Issyk-Kul Regional Development Fund: Challenges and Future Prospects

Abstract

For mining companies to successfully operate, especially in developing countries, corporate social investments are highly advisable. One of the options of corporate social investment is the establishment of a foundation, trust or fund (FTF). However, mining companies are often concerned if such funds are not fairly and properly governed, they would not bring benefits to the well-being and development of the local communities. There is a vivid example of such misappropriation of funds and discontent of the main stakeholders with its work. This is Issyk-Kul Regional Development Fund from Kumtor Gold Company located in Kyrgyzstan. The research is based on a case study of the Issyk-Kul Fund and utilizes a qualitative method. It mainly relies on semi-structured, open, and group interviews with the main stakeholders and analysis of operational documents and reports. The evidence shows that Issyk-Kul Fund faced a number of challenges in terms of the transparency and accountability of its operations. The effectiveness of the Fund’s social and economic investments was questioned a lot of times. However, there are a number of steps that can be taken by stakeholders in order to improve its functioning. The chaotic social projects should be aligned with long-term sustainable development strategy of the region. Such planning would increase the efficiency of the projects and provide more transparency for the Fund’s activities. Attempts should be done to support local businesses and create alternative livelihood sources because the dependency of the communities on contributions from the mining would undermine the sustainability of the communities once mining is closed. Disclosure of financial information is the main tool in gaining the trust of the local population and bringing the notion of profitability to the public.