In order to foster sustainable investments which benefit all stakeholders, mining companies are required to contribute to a community development fund in Ethiopia.
Community Development
As has been the case for many years, applicants for any mining license need to participate in planning community development initiatives with the peoples within the license area, as well allocate funds to pay for these initiatives, as explained in Ethiopia’s Mining Operation Proclamation No.678/2010 (as amended by Proclamation No 813/2013) and Environmental Impact Assessment Proclamation no. 299/2002.
In 2019, Ethiopia issued a new Directive which provides guidance on how this process is to work, as well as clearly specifying both the duties and the rights of all parties involved with the community development fund.
Overseeing the community development fund
While holders of any kind of mining operation license and the holders of an exploration license are all required to establish a community development fund, the requirements are a little different depending on whether the license in question is an operation license or merely an exploration license.
When the fund is established by those who hold a mining operation license (like, for example, a Large Scale Mining License) a committee must be established to oversee how the fund is used.
This committee should be made up of, among others, representatives for the local community, various local officials (including members of local mineral sector, the Finance and Economic Cooperation Bureau, the Women, Children and Youth Bureau) as well as a representative for each mining license holder who contributed to the fund.
This committee is responsible for consulting with the community in order to identify the appropriate development project that will be of the most value or use to the community, and then making sure that the project proceeds smoothly and without impediment.
When the fund is established by an exploration license holder, there is no need to establish such a committee, and the fund is overseen by the relevant licensing authority. It is, however, to be used for the express purpose of benefitting the communities who are directly or indirectly affected by the exploration activities.
For more detail about how the community development fund is to be managed, please see the Directive to regulate the allocation of Community Development fund.