Centre for Development Studies

Blazing the path to formalization: Artisanal Mining, Wealth Creation and Rural Livelihoods in Ghana.

Principle Investigator: Roy Maconachie

Research Team: Co-Investigator, Gavin Hilson (University of Surrey), Local collaborator, Richard Amankwah (University of Mines and Technology at Tarkwa, Ghana)

Project Partners: University of Surrey, UK, University of Mines and Technology, Ghana, University of British Columbia, Canada

Funding Body: Canadian International Resources and Development Institute (CIRDI)

Project Rationale and Aims:

This research will deepen the current understanding of how the formal and informal financial relations of poor individuals in sub-Saharan Africa (SSA) affect their livelihoods and wellbeing. It will focus on those living in communities where artisanal and small-scale mining (ASM) – low- tech, labour-intensive mineral extraction and processing – flourishes. The study will be undertaken in Ghana, the location of one the region’s largest and most dynamic ASM sectors in SSA and where the investigators have extensive networks. While previous research on ASM has documented how, despite high levels of risk, the sector provides important informal livelihoods to millions of poor people, these gains have often come at a cost. As many entrants to the sector become 'adversely incorporated' into exploitative relationships with buyers and middlemen, they become trapped in cycles of borrowing and indebtedness. With little official recognition of these dynamics, and minimal effort made to develop intervention models needed to break out of such cycles of exploitation, it has been argued that the formalization of ASM is the key to empowering unregistered miners and making the sector more sustainable.

In laying the groundwork for a more equitable, formalized ASM sector that can provide sustained routes out of poverty, this research will generate critical baseline data on financial landscapes in ASM communities, deepening understanding of how different individuals engaged in ASM manage their livelihood portfolios. Specifically, it is guided by the following four sub-questions:

  1. To what extent is growing monetization and financialization of livelihoods affecting resource distribution and the wellbeing of households in ASM communities?
  2. How do ASM operators negotiate risk and exploit opportunity in managing their financial portfolios, and what explains variation in their adaptive management, vulnerability and resilience?
  3. How are the financial relations of those engaged in ASM embedded within social networks, how are these mediated by formal and informal regulatory processes, and what significance does this have for ASM formalization?
  4. To what extent can a financial diaries methodology be used to explore person-to-person transactions that are difficult to capture (gift exchange, in-kind transactions, reciprocity, etc.), and how can this help us understand the formal and informal micro-financial circuits of individuals in new ways in SSA?

The research will employ an innovative methodology involving the compilation of 'financial diaries' of participants in ASM communities. Specifically, it seeks to explore how wider changes in the financial circuits and social relations governing ASM affect rural livelihoods, resource distribution and well-being at the household level. In so doing, it will contribute to the development of the financial diaries methodology, piloting it for the first time in the context of ASM, as well as using the approach as a window into the formal and informal social relations governing diarists' livelihoods. This will be complemented by in-depth livelihood interviews with respondents, as well as focus group discussions and semi-structured interviews with other key stakeholders, to broaden understanding of the economic opportunities and constraints within the ASM sector and to pinpoint the challenges to formalization. For a formalized system to make a meaningful difference in the lives of poor miners and their households, a richer, more nuanced understanding of the socially-embedded nature of informal economic systems is first required.

Project Outputs and Impact:

Description of Activities & Intermediary Outcomes:

  1. Improved design and implementation of extractive sector policies and frameworks by developing country governments.
    The collection of financial diaries data will inform ASM policies and yield more robust and appropriate policy interventions for the sector.
    Interviews with local-level actors will broaden understanding of the challenges and bottlenecks mine operators face, in turn yielding more user-friendly and appropriate licensing schemes, formalization policies and support measures.
  2. Increased human resource capacity in developing countries to contribute to the equitable and sustainable governance and management of their extractive sectors.
    The data collection will help to direct the ASM formalization process by helping to bring miners into the legal domain, a move which will yield more efficient and productive activity, and with increased security of tenure, change the mindset of operators.
    The collection of livelihoods data will help to engage hitherto dormant financial services for ASM in Ghana, which could increase badly-needed cashflow for miners, and have a transformative effect on their production and operations.
  3. Increased generation and sharing of knowledge on extractive sector governance and management in developing countries.
    The livelihoods profiles and financial data will help to inform the Africa Mining Vision’s ASM policies.
    The research will bring together donors, NGOs and government officials, with the aim of galvanizing support for, facilitating formalization of, and formulating more appropriate policies for ASM region-wide.

For more information about this project please contact:

Name: Dr Roy Maconachie
Title: Reader
Department: Dept of Social and Policy Sciences
Location: 3 East 3.28
E-mail: r.maconachie@bath.ac.uk
Phone: work+44 (0) 1225 384524