In Africa’s mineral-rich landscapes, lies a paradox that economists have long grappled with—the resource curse. Countries endowed with natural resources are often trapped in a cycle of underdevelopment, economic stagnation, and heightened inequalities. Among the myriad challenges contributing to this phenomenon, the lack of social licenses and neglect of local needs stand out. As Kenya recently discovered coltan deposits, a mineral with vast economic potential, the nation stands at a critical juncture. The newfound mineral wealth is tempered by the sobering realities of the resource curse.
Historically, these areas have witnessed economic mismanagement, environmental degradation, and social unrest, underscoring the need for a shift in resource governance. Against this backdrop, the concept of Social License to Operate (SLO) becomes crucial. SLO is a bottom-up governance measure in which host communities negotiate with companies on economic development programs. The lack of trust between state and citizens makes it even more important for companies to establish their own relationship with host communities.
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Other than mining, industries that may require SLO include mining, renewable energy and construction or infrastructure projects.
Managing diverse interests in local areas
While obtaining a Social License to Operate (SLO) is a critical step in gaining support, diverse interests groups should be expected.
Departments heads should consider conducting situational reviews where information on socio-economic status (SES), gender, age, and vulnerable groups is collected. These factors play a crucial role in shaping the best approach to SLO. This information can also help manage dissension. Robust and inclusive engagement strategies can contribute to building a more thorough and resilient Social License to Operate.
SLO Trends and Best Practice
As The Village Well provides end-to-end service for companies who need to establish SLO’s , we have noted the following trends:
- A robust SLO process fosters continuous dialogue and establishes effective channels for communication, including an efficient and timely grievance mechanism.
- Some companies go beyond self-reporting and enlist third-party auditors to assess the quality of their relationship with the host community.
- Furthermore, certain companies voluntarily report on the quality of their relationship with the community, often involving third-party auditors to ensure objectivity and transparency.
- Attaining a SLO requires a structured and systematic process, companies are opting for ERP or related system for daily activities and incident reports.
These proactive measures underscore a growing awareness of the social risks associated with operations, reflecting the on-going commitment to sustainability.
The demand for a high-quality relationship between a business and local communities is particularly crucial in the mining industry. Mining industry activities often have long-lasting impacts on the environment, local economies, and social structures. Therefore, acquiring a social license to operate (SLO) becomes imperative.
The SLO negotiation process is also a strategic avenue for companies to understand local needs, mitigate risks, and capitalize on opportunities. A well-structured and transparent SLO process is an opportunity to elaborate on key benefits such as employment supply chain development initiatives. The SLO process, when effectively managed, enables companies to secure the social license needed to start or maintain operating licenses.
