From 2018 to 2023, Levin Sources worked as part of a US-funded consortium seeking to establish viable, conflict-free, artisanal and small-scale mining (ASM) gold supply chains originating from eastern Democratic Republic of the Congo (DRC). The project involved policy makers in the US and the DRC, value chain actors along the length of the supply chain, civil-society organisations and due diligence specialists. This learning is particularly topical in the current debate, led by the World Bank around how to professionalise, legalise and formalise ASM.
Private Sector Engagement
This learning brief centres on engagement with the formal banking sector in the DRC. It:
- Demonstrates the transformational potential of encouraging commercial banks to offer services directly to the ASM sector;
- Highlights the key lessons from our collaboration with two commercial banks in the DRC; and
- Describes some of the challenges remaining for ASM to become a viable and sustainable market for commercial banks in mineral-rich economies.
Key takeaways
- Commercial banks and development initiatives can overcome the systemic challenges in integrating ASM into the formal financial system by working together and playing to their respective strengths.
- ASM cooperatives and other upstream supply chain actors see the advantages of opening accounts with commercial banks, to:
- strengthen their ability to grow and professionalize their businesses,
- remove the vested interests that often come with finance in the ASM sector,
- gain recognition as valued participants in the economy.
- Commercial banks that want to investigate ASM as a potential new market can struggle with the myriad of ASM-related initiatives (both international and local). A dedicated point of contact in a relevant international organization with the right expertise and networks in ASM and the financial sectors helps to achieve practical and consistent guidance and encouragement.
- Commitment from senior management and support within commercial banks is key to mobilizing the resources required to build internal ASM expertise and processes. Proactive engagement across departments - from risk management to new business development and lending - is essential for wider acceptance and commercial success.
- Access to relevant data from a wide range of sources is essential to assess ASM risks and ensure compliance with banks’ complex national and international compliance obligations.
- Greater efforts are needed to influence regulators and financial lenders (i.e. local banks) to accept ASM as a legitimate economic sector with a manageable risk profile. Positive engagement of the international banking sector is key to giving responsible international refiners the confidence to buy ASM minerals and to facilitate the international financial transactions underpinning such trade.
- For ASM operators, access to commercial financial services is an essential stepping stone towards formalization and acceptance as a valued and legitimate economic sector. For international supply chain actors, it adds an extra layer of due diligence, giving additional confidence to their sourcing.
