts of Large-Scale MinesEffect of a Mine Opening on Household Access toSanitation in Mali912217099125Figures1.11.21.3GDP Growth by Country Groups, 2000–14Mine Openings, 1870–2014Human Development Index Scores in Selected AfricanCountries, 20131.4Channels through Which Natural Resource AbundanceAffects Local Communities1.5How Market and Fiscal Mechanisms Affect Well-Being1.6Gold Production in Ghana, Mali, and Tanzania, 1980–2011B1.2.1 Gold Mines in Mali and Spatial Buffers1.7Spatial Lag Model Illustrating the Geographic Distributionof Effects on Services Sector and Agricultural Employmentfor Women in Ghana, Mali, and Tanzania1.8Spatial Lag Model Illustrating Agriculture, Manual Labor,Mining, and Wage Earnings for Men in Ghana and Mali1.9Changes in Income, Wages, and Expenditures in Ghana1.10Night Lights and Normalized Difference Vegetation Indexbefore and after a Mine Opening1.11Ownership of Assets from a Mine Opening in Ghana,Mali, and Tanzania1.12Household Access to Infrastructure with a Mine Openingin Ghana, Mali, and Tanzania224571113171820222324
.83.93.103.113.124.14.24.34.4CONTENTSChild Health Outcomes from a Mine Opening in Ghana,Mali, and TanzaniaAccess to Health Services for Children in MiningDistricts in GhanaGovernment Mining Revenues from Mining in Ghana,Mali, and Tanzania, 2001–13Effects of a Fiscal Revenue WindfallEffects of a Local Demand ShockNegative Externalities of Environmental PollutionChanges in Resource EndowmentsGold Exports in Ghana, Mali, and Tanzania, 2000–13Gold Exports as a Share of Total Exports in Ghana, Mali, andTanzania, 2000–13Mining Employment in Tanzania, 2005–13Employment in Mining in Mali and Tanzania, 2005–13Share of License Fees and Local Development Funds in Mali’sCommunes, 1994–2010Government Mining Revenues in Ghana, Mali, and Tanzania,2001–13Government Mining Revenues as a Percentage of Total Revenuein Ghana, Mali, and TanzaniaFiscal Burden in MaliSource of Budget Revenues for Mining Communes andNeighboring Communes in Mali, 2011–13Poverty Headcount in Mining and Other Areas in MaliPopulation Growth Rate by Group of Communes and MiningCommunes in Mali, 1998–2009Registered Firms by Employment in Four Tanzanian Towns,2001 and 2011Gold Production in Ghana, Mali, and Tanzania, 1980–2011Parallel Trends in Night Lights and Infant MortalitySpatial Lag Model Illustrating Geographic Distributionof Effects on Services Sector and Agricultural Employment forWomen in Ghana, Mali, and TanzaniaSpatial Lag Model Illustrating Migrants and Never-Movers,by Occupation in Services and Agriculture in Ghana, Mali,and 4108109
CONTENTSSpatial Lag Model Illustrating Agriculture, Manual Labor,Mining, and Wage Earnings for Men in Ghana and Mali4.6Spatial Lag Model Illustrating Geographic Distribution ofEffects on Household Radio Ownership in Ghana, Mali,and Tanzania4.7Spatial Lag Model Illustrating Geographic Distribution ofEffects on Radio Ownership for Migrants and Nonmigrantsin Ghana, Mali, and Tanzania4.8Child Health Statistics in Mining and Nonmining Areas inGhana, Mali, and TanzaniaB4.2.1 Spatial Lag Model Illustrating Household Access toToilets in MaliB4.2.2 Spatial Lag Model Illustrating No Toilet or PitToilet among Migrants and Never-Movers in Mali4.9Diarrhea Incidence in Ghana for Children under Age 5,by Migration Status4.10Spatial Lag Model Illustrating Geographic Distributionof Effects on Electricity in Ghana, Mali, and Tanzania4.11Spatial Lag Model Illustrating Access to Electricity forMigrants and Never-Movers in Ghana, Mali, and Tanzania4.12Migration to Mining Areas in Ghana, Mali, and Tanzania5.1Actual and Predicted Log (GDP) Using Three DifferentModels in Burkina Faso, Ghana, Mali, and Tanzania, 2001–125.2Night Lights and Normalized Difference Vegetation Indexover a Mine’s Lifetime5A.1 GWR-Local R-Squared for Relationship between DependentVariable Total Agricultural Production, by Districtand Independent Variable NDVI Intensity Sum, by District5A.2 Log (global light sum), 2008–125A.3 Correlation between GDP and Household Expendituresper Capita Levels for Ghana, 1991/92 and 2005/065A.4 Correlation Between Night Light Intensity and Populationat District Levels for Ghana, 168170170Maps4.14.24.3Large-Scale Gold Mines and Other Mines in AfricaGold Mines and Gold Districts in GhanaGold Mines and Gold Districts in Mali929596
xivCONTENTS4.44.55.15A.1Gold Mines and Gold Districts in TanzaniaGold Mines in Ghana and Spatial BuffersGeographically Weighted Regression, by District inGhana, Mali, and Tanzania, 2007Spatial Analysis of Average Growth in Districts, Estimatedby Growth Model in Burkina Faso, Ghana, Mali, and 3.23.34.14.24.34.44.54.64.74.84.9Empirical Evidence of the Impact of Resource Abundanceon Local GrowthEmpirical Evidence of the Impact of Resource Abundanceon Local Living StandardsEmpirical Evidence of the Impact of Resource Abundanceon Corruption and ConflictEmpirical Evidence of the Impact of Mining-Related PollutionSectoral Spending, by Commune, of Mining DevelopmentFunds in Mali, 1994–2010Use of Infrastructure Services, by Group of Communesin Mali, 1998 and 2009Infrastructure Outcomes, by Group of Communes in Mali, 2013Mines in Ghana, Mali, and Tanzania, 1990–2011Household Survey Data for Ghana, Mali, and TanzaniaSummary Statistics from Demographic and HealthSurveys in Ghana, Mali, and TanzaniaOccupations of Men and Women in Proximity toMines in Ghana, Mali, and TanzaniaDistrict-Level Effects on Occupation in Ghana’s Goldand Neighboring DistrictsDistrict-Level Effects on Employment in Gold Districtsin Mali and TanzaniaChanges in Income, Wages, and Expenditures in GhanaMapping Changes in Expenditure Composition in Ghana,Using the Living Standards SurveyWealth Outcomes for Variables from Synthetic ControlAnalysis in Tanzania4748515376858594103105107112113116116117
.24A.35.15.25.35.45.55A.1Wealth Outcomes for Variables from Synthetic ControlAnalysis in MaliHousehold Asset Accumulation in Ghana, Mali, and TanzaniaHousehold Asset Accumulation by Migration Status in Ghana,Mali, and TanzaniaHealth Outcomes in Infancy and Children under Age 5 inTreatment DistanceDistrict-Level Effects on Access to Health Services forChildren in Ghana’s Gold DistrictsHealth Outcomes for Variables from Synthetic ControlAnalysis in TanzaniaHealth Outcomes for Variables from Synthetic ControlAnalysis in MaliChild Health among Migrants and Never-Movers inGhana and MaliHousehold Access to Infrastructure in Ghana,Mali, and TanzaniaVariable Definitions for Demographic and Health SurveysOutcomes for Variables from Synthetic Control Analysis, MaliOutcomes for Variables from Synthetic Control Analysis,TanzaniaSatellite-Year Pairs Used for Intercalibration CoefficientsEstimated Growth, Using Remote Sensing Data in Burkina Faso,Ghana, Mali, and TanzaniaObserved and Predicted Gross Domestic Product in BurkinaFaso, Ghana, Mali, and TanzaniaSimple Difference Specification: Comparing before andafter Mine OpeningDifference-in-Differences SpecificationGWR-Local R-Squared for Relationship between DependentVariable Total Agricultural Production, by District andIndependent Variable, Sum of NDVI Intensity by 60161164164167
ForewordAfrica has experienced a boom in extractive commodities since about 2000.The substantial growth in exports of the region’s abundant natural resources—ranging from hydrocarbons such as oil and natural gas to minerals such as gold,copper, and iron ore—significantly contributed to the remarkable turnaroundin its economic growth trajectory. And Africa’s resource-abundant countrieshave grown faster than other countries in the region. The global supercycle incommodity prices that began in 2000 boosted the production of extractives inAfrica and increased investor interest in the region’s natural resources. This ledto an expansion in resource exploration and a surge in mine openings. During2001–14, extractive industries comprised two-thirds of Africa’s exports,contributing significantly to government finances with funds for capacity development and infrastructure building. Notwithstanding the recent sharp declinein commodity prices, the overall expansion of the extractives sector and the risein commodity exports signal the importance of this sector as a contributor tofinancial resources for Africa in the years ahead.Although the resource boom has underpinned
3.1 Artisanal and Small-Scale Mining 70 4.1 Small-Scale Mining Poses Challenges for Identifying Impacts of Large-Scale Mines 99 4.2 Effect of a Mine Opening on Household Access to Sanitation in Mali 125 Figures 1.1 GDP Growth by Country Groups, 2000–14 2 1.2 Mine Openings, 1870–2014 2 1.3
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