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Good Financial Governance and Extractives

CONNEX Initiative


Cobalt filled into barrels in the Mopani Copper Mines. Kitwe, Zambia.

Revenues from the extractive sector may be a vital contribution to poverty reduction in developing countries. As a prerequisite for this, it is essential that contracts governing resource extraction are fair, maximising the contributions made by companies to national development while at the same time creating attractive conditions for investment.

Many developing countries continue to rely on freely negotiated individual contracts with international mining companies and investors. These do not always turn out to be fair, because both sides rarely negotiate on an equal footing. There are already a number of support mechanisms available to redress this situation. However, they oftentimes are unable to fully meet the needs of partner countries and to respond as quickly as desired. Moreover, the necessary trust in the service providers by developing countries is difficult to develop.

The CONNEX Initiative was launched by the countries of the G7 in June 2014 to counteract imbalances in the relationship between partner countries and investors when negotiating resource contracts. The aim is to improve the advisory services available for complex contract negotiations in the extractive sector and to provide needs-oriented support to partner countries. This means that the range of services on offer must be extended beyond just legal advice, and the time needed to respond to enquiries from partner countries must be kept short. The intention is also that, in the long term, resource-rich partner countries should be supported in building their own capacity for complex contract negotiations in the extractive sector. In the medium term, there are plans to expand the initiative to cover contract negotiations for complex investments in other sectors, such as infrastructure and land use.

The first step towards implementing the CONNEX Initiative was to launch the Negotiation Support Portal on the internet, in particular in order to improve publicising of existing offers of support in contract negotiations. Also, a Code of Conduct for the provision of advice on resource contracts was adopted, and a series of pilot projects was launched on the assignment of experts in the field in resource-rich developing countries.

Another key component of the initiative is the Negotiation Support Forum, which is held regularly to foster dialogue and mutual learning among government representatives, civil society and the private sector on priority issues in the context of negotiating resource contracts.

From the outset, the Extractives and Development sector programme has provided support to BMZ in its lead role in shaping the future of the CONNEX Initiative and implementing pilot measures. As a result, the CONNEX Support Unit was established in January 2017 as an implementation structure for the assignment and secondment of CONNEX experts.

The Extractives and Development sector programme manages the Secretariat of the CONNEX Support Unit on behalf of BMZ and is responsible for operational activities. These include, in particular, the rapid and needs-oriented identification, assignment and supervision of highly qualified and experienced experts who support the direct preparation and execution of contract negotiations.

Following a multidisciplinary approach, the experts deployed in the context of CONNEX include not only legal specialists but also representatives of other disciplines such as geology, economics, environmental engineering and finance. This enables CONNEX to bridge all possible gaps in knowledge and capacity in partner countries as and when required.

Since the start of the initiative, CONNEX support measures have been implemented by the Extractives and Development sector programme in more than eight countries and have encountered a great deal of interest. Plans are already in place to introduce support measures in other countries. Geographically, the focus is on Africa, but the initiative has also provided support in Mongolia and Central Asia.

The CONNEX Initiative also has a role to play in the implementation of the 2030 Agenda for Sustainable Development. This stresses the importance of both domestic resource mobilisation and boosting foreign direct investment to finance sustainable economic and social development. Fairer contracts in the extractive sector can play a significant part in this. The CONNEX Initiative also complements other initiatives in the extractive sector, such as the Extractive Industries Transparency Initiative (EITI). Both the content of resource contracts and the way in which they are negotiated provide the framework for transparency in the extractive industries.

Please follow the link to get to the CONNEX Support Unit’s official website: www.connex-unit.org.



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