The implications of Artisanal Gold Mining Practices on Livelihood Security in Uganda By Herbert Nabaasa REGISTRATION NO: 2014/PHD (MGT)/035/PS Supervisors Dr. Willy Ngaka, Makerere University Rev.Fr.Dr. Odubuker Picho Epiphany Muni University A PhD Proposal submitted in the fulfillment of the requirements for the award of Doctor of Philosophy in Management of Mbarara University of Science and Technology (MUST) ___________________________________________________ January 2016 Page 1 of 69 TABLE OF CONTENTS Acronyms ................................................................................................................................................... 3 CHAPTER ONE ...................................................................................................................................... 4 INTRODUCTION ..................................................................................................................................... 4 1.1 Introduction .................................................................................................................................. 4 1.2 Background ................................................................................................................................... 5 1.2.1 Historical background .............................................................................................................. 5 1.2.2 Theoretical background ....................................................................................................... 7 1.2.3 Conceptual background ..................................................................................................... 12 1.2.4 Contextual background ...................................................................................................... 14 1.3 Problem statement .................................................................................................................. 21 1.5 Research questions ................................................................................................................. 23 1.6 Significance of the Study ....................................................................................................... 24 1.7 Justification of the study ........................................................................................................ 24 1.8 Scope of the study .................................................................................................................. 25 1.9 Operational Definitions .......................................................................................................... 25 CHAPTER TWO ................................................................................................................................... 27 LITERATURE REVIEW ........................................................................................................................ 27 2.1 Introduction ............................................................................................................................ 27 2.2 Theoretical review of Artisanal and informal Mining ........................................................... 27 2.4 Conceptual Review ................................................................................................................ 30 2.4.1 Conceptual Framework ...................................................................................................... 32 2.5 Thematic Review ................................................................................................................... 32 2.5.1 Artisanal gold mining practices and their implications on livelihood security ................. 32 2.6 The Empirical studies on Artisanal Gold Mining (AGM) ..................................................... 36 2.7 Synthesis of the Literature review .......................................................................................... 40 CHAPTER THREE ............................................................................................................................... 42 METHODOLOGY .................................................................................................................................. 42 REFERENCES ........................................................................................................................................ 56 APPENDICES ......................................................................................................................................... 61 Page 2 of 69 Acronyms AGM Artisanal Gold Mining ASM Artisanal and Small Scale mining AMD Acid Mine Drainage DLG District Local Governments FAO Food and Agriculture Organization GDP Gross Domestic Product IIED International Institute of Environment and Development ILO International Labour Organisation MEMD Ministry of Energy and Mineral Development MAAIF Ministry of Agriculture Animal Industry and Fisheries NEMA National Environment Management Authority UBOS Uganda Bureau of Statistics USAID United States Agency for International Development WBCSD World Business Council for Sustainable Development Page 3 of 69 CHAPTER ONE INTRODUCTION 1.1 Introduction Artisanal gold mining (AGM) is one of the emerging economic activities providing alternative livelihoods globally with more than 13million artisanal miners and about 150 million people indirectly reliant on AGM (ILO, 1998). A large proportion of artisan miners mainly in Africa are women and children who are also important in supporting sustainable livelihood security. However, their extensive involvement in the informal mining operations sharply affects other livelihood interventions for which they hold key roles (Hentschel, 2003). In Uganda, Artisanal Gold Mining is on the increase and is largely a poverty-driven activity used as a coping mechanism with thousands of local communities currently engaged in the mining practice (MEMD, 2011). The communities in the mining sites live in deplorable sanitary conditions, use toxic chemicals such as mercury in the gold extraction and have severely degraded fragile ecosystems that support their livelihoods (Kinene 2012). The government of Uganda still regards AGM as an illegal practice providing no regulatory and policy framework to guide the mining operations. The absence of evidence based strategies for sustainable mineral exploitation exacerbates the situation (MEMD 2009). Despite the growing trend of community engagement in artisanal gold mining practice, the implications of the mining on the livelihood security are largely unknown. This research therefore seeks to explore artisanal mining implications on Page 4 of 69 livelihood security with the aim of developing best practice strategies and inform other necessary interventions. 1.2 Background 1.2.1 Historical background The international interest on artisanal gold mining (AGM) has evolved over time looking mainly at; the definitional issues, technical, legal, Gender, Environmental and Social Economic issues and some important linkages that exist (Hentschel et al 2003; Hruschaka et al 2002; Hinton 2011; Bastia, 2004; Chaparro, 2003; WHO 1995; Ibrahim, 2003; ILO, 1998; Carmouze, 2001). It is important to note that most of the historical artisanal and small scale gold mining episodes evolved in form of “gold rush”. Gold rushes extend back as far as gold mining history, to the Roman Empire, whose gold mining was described by Diodorus Siculus and Pliny the Elder, and probably further back to Ancient Egypt. (Hinton, 2011) The recent massive involvement of communities in artisanal gold mining operations particularly in Africa is typical gold rush stereotype (ILO, 2012). The gold rush is a period of feverish migration of workers to an area that has had a dramatic discovery of gold deposits. Major gold rushes took place in the 19th century in Australia, Brazil, Canada, South Africa, and the United States, while smaller gold rushes took place elsewhere in the world (Reeves, 2010, Eane, 2009). Hentschel (2002) notes that despite some level of recognition, implementation of legislation among the mining communities remains problematic and many miners do Page 5 of 69 not have faith in the ability or commitment of their governments to provide assistance and as a result the miners have depended on the middlemen further exacerbating the situation in the mining operations, a reason it has remained informal. In Uganda, mining started in ancient times by artisans. Formal mining started with arrival of the British Explorers during the colonial times. Copper, phosphates, limestone and several small- medium mines for tungsten, tin, beryl, niobium, tantalum, gold were operated (1930s-60s). During 1950s-60s, mining contributed about 30% of foreign exchange earnings. In 1970s, due to political crisis, exodus of skilled man power, economic sanctions and the collapse of the economy, the mining industry collapsed. In 1990s, rebuilding of the nation started but mining sector was not a priority and it was not easy to get back investors. Mining continued on small scales. Then some medium scale mining started especially that of strategic minerals such as limestone for cement manufacture, but precious metals, base metals and others continued to be exploited on small scales and as a result of limited or lack of regulations, artisanal gold mining has recently sprung up in many parts of the country (MEMD, 2013). Page 6 of 69 1.2.2 Theoretical background 1.2.2.1 The Classical Theory of the informal sector The informal sector is defined as processes which, at prevailing wages, will not return the average rate of profit in the long run. Informal sector producers operate these defective processes because they have no alternative and when these individuals cannot find more remunerative formal sector employment, they are reduced to informal sector activity as their sole means of reproducing themselves. Thus there is “full employment” in the model, but not in the neoclassical sense of flexible wages and formal labour markets (Gibson, 1994). Bill Gibson and Bruce Kelley (1994) note that in terms of informal sector theories, several scholars have analyzed the informal sector particularly from the historical and empirical point of view. Gibson notes that theoretical perspectives on the informal sector are still sparse. The classical theory posits that the common unifying principle which underlies the previous literature is that the informal sector arises from the capital-limited nature of the economy and where capital is not in short supply, all activity would be formal. Thus, the classical theory is based on the notion that informal sector processes are processes which will not return the average rate of profit when evaluated at the prevailing level of wages and prices and will not be operated by capitalists who require the average of return. The theory very well resonates with several scholars who assert that artisanal mining is largely inform and often illegal with most Page 7 of 69 communities turning to it as a poverty coping mechanism (Hentschel, 2011, MDLG, 2013). Under the informality nature, the economies are limited by exogenous level of demand which forces unemployed workers and “unemployable illiterates” to join the informal sector making “neither nor scenario” workers who are neither capitalists nor workers but who rather constitute a distinct social class. In some instances, in the short run, the informal sector processes may earn positive or negative profits but in the long run, the implicit wage in the informal sector determines the formal sector wage rate (Gibson, 1994). Under this theory, if the initial conditions are appropriate, the informal sector will eventually earn the average rate of profit becoming in effect formal but if this case scenario does not suffice, then it is possible that this adjustment path is blocked so that the model converges to a lon-run equilibrium in which both formal and informal sectors coexist. The theory generalizes that the informal sector technologies are largely rudimental and labour productivity is characteristically low, overhead or fixed capital is minimal and intermediate inputs, especially imports are not nearly plentiful as in the formal sector if at all they exist. This scenario contrasts with the general understanding that artisanal mining is highly rudimental employing low technological equipment such as hand tools and applying polluting and toxic chemicals chief among them Mercury and Cyanide which are not only ecologically sensitive but have serious health impacts (Hentschel, 2011) Page 8 of 69 Various studies indicate that the marginal commitment of financial capital to create a job is a fraction of that of the formal sector resulting in policy makers to think that the informal sector is a cheap means of employment creation. This is largely reflected in the fact that informal mining operations by communities whether profitable or not are still illegal. Most governments particularly in Africa, have not labored to provide regulatory and policy framework for the sector making it one of the most highly disorganized and illegal livelihood adventures (Hinton, 2011). 1.2.2.2 The Theory of Property Rights and regulation of Artisanal Mining Fabian Clausen, Maria Laura and Amir Attaran in a 2011 publication by the Canadian Center of Science and Education provide insights on how the theoretical justification of property rights influences attempts to formalize informal sectors including providing legal regimes for regulating the informal operations such as artisanal mining. Different scholars have several definitions for a property. A property is a legal institution that governs the use of things (Barnes, 2009). Property is viewed by many from a narrow sense of private context; however, it also has social and public dimensions as it provides the means to achieve sustainable development, particularly the social order and the mode of public and economic organization (Singer, 2000). As several scholars assert, the structure of a property system influences how societies are shaped and how people interact (Fabian, 2011). Fabian (2011) further indicates that; how one understands and justifies the existence of a property influences the kind of property necessary to manage certain resources and that, the understanding of property theories has an impact on how much state Page 9 of 69 regulation particularly for the private property is tolerated. The understanding of property rights helps to know who is given what kind of rights over his property, setting requisite rules to govern the acquisition of property, and how conflicts between property owners are potentially resolved (Barreto, 2011). In articulating issues of informal sector and with particular reference to artisanal mining, it is important to acknowledge the fact that land rights and ownership dynamics greatly influence the sector. Thus the theory of property rights particularly from the land and economic rights point of view must be explored including efforts to regulate artisanal mining operations not only as government policy but also as an economic tool of empowerment. One fundamental issue is clear in respect to informal mining by individuals and communities, the fact that all artisanal mining operations globally and particularly in Africa, conflict is common practice and as such adequate regulatory solutions must be found to make the sector meaningful. This is entirely because mining is an economic asset and more so takes place on the valued property- the land resource, thus property issues arise in the context of land use. In most cases, miners will not own the land on which the minerals are located. This leads to questions of land allocation, for example if the government should set aside specific lands for Artisanal Mining, and what provisions are made with regards to other private owners of land on which minerals happen to be located. Thus, from a theoretical point of view, some basic questions underlie all of these issues: how much space do governments grant private actors regarding the use of their property, and how much government regulation is acceptable? Or, in other words; Page 10 of 69