Implications of credit constraint on the formalization of artisanal and small-scale mining (ASM) in sub-Saharan Africa

Abstract

Artisanal and small-scale mining (ASM) operations continue to grow across sub-Saharan Africa and serve as a source of livelihood to many rural communities. Owing to safety, health, environmental, and social concerns, the occupation has been regarded as a menace in several sub-Sahara African countries. Recent studies in the field of ASM prescribe formalization as a way to tame its excesses while enhancing its potential. This paper explores the concept of formalization as it relates to ASM and how it is being affected by the funding situation. The paper seeks to address the question as to whether formalization of artisanal mining operations can achieve the desired results in view of the lingering credit constraints in this mining subsector. It is recommended that, as a way of extending the scope of formalization, focus should be placed not only on access to credit in ASM but also towards optimizing the creditworthiness of ASM firms, with the goal of improving the viability of the operations.