Community Development

2. The changing legal context for community development

In the past, foreign investor relationships were commonly based on a two-party model: the state on one side and the resource company on the other, with the financial backers of the project in the background.

This model did not contemplate a local or community role in the decision-making or legal relationships related to resource investment and is based on the idea that the national government is the spokesman for all citizens of the country.

Typically, a country’s constitution or legislative framework, or both, rests ownership of all mineral resources with the State for the benefit of all of the people of the country, not just communities most affected by resource development.

This can be contentious, since one can argue that the impacts of development on local communities are significant and resources should be directed at mitigating those impacts. Otherwise, communities in the producing region are subsidising the rest of the country.

An opposing point of view is that the producing region receives employment and other benefits resulting from a range of economic activity associated with the project. Every region has a part to play in achieving national development goals and helping underdeveloped regions. For proponents of this view, the government is not just wise to direct its resources at these problems but has an obligation to do so, even if that means less for the producing regions.

These debates can be healthy and occur in all countries, from the poorest to the richest.  The issues are often at their most difficult when they occur across ethnic, religious or tribal groups. Where people in producing regions are a minority and directly deal with the consequences of resource development, tensions can be very high because of the feeling that the benefits of the extractive industries are all going to a national government controlled by a different group.

Generally, however, local interests now have a far greater impact on resource development, a development which is driving major changes in policy, law and institutions.

This new perspective on the model of resource investment raises many questions for industry stakeholders, for example:

  • Local communities have relationships with both national government and resources companies. How should the legal and policy nature of these relationships be defined?
  • Adapting to the more prominent role of local communities may require changes in existing relationships between investors, resource companies, communities and governments. How will these changes be effected?
  • There is a significant body of literature about 'the community' but this does not give good guidance on the sociological, legal or political realities that underpin communities. How can governments and industry stakeholders understand these issues better?