Guistra like that!
Published by MAC on 2008-04-20How $100 million in mining money goes to help the common man Gold Editor
16th April 2008
$100 million is a mind-boggling sum of money for most of us to comprehend. That’s the amount Canadian mining magnate Frank Giustra gave to ex-US President Bill Clinton to create more long term growth in developing countries where mining is a big part of the economy.
So we talked to the man-in-charge of the team spending this money, Eric Nonacs, to ask him what he’s doing with all that cash. We want to know – how does this money find its way to the common man? How does it affect their day to day lives? Eric is a great interview, telling us in simple terms where the rubber meets the road. We have a much better sense of how people’s lives are changing for the better.
How $100 million in mining money goes to help the common man
Charity begins at home they say, and Canadian mining magnate Frank Giustra has made the resource sector home for most of his life. His recent, well-publicized donation of $100 million, and half of his future earnings, to help spur sustainable development in developing countries –where mining is a significant part of the economy-is now six months young. It’s called the Clinton Giustra Sustainable Growth Initiative (CGSGI).
We at GoldEditor are simple people. We find that it’s easy to get lost in the “bigness” of these large sums and large words like “sustainable development”. But now, some concrete initiatives are starting to become public.
So to help us understand how something like this affects the common man on the street in these developing countries, GoldEditor talked with Eric Nonacs, the Managing Director of Global Affairs at Endeavour Financial and a Senior Advisor to the William J. Clinton Foundation, regarding CGSGI.
Prior to joining Endeavour , Eric spent five years working as the Foreign Policy Advisor for The Clinton Foundation, headed by former US President Bill Clinton. The Clinton Foundation is a non partisan non-governmental organization that will serve as the implementing body for CGSGI.
GE: Eric, before we get right into what you are doing on the ground in your projects - one of the first questions I had when I heard about Mr. Giustra’s donation, was - how do you spend $100 million?
EN: A lot of people think we have $100 million sitting in a bank account – we don’t. The very generous commitments we have, not only from Frank, but over 20 additional other people and companies, for the Clinton-Giustra initiative are over…say, a 10 year time span, and a lot of it is targeted as co-investment in geographic areas, like Latin America or Africa. So it’s a much more manageable sum when you think of it that way.
GE: Eric, our readers are private retail investors from small town America and Canada. We think they could identify more with what you’re doing if you could perhaps explain how one of these projects affects the common man in one of these developing countries.
EN: OK, well, think about a fisherman in a little ocean village called Cupica, in Colombia. He and 150 of his fellow fisherman go out every day, and bring their fish back to dock to sell. This is a poor area, they are using old boats, and they’re not well organized.
One of our first projects will see us partner with the government of Columbia and with the local community to help these 150 fishermen create and manage a sustainable cooperative that will allow them to negotiate better prices, sell to new markets, plan for the future, and in so doing improve the lives of their families. This group of 150 fishermen touches, by extension, about half of the town of 1,500.
You see, there is a large existing market for fresh fish from the Pacific in Medellin and other cities in Colombia. That’s key for us. There is a strong market demand for their product. A lot of fresh fish that Medellin vendors buy and sell is caught in Cupica – it’s considered a good fishing area because it has deep water. But very few of the fishermen are getting by.
GE: Now is that because there is not much fish there? Or ---
EN: There are plenty of fish. They're working with outdated equipment and they are working individually, so there are a lot of middlemen who basically take the produce that is currently caught and they use it – they send it to one of the three companies that are operating there.
GE: Like a packer, or a cannery?
EN: Right. Currently, the fishing companies dictate the price they will pay for fish dealing with each fisherman individually. Creating a cooperative would allow them to negotiate a better price. It would also allow the fishermen to pool their resources, better maintain their boats and other fishing equipment, as well as develop a processing centre to make use of fish that are now thrown back into the sea.
It’s a highly inefficient business they’re in now. We're hoping to work with them on creating a series of systems that will make them a more efficient and more profitable actor in the marketplace.
Our focus is helping develop this cooperative and to work with the community as they keep asking, “what does it take this community of artisanal fishermen to band together to build more sustainable, more lucrative business.”
GE: We can grasp that. How much does something like that cost?
EN: We're making an initial investment of $500,000 which will be matched one for one by the government. The project will be very rigorously monitored to ensure that the proper use of funds takes place, and that we meet our goals on time and on budget. We’re launching a project here that’s initially small in scale, with the idea of having it serve as a model for future efforts in other parts of the country and in other industries. Ultimately, we expect CGSGI to make highly-leveraged investments of up to $5 million in sustainable, market-driven businesses over the course of the coming years.
GE: So, how fast will this get up and running and how do you measure success?
EN: Immediately. I think we have moved pretty quickly but I think by Clinton Foundation standards - which I would say are high on the spectrum of impatience - we have moved more slowly than we would like. So we're eager just to dive right into implementation. In terms of measuring success, the results that matter most will be job creation and income generation.
I think it’s really critical to understand that the Clinton Giustra Initiative will be run very much like a business. So if there are ‘lines of business’that are not productive...that are not having an impact, we will try in real time to improve their performance. If we think there might be a more productive use of these resources - human, fiscal, or otherwise - then we'll look at doing that.
The Clinton Foundation has used this approach before, with coffee growers in Rwanda. We helped them strengthen their co-operative and to get better prices for their coffee beans. We helped them obtain various organic and “Free-Trade”[don't you mean "Fair Trade?" Or don't you see the difference? MAC-ED] certifications, and we have also been able to help them improve their marketing and, with all of this, to ensure that the local producers receive a higher price for their coffee.
GE: Last couple questions here Eric. Briefly, what makes for a successful project like this – what are the key ingredients?
EN: First, any good project is ‘locally owned.’ It can’t be the Clinton Foundation’s idea of what is good for Rwanda or Colombia...the people living in these countries need to be in charge both conceptually and in implementation. Second, in the area of economic development—and business creation, specifically—you need to start with a demonstrable market demand for a specific commodity or service, and then work backward from there....How can we work with producers to help them meet the quality and quantity proposition of the marketplace?
Next is creating the right team. CGSGI will partner with and support the work of local groups, bring some know-how to the game they might not have, bring in some capital that they might not have ready access to, and basically stimulate partnerships that deliver results. We will help bring together stakeholders who haven’t worked with each other before.
Lastly, we monitor these projects tightly. And, as I mentioned before, we make changes in real time to ensure they work. We run each project like a business.
GE: Eric, is there anything you want to say before we wrap up; something you think is important that we have missed?
EN: Not all of our projects are as small scale as the work with the fishing community we talked about earlier. One of our projects hopes to improve access to medical treatment for 60,000 people living in underserved areas in Colombia. Other efforts will focus on scaling up cost-effective child nutrition programs.
There’s another misconception about CGSGI I want to address. Even though mining companies are critical partners in our work, not all of our projects are around mines. The work with the fishermen in Cupica is a good example of that.
Finally. I would add that we are not replacing the community-level social work that mining and oil & gase companies do now. That work continues. CGSGI operatesin addition to those efforts.
GE: Eric, we are very grateful for your time. We intend to check in on you every six months or so to see how your endeavours are doing.
EN: I look forward to it. Thanks in advance for checking back in..