Mining and quality of public services: The role of local governance and decentralisation

This paper investigates the effects of mining on the quality of public services - as reported by the citizens - and on people's optimism about their future living conditions. More particularly, it examines how the quality of local governance and the level of decentralisation may shape the proximity to mine effects. We connect more than 130,000 respondents from the Afrobarometer survey data (2005-2014) to their closest mines based on the geolocation coordinates of the enumeration areas and data on the mines and their respective status from the SNL Metals & Mining. Using a difference-in-difference strategy, the results from the baseline model suggest that residents living within 50 km to an active mine are less likely to approve the government performance in key public goods and services delivery. Compared to the distance to an inactive mine, the geographical closeness to an active mine lowers the likelihood of a positive assessment by 2.2% points on how the government handles improving living standards of the poor, by 2.6% points on job creation, by 1.2% points for both health services and water and sanitation, by 1.9% points on public services as a whole. Living near an active mine also lowers optimism about future living conditions by 1.7% points. Exploring the confoundedness of local governance and decentralisation, the results show that the incidence of bribe payments (effective corruption) at the local level has a negative effect on the relationship between mining and quality of public services. On the other hand, we found that the closeness to a mine tends to have a positive effect in more decentralised countries; however, the positive marginal effects of decentralisation tend to be reduced in an environment with poor quality of local governance, high incidence of bribe payment and low level of trust in local government officials. In communities within 50-km to an active mine, low corruption and high decentralisation is the best-case scenario, while high decentralisation and high corruption constitute the worst scenario.

Keywords: Mining, Public Services, Local Governance, Decentralisation, Africa

JEL Classification: H410, H700, O550, Q000