Can increased transparency and collective redress improve investor accountability and spur local development? Experimental evidence from Sierra Leone

Foreign investments in the developing world’s agriculture and mining sectors have increased dramatically. In Africa alone, such investments amount to an area the size of Europe, and in some countries foreign firms own more than 30% of all arable land. Some argue that foreign direct investment (FDI) is a promising development strategy. Others, however, argue that, in the absence of effective governmental oversight, FDI can have detrimental impacts on inequality, social conflict and corruption. Despite the scale of these investments, we still know little about their overall impact.

The investigators for this project are investigating the impact of foreign investment on development, and specifically whether communities can play a role in concession agreements between the government and large scale agriculture and mining companies. The study aims to answers two primary questions:

1. Where do agricultural and mining companies operate in Sierra Leone, and how has the scale and composition of concessions changed over the last decade?

To achieve this, the researchers will conduct a census of operational concessions in Sierra Leone. While government agencies, such as the National Minerals Agency, have been working to compile lists of license holders, they do not currently have the capacity to determine whether license holders are active. We plan to verify the status of every firm in early 2017. From this, we will able to produce a map of operational concessions that will be of use for research and for government partners. Mining officials, for example, are concerned that exploration firms have acquired licenses but are (a) not active or (b) have started mining without graduating to a full mining license. In both cases, the government is failing to capture revenue that should accompany new mining activity.

2. What intervention can improve the extent to which concessions contribute to local development rather than fomenting resentment and conflict?

In answering this question, the study aims to investigate whether interventions exist that can improve development outcomes in communities that host concessions, foster honest and amicable communication between companies and communities, and thus provide better livelihoods for citizens and more stable operating environments for companies.

To accomplish this second objective, the study plans to evaluate an intervention that includes information provision, community organizing and dialogue, and conflict mediation. This advances two strands of recent work on political accountability. First, we believe that information can inform community members’ expectations about what to expect from companies, as well as local and central government authorities that are involved in negotiating and managing concessions. One current source of tension is that communities often know very little about the financial status of companies or the contracts that have been concluded with local or national authorities. Second, while informational interventions have been successful at updating beliefs, several have failed to prompt collective action. Our local partner will facilitate community dialogues, in which (a) individuals can express concerns or demands, (b) these requests are collectively prioritized, and (c) a list of actionable requests is presented to the company or government.