ONGAMA MTIMKA: Developmental approaches needed for host communities to benefit from projects

Developing community projects that are viable for support by investors in communities that host renewable energy and mining investments is expensive and risky, but requires a more developmental rather than neoliberal approach to truly have an effect.

Many companies operating in various least-developed communities are often discouraged that there are generally limited skills in the communities to conceptualise, develop and implement viable community development projects. Therefore, they end up using service providers from outside their host communities to deliver on projects more quickly and competently, despite their good intentions to not only spend funds for community development to deliver services but to also create local capacity and leave a legacy.  

While this approach helps ensure the companies can report to their boards, stakeholders, funders and the department of minerals & energy, there is a sense in which they may alienate local prospective service providers and non-profit, and create resentment in communities by using outside consultants. A bit of context is necessary before explaining what can be done to solve the problem.  

The “mining-energy complex” remains crucial in the political economy of SA’s development in the 21st century. The country’s energy supply crisis has resulted in various initiatives by the government and stakeholders to increase investments in the energy sector, while mining remains a significant contributor to
socioeconomic life in the country.  

As the proliferation of energy projects run by independent power producers increases in places such as the Northern Cape, Eastern Cape, and Western Cape, there has been increasing focus on ensuring host communities also benefit from the inflow of investments.  

This is as much a matter of policy as it is about increasing focus on triple-bottom-line principles, as contained in the King IV report, sustainable development goals and general measures from experience in the global south to turnaround the resource curse narrative.  

Political elites

It has been common for mineral rich countries in formerly colonised countries to know no peace and stability because of the extraction of mineral resources by multinational corporations. The reason for this was that whatever benefits from mining were due to communities ended up being controlled by powerful political elites through patron-client networks. Elites that felt sidelined in the distribution of the spoils would amass military might and then challenge the favoured elites, giving rise to protracted conflicts.  

Communities hosting mining and energy projects would be caught up in the web of fights and bear the brunt of the destructive elite battles for control of petrodollars of spin-offs from the mining sector, along with the negative externalities of the mining or energy extraction activities.  

For this reason, living close to mineral deposits or sources of fossil fuel became a curse rather than of benefit for communities. Not only would they suffer healthcare risks associated with projects, but also economically as their land or water would be dramatically affected by mining and energy exploitation activities.  

Significant progressive legislation and policies have been put in place that enforce a triple-bottom-line approach to projects undertaken in postapartheid SA. Environmental affect assessments are done as an integral part of the project development activities and records of decisions prescribe measures to manage negative externalities from projects. Rehabilitation measures, social labour plans and community and supplier development spending are also prescribed for the lifespan and the aftermath of projects.  

In the renewable energy programme in particular, stakeholders such as the Industrial Development Corporation, department of mineral resources & energy and private developers have made concerted efforts to include structured ways in which communities might benefit from their projects. There are two main approaches: spending up to 2% of profits on communities, and including community trusts as shareholders in the projects or as beneficiaries of broad-based BEE shares owned through special-purpose vehicles.

The expenditure of the 2% and the funds of project companies is for community development, which is generally done in partnership with for profit and non-profit implementing agencies. Communities benefit in two ways from these arrangements, as beneficiaries of projects only or as both beneficiaries and implementing agents.  

The difficulty found in many host communities is that they tend to participate more as beneficiaries of the projects themselves and not also as implementing agents. This is due to poor local capacity to implement projects, or sometimes due to being deliberately left out because of patron-client networks or delivery targets.  

The one way to deal with this challenge is by spending significant resources in capacitating local communities with abilities to conceptualise projects, develop them to become viable and aligned to funding priorities, and then hand-holding during implementation of these projects.  

This approach takes time and patience as well as a degree of commitment to leaving a true legacy in the community. It is driven by the humility to accept that the established ways to testing potential and capacity may not fit in certain local settings.  

When one surveys the entire range of support offered for community and small business development support, few focus on the expensive processes of ideation and prefeasibility investments, and it is precisely what is needed if communities are going to have a chance to be not only beneficiaries but also implementing partners in projects taking place in their communities.  

• Dr Mtimka is a lecturer and researcher at Nelson Mandela University, and a director for external relations at Bophelo Impilo Development Centre. He writes in his personal capacity.