Cape Town – The World Bank Group on Tuesday launched a diagnostic tool that will measure each country’s governance and stability in the mining sector to help ease investors’ decisions before they could invest.
The Mining Investment and Governance Review (MInGov) was officially launched at the Mining Indaba in Cape Town by World Bank Group’s senior mining specialist, Martin Lokanc, who said most of the investment decisions were largely influenced by the manner in which countries governance is structured.
Lockanc said governance of the mining sector has a direct impact on investment in resource-rich countries as investors monitor the sectors governance in each country, and reward better performance with a lower cost of capital.
“Resources can yield positive development outcomes if countries governance is good. The importance factors that determine investor decisions are influenced by governance,” Lokanc said.
The Review was first piloted in Zambia last year as the World Bank Group determined that the country offered the most representative assessment to get a clear picture of how the review should function.
The World Bank Group says MInGov Review presents an objective assessment of the mining sector of several countries by offering actionable avenues for reform, supporting transparency, and informing investment decision-making and debate among interested stakeholders.
Laokanc said the MInGov Review looks at themes that include policy, legislation and regulation; accountability and inclusiveness; institutional capacity and effectiveness; economic and political environment, and sustainable development.
Zambia’s Minister of Mines and Mineral Development, Christopher Yaluma, was applauded for facilitating the MInGov Review to be piloted in his country.
Yaluma, who was in a panel discussion with the World Bank Group, said governance is critical if mining industry is to have any meaningful impact in society.
“We need to ensure that governance in extractive industries is right so we can maximize returns on our minerals for the benefit of the country,” Yaluma said.
Yaluma added that though mining in Zambia continues to be the dominant and leading sector to contribute to the country’s GDP, there was noticeable lack of meaningful participation of locals in the industry.