SED/ED IMPLEMENTATION IPP EXPERIENCES

Transcription

1 SED/ED IMPLEMENTATION IPP EXPERIENCES The Expectations Gap SAPVIA Workshop 04 March 2015 Masechaba Mabilu

2 Overview of the REI4P ED Requirements Economic Development Elements Minimum Threshold 1 Job creation 12% - 50% (various indicators) Maximum Target 20% - 80% (various indicators) Weighting 25% Jobs created for local 12% 20% community 2 Local content 40%-45% (differs by technology) 65% 25% 3 Ownership (overall black ownership requirement) Ownership(community ownership requirements) 12% of project shareholding 2.5% of project shareholding 30% of project shareholding 5% of project shareholding 4 Management Control 0% 40% 5% 15% 5 Preferential procurement Various indicators 10% 6 Enterprise Development (ED) 0% 0.6% of project 5% revenue 7 Socio-economic development 1% of project 1.5% of project 15% (SED) revenue revenue Total 100% Total Points 30

3 A Crisis of Expectations Over-promising and under delivering? Delivery of basic services Welfare Economic Participation Jobs and SMEs Community Expectations Expectations = Past Experiences + (Hopes Fears) Business Continuity Compliance with IA Social license to operate Government Expectations IPPs/Funders Expectations National demonstrable impact of ED benefits of REI4P >> reporting, M&E District/Local support development priorities >> delivery of basic services, jobs

4 Can we do COMPLIANCE and be STRATEGIC? Compliance We have to comply with our SED and ED obligations as per the IA, adhering to the guidelines provided in DoE s Monitoring Notes Compliance with SED and ED obligations is measured in terms of monetary spend and reported on quarterly Strategic We should endeavour to implement SED and ED programmes that positively impact on the communities we operate in alignment with local development priorities NB SED and ED programmes implemented should support the project in maintaining its license to operate Where possible, SED and ED programmes should support the project in achieving other economic development obligations - strategic alignment

5 Strategic Community Investment voluntary contributions or actions by companies to help communities in their areas of operation address their development priorities, and take advantage of opportunities created by private investment, in ways that are sustainable and support business objectives. IFC, 2010: Strategic Community Investment A Good Practice Handbook for Companies Doing Business in Emerging Markets

6 Strategic Community Investment in REI4P SED/ED activities should flow from a well-defined strategy Short and long term objectives Focuses selectively on a few key areas for greatest impact Draw on the company s core competencies and resources. IPP Experiences Limited feedback on ED plans Measured on quarterly monetary spend and not impact Pressure to spend in short term for compliance, Timing of payments impacts on SED/ED implementation model and types of initiatives selected

7 Strategic Community Investment in REI4P Aligns with the local development priorities Aligns with other company policies and practices that affect communities local job creation, procurement Aligns Econ Dev reporting obligations Aligns with Community Trust activities IPP Experiences Superficial IDPs and LED plans Agreements between IPPs and O&M companies does not always support alignment with other EDOs Misalignment between SED/ED activities timelines and availability and timing of funds Priorities and capabilities of com. trusts

8 Strategic Community Investment in REI4P Positions the company as a partner in multi-stakeholder processes rather than as the principal actor in promoting local development Identifies and establishes effective partnerships with companies, the community, NGOs and government IPP Experiences Limited collaboration amongst IPPs due to competitive bidding process Uncoordinated efforts by individual IPPs, community trusts and other development partners limit the potential for meaningful development impact at the municipal and community levels NB in areas with multiple RE projects in same geographic area Relationship between local govt, IPPs and community trusts not defined

9 Strategic Community Investment in REI4P Seeks to avoid dependency, encourage self-reliance, and create long-term benefits that can outlast company support Built upon community assets with a clear and sensible exit strategy IPP Experiences Requires long term planning, but pressure to spend in short term for compliance purposes Skills and capacity development NB for promotion of access to the economy and long term self-reliance of communities, however there is pressure from local govts to focus on provision of basic services (big budget) Short termism of communities and local govt

10 Strategic Community Investment in REI4P Measures return on community investment to both the company and the community Uses outcome and impact indicators to measure the quantity and quality of change Proactively communicates the value generated to internal and external audiences IPP Experiences Reporting is mandatory spend and evidence Compliance measured on monetary spend Too early to measure impact, but important to develop impact indicators Challenge of effectively communicating intentions without creating higher than achievable expectations educating communities and local govt on REI4P NB

11 A Focus on Reporting Mandatory quarterly reporting on monetary spend and supporting documentation as evidence of spend Challenge of increasing complexity and volume of reporting; frequency of reporting Debate in corporate sustainability reporting - is reporting driving performance? Not everything that can be counted counts, and not everything that counts can be counted If you can t measure the work you do, the temptation is to do the work you can measure - compliance vs strategic Maximising and demonstrating socioeconomic impact of REI4P is NB for both IPPs and Govt From a practical point of view, measuring impact can be challenging Impact is not achieved in the short term The process towards 'good' reporting is a learning trajectory for all Effective M&E and learning requires design of appropriate processes and indicators What to report on? relevance and materiality; context NB Achieving the appropriate quality of the reported information? - principles of balance, comparability, accuracy, timeliness, reliability, and clarity (GRI) Reporting requirements should be proportional to size of spend Requires input of both the regulator and the regulated Reporting should become an enabler of change, not a compliance-driven instrument

12 Recommendations Minimal two-way communication between IPPs and the IPP Monitoring Office Reduces Econ Dev to a compliance exercise Improved communication between industry and government NB to improve quality and relevance of economic development reporting and shift focus from compliance to strategic SED and ED investments large at aggregate level over lifetime of projects but small at disaggregated level Communication of this to manage expectations of local govt and communities is NB Collaboration and knowledge sharing amongst IPPs NB in maximising the social returns of the renewable energy program at local and district level. Management of local government and community expectations with regards to benefits from community trusts in short term Develop a strategy towards minimising the potential negative impact of multiple projects and trusts in a particular geographic area Educate local government and communities on REI4P process and what their role is Define a framework for strategic SED and ED to form a basis for compliance and reporting

13 A step towards Launch of SED Sub-Committee to facilitate engagement between IPPs and key stakeholders