By Vanessa Bauza, IFC Communications
COYLLURQUI, Peru—High in the Peruvian Andes, Urbano Rodriguez’s family farm is surrounded by terraces of wheat, corn, and potatoes. Mountains ripple to the horizon, stretching as far as the eye can see. At 3,800 meters above sea level, coaxing a living from these rugged peaks and plateaus can seem a daily test of will.
Rodriguez and his wife, Griselda Letona, are up before dawn, working their two-hectare plot and grazing their animals. On some nights, sleep comes fitfully. There’s so much left to do.
But lately they are preoccupied with new tasks: he’s been weighing in on a multi-year municipal budget and learning about public works contracts. She’s participating in workshops on good governance and transparency.
Half-joking, Rodriguez says he’s spending nearly as much time learning about his town’s finances as he does working his fields. He does it for his kids: “I want my children to have it better than we did,” says the father of five.
The Apurimac region, where Rodriguez and Letona live, is in the midst of a big mining boom that’s injecting money into municipal coffers. Their hometown of Coyllurqui has seen a 300 percent jump in mining revenues—from about $3 million in 2015 to $12 million last year.
Promise and Pitfalls
If managed carefully, the revenues from mining could transform opportunities for the next generation in this rural town of 8,000. The windfall could fund more schools, roads, irrigation systems—and local officials and residents are eager to ensure it is put to good use.
Mining concessions cover at least half of the territory of Apurimac, the country’s second-poorest region, which is roughly the size of Israel. It is home to one of the world’s largest copper mines and at least five others are now under exploration. But charges of money-laundering and mismanagement of mining revenues in some municipalities have derailed economic growth and given residents pause. Unmet expectations have fueled frustration. Some worry the mines could pollute their land or soak up their water.
“This land is our strength,” says Rodriguez. “The mines must be conscious that they are extracting the riches of our land. If they are responsible, we can live in harmony. Otherwise it will bring conflict.”
Coyllurqui is one of seven municipalities where IFC recently concluded a program to help local officials and communities prepare for increased mining revenues over the coming years. IFC developed the program at the request of the Peruvian government, which recognized that Apurimac needed support in managing revenues as it became one of Peru’s largest mining districts.
Many municipal leaders lacked experience managing large budgets or supervising the construction of major public works. In training sessions, mayors and their teams were given tools to help guide investment decisions, develop a culture of accountability, and build trust with communities.
“The mines must be conscious that they are extracting the riches of our land.”
— Urbano Rodriguez, Coyllurqui resident
At the same time, IFC arranged for training that enabled community leaders to participate in the municipal decision-making process. A series of workshops helped them better understand budgeting and financial planning. Leaders were encouraged to act as watchdogs to ensure that mining revenues are managed responsibly and used to meet people’s needs.
Mining Our Experience
IFC’s work in Apurimac grew out of a decade of experience with community engagement and revenue-management programs in more than 50 municipalities across Bolivia, Colombia, and Peru. It draws upon lessons from mining projects in Africa and Asia, where investors have found that projects whose benefits are distributed fairly to neighboring communities tend to be less vulnerable to protests, renegotiation, and expropriation.
“Oil, gas, and mining companies have traditionally invested in what’s happening underground,” says Veronica Nyhan Jones, who heads IFC’s advisory program for infrastructure and natural resources. “They focus on engineering or finance or commodities. In a way, what’s more complex are the social and political relationships happening above ground. These can be make or break.”
Nyhan Jones says IFC used to focus principally on providing capital. “Now, more value is placed on hearing directly from people at all levels of society,” she says. “We want to help communities and institutions become more robust and resilient. That’s our goal.”
IFC’s work with communities that live near mining projects extends far beyond Peru. In Cote d’Ivoire, Guinea, Mongolia, and other countries, it involves helping local entrepreneurs connect to the supply chains of large extractive companies or bringing together key stakeholders to give communities a voice on issues like water management.
Image: Mining concessions cover half of Apurimac’s territory, which is roughly the size of Israel.
Seeds of Change
On a weekday afternoon in Coyllurqui, Rodriguez walked half an hour to town hall for one of the regular workshops that have filled up his calendar. The yellow, three-story building with an “Ask Your Municipality” comment box near the entrance sits off a tidy plaza. There’s a market on one side and a church across the way. From the center of town, paved streets soon give way to winding dirt and gravel roads. The surrounding mountains look like a crumpled quilt tossed across an unmade bed.
“Before I came here, I didn’t know how the money was being spent,” says Rodriguez, who is part of a citizens committee tasked with reviewing the city’s budget. “If you don’t know about public administration, how can you watch and see if the authorities are doing the right thing?”
Antonio Espinosa, a school teacher, joined the committee early this year. He says he is wary of mining representatives who “come and talk nice” but don’t live up to their promises. Advocating for his community’s needs is a way to give “voice to the reality of the people,” he says.
“I’m not in favor of mining—I don’t trust them,” Espinosa says. “But now I want to make sure it brings development. In 20 years I want professionals to come from this town.”
There has been a shift. In 2015, before IFC’s revenue management program began, only 4 percent of financing in participating municipalities went to projects recommended by community-led committees like the one Rodriguez and Espinosa belong to. By the end of 2017, more than 70 percent of municipal financing went to those projects.
“We are trying to plant a seed of change here,” says Marleny Pozo Sarmiento, a 20-year veteran of municipal government who manages Coyllurqui’s budgeting and accounting. “We want community leaders to participate in the space we are creating. We are not afraid of being transparent.”
IFC’s program, which is funded by the Canadian government, aims to cultivate Apurimac’s agricultural promise, too—so that mining can complement, rather than compete with, small-scale farming. It taught families who practice subsistence farming how to increase production and establish small-scale irrigation systems. Today, new greenhouses dot the landscape. They shield tomatoes, spinach, and other warm-weather crops from the harsh Andean climate.
Farmers who participated in the program now harvest a greater variety of vegetables. They sell surplus crops at local markets. On average, those families earn $100 a month from their market sales—twice as much as they used to earn. The new source of income has made a difference especially for women, many of whom are earning money for the first time—and report higher sales than their male counterparts.
A future beyond mining
Mining revenues, however significant, are ultimately finite. IFC’s work in Apurimac and elsewhere aims to build enduring benefits for local communities. That means avoiding an over-reliance on mining money.
Ana Leyva, who heads the Lima-based community-development organization CooperAcción, says many communities “have a short-term agenda” that focuses on immediate gains rather than investing in social programs that can bring long-term benefits. “They have to imagine a future beyond mining. They have to look for more holistic development in which the people are the protagonists.”
This is beginning to happen in Coyllurqui, where new schools have opened in outlying communities. Mining proceeds funded the area’s only child protection center, which is now staffed by a resident psychologist.
Mayor Leoncio Mendoza says he does not want to hitch his town’s fate to the mines. Instead, he is focused on using mining revenues to create jobs and long-term income.
The town is investing in a new road that will connect remote farming communities—which once were accessible only by horseback—to new markets and services.
The road, Mendoza says, is “a triumph” for the community. “Because of lack of access, we’ve never been able to do anything here,” he says, standing among backhoes and bulldozers. “With this opportunity for transportation, everything is possible.”
Mendoza has big plans for this area. Scanning a rocky ravine on the outskirts of town, he imagines a day when it will be blanketed with a lush avocado forest. Mendoza wants to export his town’s prized cash crop to far-flung markets in India and China. Already, he has distributed thousands of seedlings to neighboring farmers.
“Mining allows us to do this, but it’s not everything. Revenues don’t last forever,” he says. “If we don’t invest in our people, we will be in the same place we are now.”
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Published in November 2018