Support to the implementation of the ICGLR's Regional Initiative on Natural Resources This project is co-financed by the European Union

Transcription

1 1 Support to the implementation of the ICGLR's Regional Initiative on Natural Resources This project is co-financed by the European Union International Conference on the Great Lakes Region (ICGLR) Terms of Reference for the recruitment of a consultancy on a study cost analysis of the Regional Certification Mechanism 1. Context In the Nairobi Declaration of December 2006, the Heads of State and Governments of the International Conference on the Great Lakes Region (ICGLR), namely Angola, Burundi, Central African Republic, Democratic Republic of Congo, Kenya, Republic of Congo, Rwanda, Uganda, Sudan, Tanzania and Zambia agreed to seal a Pact on Security, Stability and Development, which confirms their determination and commitment to transform the Great Lakes Region into a space of sustainable peace and security for States and people, political and social stability, shared growth and development. In the spirit of the Pact, it is regarded as paramount to translate the Great Lakes region s rich endowment of natural resources from sources of conflict into resources for development. This necessity has been specifically recognized in the ICGLR Protocol on the Fight against the Illegal Exploitation of Natural Resources, adopted as part of the Pact. The Protocol constitutes the legal framework for the ICGLR Regional Initiative against the Illegal Exploitation of Natural Resources (RINR) launched at the Lusaka Special Summit held in December The RINR has to be understood as the central element that translates the principles of the Protocol into action. The ICGLR Conference Secretariat (CS), based in Bujumbura, is tasked with the development of the RINR, as well as with coordinating Member States efforts to implement the various elements of the RINR. The ICGLR has been tasked by the third Meeting of ICGLR Minister responsible for mineral resources of November 6 th 2014 in Kinshasa Democratic Republic of Congo to encourage the implementation of the Regional Certification Mechanism (RCM). In order to ensure long term sustainability of the RCM in implementing countries and as precursor to establishing the RCM in countries willing to join the process, ICGLR and its Members States should possess a clear analysis of the direct and indirect costs generated by the implementation of the RCM. To date a large extent of the implementation costs e.g. for supply chain due diligence are financed by industry or donor contributions.. Previous studies conducted on chain of custody systems have identified the costs borne by exporters in Member States, but to date, no study has taken an analytical view of the costs for Governments and private sector in implementing the RCM. DRC and Rwanda issued first ICGLR certificates for export shipments in July 2013 and October 2013 respectively.

2 2 In the framework of this proposal, the ICGLR is hiring a consultancy to identify the costs (direct and indirect) that are incurred by the Member States in implementing the RCM and to develop a draft budget outlining the necessary funding to fully implement the RCM. The field study is to be conducted in the Democratic Republic of Congo, Rwanda, Burundi and Uganda which are the countries that have implemented the RCM or are putting in place systems and structures to do so. The RCM is comprised of three key elements: mine site inspection, chain of custody tracking and certification of mineral export shipments. 2. Overall Goal and objectives. The overall goal of the RCM cost analysis is to provide Member States and the ICGLR Executive Secretariat with reliable information and specific recommendations on RCM implementation cost as a basis for decision making. The Objective is to quantify cost of RCM implementation in Member States and at regional level and to evaluate the economic feasibility against the value of mineral production and exports. 2.1 Specific objectives: - The study project is structured in three phases and includes the following objectives: 2.2 Deliverables: The consultancy is expected to provide the following deliverables: - An inception report detailing the methodology, key milestones and a timetable for the implementation of the study project; - Presentation of the inception report at an ICGLR expert meeting on RCM and incorporation of proposed changes into the study concept; - Conduct field research in Burundi, DRC and Rwanda and Uganda; - Develop a master budget template for the implementation of the RCM;

3 3 - Evaluate cost-benefit structure for Governments and exporters linked to RCM implementation; - A comparative cost analysis and identification of modes of financing of similar certification mechanism (i.e. itsci, KPCS, FSC,PEFC); - An Itemized list of direct and indirect costs for the RCM including cost estimates for their implementation; - Draft a mid-term report including a draft cost-benefit analysis; - A final report (maximum80pages) detailing the analysis of the costs in Member States and at regional level of the RCM and containing recommendations adapted to specific conditions in Member States and ensuring flexibility in implementation; - Develop recommendations and steps for adaptation of RCM standard 3. Responsibilities and Specific Tasks The main responsibilities and tasks of the consultancy are presented below grouped under the main components of the Regional Certification Mechanism. 3.1 Regional Certification Mechanism The RCM encompasses chain of custody systems, mine site inspections and certification of mineral exports. The RCM also includes a viable self-financing mechanism. - Identify comparable certification systems (i.e. Program for the endorsement Of Forest Certification, Kimberley Process Certification Scheme) - Identify and cost the activities and services associated with implementing the RCM; - Identify the cost structure: what are the key elements of the cost structure in a certification mechanism? What are the direct costs, what are the indirect costs? - Analyze the cost structure: how are the costs determined? What are the variables? - Identify Member State deployment of resources for mine site certification, chain of custody tracking, export procedures etc.. - Assess the costs of certification relative to competitiveness and the size of the mineral production and exports. Are the certification costs justified? Does the size of the deposits and production support those costs? Mine site inspection Mine site inspection is the process in which a Member State undertakes and audit of mine site to verify its conformity with the criteria s RCM) - Assess and analyze the costs of mine site inspections according to the referenced criteria s; - Provide a benchmark for costs in Member States; - Analyze the viability of these costs in relation to a Member States geographical size and number of identified mine sites; 3.3 Chain of Custody Certification The chain of custody plays a pivotal role in the RCM. It allows Members States to identify which mineral was handled by whom the volume produce. The data generated

4 4 from chain of custody systems allows the mineral exporter and certifying authority to reconcile the data and verify for discrepancy. - Identify key activities and their costs; - Assess and analyze the levy amount charged by traceability service providers; - Identify key activities and their costs; - Assess and analyze the levy amount charged by traceability service providers; - Identify the costs related to data management(record keeping); - Identify and analyze the chain of custody costs in Burundi; 3.4. Certification of mineral exports The certification of mineral for exports is the last activity in the regional certification mechanism. This activity is carried out by the Member states certifying authority after verification that all data matches and the required documentation is provided. - Identify the number of government personnel used to issue a certificate; - Identify and list the costs of deploying the personnel in order to issue certificate; 3.5. Third Party Audits and Independent mineral chain auditor (IMCA). Third party audits and the IMCA serve a compliance function within the RCM.. The ICGLR Third Party Audit system is managed by a tri-partite Audit Committee, which has representation from government, local and international industry, and local and international civil society. The Audit Committee accredits auditors, and sets the standards and terms of reference for Third Party Audits. - Assess and analyse the additional costs of audits; - Identify alternatives cost saving models; - Identify the costs related to data management (record keeping); - Assess and analyze the costs of the Analytical Fingerprint (AFP); - Present a budget in relation to the work of third party audit and IMCA; 3.6 Self-financing mechanism This mechanism is part of the regional certification mechanism. Its function is to identify the most viable way for member states to pay for the physical certificate and all the work done to maintain the regional certificate mechanism functioning and viable. - -Review the previous study on Self-financing mechanisms - Identify and list alternatives options for member states to generate o Identify the amount need to be generated by members states to cover their costs of certifications (i.e, how many certificates must the MS issue in order to recuperate the costs; 4. Qualifications and Experience The consultant team should be composed of a minimum of two consultants and possess the following qualifications and experience: Skills and Qualifications

5 5 A Master s Degree or equivalent qualification from a recognized institution in Business Administration, Economics, Finance, Accounting and Auditing. An accreditation from a recognized accounting body is an advantage; A Master s Degree in Mining Engineering or Geology or equivalent qualification related to the evaluation of mine operations; Strong numeracy skills ability to analyse interpret financial data; Ability to design a performance budget and functional budget; Strong focus on analytical and statistical approach to data collection; strong capabilities in data collection, analysis and interpretation to derive relationships between costs and the certification system; A demonstrated ability to perform cost structure analysis and activity based costing; Strong capabilities on mineral sector governance for technical backstopping; Experience Substantial experience in coordinating, planning and managing financial audits and costs analyses (preferably in ICGLR Member States); Good governance in public sector financial management; At least 10 years of relevant professional experience in finance, accounting and auditing and administration; Providing advice on interpretation of accounting standards and procedures to senior decision makers; At least 10 years of relevant professional experience in technical and financial evaluation of mining projects. Experience with Artisanal and Small-Scale Mining is an advantage; A demonstrated ability to provide technical advice and conduct financial evaluations of programs; Computer literacy (in data management, word and spread sheets and accounting and management software, detailed budget presentation); Proven management skills, excellent communications and writing skills; Fluency in English/French, written and spoken is a must. Working knowledge of Kiswahili or any other languages of the region is an advantage. 5. Duration and conditions of the assignment: The geographic focus of the study is primarily the Democratic Republic of Congo and Rwanda. These two member states have established the regional certification mechanism and therefore should have financial data available.

6 6 The assignment is budgeted for 52 calendar days (excluding travel days). The reports are in English and should be able to be translated into French upon request. The timeframe for the consultancy is: June 2015 to November The Offer should be transmitted in two separate envelopes; one envelope containing the financial offer and one envelope containing the technical offer. A proposed timetable for the study is in included in Annex 1. Item Calendar days Desktop 15 Identify Cost 4 Structure of Certification Identify work 4 processes of Certification mechanism Comparative Cost 7 structure for similar certification mechanisms Inception report 5 Review of key 2 reference documents (RCM Manual) Preparation of 1 Inception report Briefing and 2 presentation of methodology with T.U Field study 20 Consultation 13 government officials in Burundi, DRC, Uganda and Rwanda Consultation with 7 key stakeholders Travel days 4 Debriefing 2 Consultation with 2 technical Unit Final Report writing 10 Contact: Angone MABOLIA Regional Expert, Natural Resources angone.mabolia@giz.de Gerard NAYUBURUNDI Coordinator,Technical Unit ICGLR gerard.nayuburundi@icglr.org