ASM formalization through financial inclusion and health insurance

Formalization is commonly seen as the only appropriate response to the ‘numerous negatives’ (Hilson et al., 2021) reigning in artisanal and small-scale mining (ASM). These negatives include bad work conditions, substandard health and safety, environmental pollution, poverty and conflicts.

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Within the vast literature on ASM formalization, many studies focus on how to incentive ASM miners to formalize, given the numerous impediments that exist. Top-down formalization strategies have been extensively criticized (for DRC, see Geenen, 2012) for being exclusionary, bureaucratic and a-political. A kind of bottom-up formalization is imagined to ensure that artisanal miners and miners’ cooperatives are included and motivated to formalize their activities (Banza et al., 2018; Prescott et al., 2021).

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In this project we will look at two specific aspects of such a strategy: health insurance and financial inclusion (World Bank, 2020). First, we will explore the possibilities for rolling out mutual health insurance as an important pillar of social protection (SP) in the ASM cobalt mines of Lualaba province.

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Mutual health insurance is a contributory SP mechanism. In a context with considerable health and safety risks, it could provide an incentive to miners to set aside part of their income for health insurance. Yet, we do not have sufficient information on whether this would work, and under which conditions.

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Second, we will explore potential mechanisms for financial inclusion. Indeed, access to finance has become a central tenet of various efforts to assist ASM in its formalization (World Bank, 2024). As an economic catalyst, through cooperatives or informal associations of ASM actors, access to credit may reinforce the formalization of ASM in providing financial resources for investment, working capital and acquisition of equipment and machinery. As a consequence, productivity and professionalization of ASM is assumed to promote decent employment and keep them in formality (World Bank, 2024; UNDP, 2021).