© GIZ

CONTEXT

The CONNEX Support Unit is the implementing body of the CONNEX Initiative. Its background is as follows:

 

For many developing countries and economies in transition, mining is a key economic sector. In at least 20 of these countries, resource extraction accounts for more than 20% of GDP. Sums ranging from USD 10 to 50 billion were invested by foreign countries in Africa’s extractive sector from 2000 to 2012. Extractive industries thus offer great opportunities for economic development.
 

Through fair and stable contracts, these investments can mobilize the revenues which individual countries need to achieve their SDGs, build their infrastructures and create employment opportunities.
 

The economic benefits deriving from natural resource wealth are largely determined by complex commercial agreements between the host country and foreign investors. These agreements regulate the allocation of costs, risks, profits and benefits. They may remain in place for decades and have significant fiscal, economic, environmental and social impacts. Well-crafted and carefully negotiated foreign investment contracts can generate revenues, boost development and protect the interests of both the host country and foreign investors.

However, many low-income countries lack the capacity to successfully negotiate complex contracts and to properly enforce and monitor their implementation. As a result, these contracts often fail to maximize the potential benefits and instead lead to loss of public revenues, as well as to corruption, resource and environmental degradation and depletion, health and safety issues and social unrest.
 

Existing support mechanisms show noticeable gaps, including a lack of non-legal (fiscal, economic, social) and industry-specific (geological, mining, environmental) expertise, of sufficiently rapid support, of strategic advice that links extractive industry investments to development strategies, and mutual trust.
 

In order to address this situation, the G7 leaders launched the CONNEX Initiative in 2014.