Role of state-owned development finance institutions in fostering environmental compliance by small-scale miners in South Africa
South Africa’s SDFIs have potential to play a critical role in fostering environmental compliance in the mining industry. Their role is particularly important in the small-scale and junior mining sector which is usually shunned by private finance institutions because of high environmental credit risk. Equipped with knowledge and experience of working with clients across different sectors and their potential leadership role in technology transfer, SDFIs can leverage their position in acting as trusted third party environmental regulation enforcers. Financial institutions have long been criticised for showing little interest in environmental impacts of their clients while concentrating on profit maximisation. This study sought to investigate the response by financial institutions to this criticism through evaluating the role of SDFIs in fostering environmental compliance by small-scale and junior mining companies which are generally viewed as having a poor environmental compliance record. Through the twin qualitative research methods of interviews and document analysis, the role of three state-owned development finance institutions in fostering environmental regulation compliance by small-scale mining enterprises in South Africa was evaluated. The study revealed that SDFIs explicitly and implicitly provide a wide range of products and services which help small-scale and junior miners in complying with environmental regulations. The study also found that, while SDFIs are beginning to adopt market-based mechanisms to encourage environmental compliance, they still heavily rely on command and control mechanisms as a way of mitigating environmentally related risks arising from financing mining companies.
A research report submitted to the Faculty of Science, University of Witwatersrand, Johannesburg in partial fulfilment of the requirements for the degree of Master of Science (Environmental Science). Johannesburg, 2017.
Manzi, Brighton (2017) Role of state-owned development finance institutions in fostering environmental compliance by small-scale miners in South Africa, University of the Witwatersrand, Johannesburg, <http://hdl.handle.net/10539/25119>