Collaboration: Tetra Tech ARD
USAID is the lead U.S. Government agency that works to end extreme global poverty and enable resilient, democratic societies to realise their potential.
Working with Tetra Tech ARD, Levin Sources supported USAID’s Property Rights and Artisanal Diamond Development (PRADD) project by developing a comparative study to understand how artisanal diamond miners in the Central African Republic (CAR) could be incentivised to formalise their activities through reduced costs of licensing, royalties, taxes, and fees.
The ELL Team reviewed legal codes, statistics and reports pertaining to the fiscal and legal systems for artisanal and small-scale mining of precious minerals in 10 countries, and identified the factors that determine rates of formalisation of artisanal mining sectors. The team also consulted with experts and government officials and created detailed case studies from diamond producing countries—Liberia, Sierra Leone, Guyana, Tanzania, and the Democratic Republic of Congo (DRC) – and gold and coloured gem countries – Madagascar and Philippines. The Team performed statistical analysis and developed an economic model to determine what level of license fee will generate the higher formalization rate and the higher revenue for the state.
This work was acknowledged to be a key factor in the government of CAR’s decision to reduce the price of the miner’s licence fee (the patente) from 46,500 CFA to 30,000 CFA. This 36% reduction in price actually increased revenue in state coffers by 25% between 2010 and 2012. 1,821 licenses in 2010, 2,564 licenses in 2011, and 3,542 licences in 2012. This led to not only an uptake in formalization but also provided financial benefits to the state. Sadly the recent civil war in CAR means these gains may be lost, but at least this fiscal policy can help enable a more rapid formalization of the diamond sector when peace returns.
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