We all understand the carrot is more effective than the stick. This too is true within the artisanal mining sector and using incentives to encourage legal trade. But what specific incentives can create change?
That is one of the questions IMPACT, in collaboration with Solidaridad, set out to answer in the Scaling Up project. Working with artisanal gold mining cooperatives and traders in Côte d’Ivoire, the project tested approaches to scaling responsible artisanal gold supply chains in the country.
The project supported four mine sites and two traders in northeastern Côte d’Ivoire to implement the CRAFT Code and demonstrate compliance with the OECD Due Diligence Guidance. Mining cooperatives and their members tracked progress towards 10 selected actions in the CRAFT Code. The cost for each cooperative to meet these obligations under the CRAFT Code was estimated to be $6,410 USD.
International standards like the CRAFT Code or the OECD Due Diligence Guidance have traditionally been poorly understood in the region, with artisanal mining actors seeing little value in taking the steps to invest in their implementation. Overall, these standards have been seen as for the international buyers with little benefit to local actors.
Digital Tools Simplify Due Diligence Compliance
The project tested how digital tools could both simplify and incentivize due diligence for local artisanal gold actors.
Bloom by IMPACT adapted the CRAFT Code into a custom M&E Framework, relating it to the OECD Due Diligence Guidance. Bloom integrated with Solidaridad’s Extension Solution app, which enabled mine managers to track their progress on the CRAFT Code, generate workplans to close any existing gaps, and upload evidence of their progress. This provided miners with an efficient tool for managing operations at the mine, and sharing evidence of their compliance level through text, documents, and photos with traders in real time, making the whole supply chain more transparent and efficient.
The local gold traders were able to view the cooperatives’ progress and supporting evidence to check due diligence on their supply chain. The traders were able to provide support to the mines they source from to address any compliance gaps.
The CRAFT Code workplan related activity data, collected by Extension Solutions, flowed into Bloom by IMPACT, which was able to demonstrate progress on related OECD Due Diligence Guidance outcomes. Bloom structured the data into analysis and visualizations that would be easily digestible for the international market.
The use of digital tools proved to have many benefits—an incentive in itself—as it:
- Guided users through complexity
- Made data useable to miners and traders
- Helped manage documentation as it was all in one place
- Helped local actors meet their legal compliance requirements
- Made traders active participants in the responsible sourcing initiative
- Provided view of progress for interested downstream actors
Testing Incentives
In addition to the digital tools, the Scaling Up project analyzed and tested how other incentives could be applied to motivate due diligence compliance. Potential incentives that were identified as relevant for Côte d’Ivoire’s artisanal gold mining actors included access to finance, cash payments, training, Personal Protective Equipment (PPE), and contributions to the community.
The project examined how a material incentive would help the artisanal mining actors understand the cost and benefits of participating in responsible sourcing. Two cooperatives earned points as they completed actions moving forward in their progress on the CRAFT Code. Points were equivalent to 60 percent of the cost of conducting the action and were disbursed in the form of PPE.
The cooperatives steadily improved their compliance with the CRAFT Code, enhancing health and safety signage at the mine sites, drafting policies to address child labour and human rights, as well as strengthening administrative procedures. Overall, more than $8,400 USD worth of PPE was awarded by the end of the project.
Powerful Motivator is Due Diligence Compliance
Through IMPACT and Solidaridad’s research and on-the ground observations, it became clear that the most powerful motivators are not necessarily material awards but the ability to leverage due diligence compliance into new opportunities—both at home and abroad. Actors saw benefits from marketing to international buyers, receiving recognition within their communities, and being able to provide evidence to local authorities they were complying with regulations.
The use of digital tools simplified the complexity of the diligence process, allowing artisanal mining actors to easily demonstrate compliance with local and international regulations. For local actors who often face significant scrutiny, this can be a significant support to promote improved administrative procedures that can challenge harassment and corruption.
The Scaling Up project demonstrated that there are pathways to scale traceable, responsible artisanal gold—with both artisanal miners and traders motivated to participate. Local actors are driven by new opportunities, as well as business continuity. Downstream actors need to leverage the unique contexts of artisanal mining communities to incentivize legal trade and guide them through the complexity of meeting international standards. They’ll find many actors ready to participate.