Category Equity

Natural resources – a curse, a blessing, or a “preventable disease”

According to conventional wisdom, a rich endowment of natural resources represents a curse, not a blessing, as resources are said to do more harm than good. Findings show that the resource curse may be overstated in the case of Mozambique.

Firstly, natural resource dependence has been linked to increased incidence of civil war in places like Angola, Sierra Leone and the Democratic Republic of Congo.

In the case of Mozambique, natural resources were not a factor in the civil war. A distinction can be drawn between resources that are “lootable” – those that can be exploited with out sophisticated technology – and those that require industrialized production. While there is artisanal production in Mozambique, the majority of the mineral wealth can only be exploited with industrial technology.

Infrastructural limitations are casting doubts on Mozambique’s ability to meet ambitious predictions on coal exports

Ten years ago, Mozambique did not have an extractive sector. Today, many predict a coming natural resource boom in Mozambique. While there is no shortage of coal in Mozambique, there is growing hesitation around the country’s ability to export and subsequently generate revenues from this natural resource.

It has long been known that there are vast coal deposits in Tete and Niassa provinces. According to industry analysis, Mozambique has the potential to provide 20% of the world’s sea-borne coking coal by 2025.

World Bank’s Vice President for Africa, Diop: “Too often local populations suffer …the development neglect of extraction…

PARIS, October 5, 2012 - With new discoveries of oil, gas, and other minerals generating a wave of significant mineral wealth in African countries, the World Bank today launched a new fund to help countries on the continent level the playing field and ensure equitable deals in their natural resource contracts with international companies.

With Africa holding 15% of the world’s oil reserves, 40% of its gold, and about 80% of the platinum group of metals, natural resources represent important development opportunities for the continent. For example, oil production has been growing steadily in Africa, and is expected to continue to rise at an average rate of six percent per year for the foreseeable future.

UNICEF tells Foreign Affairs – Helping the Bottom Billion is Good — and Good Business

Interesting advice for how the extractive indsutires can make long term and sustainable investments in Mozambique – prioritise the poorest! See below…
May 21, 2012
Prioritize the Poorest – Helping the Bottom Billion is Good — and Good Business
Robert Jenkins and Anthony Lake
ROBERT JENKINS is Associate Director for Policy, Planning, and Programme Monitoring at the United Nations Children’s Fund. ANTHONY LAKE is the Executive Director of the United Nations Children’s Fund.

Students display their work at the Anganwadi centre in Jamsaut village in Bihar. (Gates Foundation/flickr)

The world of international development has long been divided between idealists and pragmatists. The idealists give more weight to addressing the needs of the world’s most destitute. The pragmatists are driven more by impact at the aggregate level, such as increasing GDP per capita. A growing body of evidence, however, suggests that the interests of these groups coincide. In many cases, it is most cost-effective to focus on the poorest groups.

Taxes for good?

I spend a lot of time thinking about the revenues from the extractive industry and the wait predicted by some experts as to when the monies will actually be visible in the national treasury.  My concern is that children don’t have the luxury of waiting a decade or two for coal and natural gas revenues to flow in and out of the national coffers and eventually into the pockets of their parents – through decent employment, their teachers – through quality education and their community health clinic – through basic vaccines and other core services.  Children need their rights fulfilled now.  Children are stunted due to inadequate nutrition and care practices today and will not have the capacity to grow into the leaders of tomorrow if they are physically and cognitively compromised in their first two years of life.  Investing in social protection systems could make the difference to the most vulnerable and give them a fighting chance for their futures.

If I had a million dollars…

Many of us could spend a few moments daydreaming about winning the lottery or finding a pot of gold at the end of a rainbow.  But in resource rich countries like Mozambique, the discovery of coal and natural gas, among other mineral resources, can place a Government within a tempest of rapidly evolving circumstances where decisions with regard to the legal, policy and fiscal regimes can mean the difference between sustainable development for all or battling the resource curse for decades to come.

Building the investment case for children

The extractive industries are the most important developmental opportunity and challenge in Mozambique today.  There is great potential for the coal, gas and other mineral resources to act as a driver for development.  There are also large risks involved.  Tete province, the current centre of mining exploration and production, is already one of the poorest provinces in the country with 60% of children experiencing deprivation-based poverty: only 69% of children are in primary school and 48% of children are stunted.  The mining sector is already causing substantial price inflation in the province, particularly for food, which will impact poverty rates and the nutritional status of children.  Anecdotal evidence from families in resettlement areas indicate even less access to basic health services and education, while long term environmental effects may lead to even more precarious livelihoods for the populations in and around the mines in the years to come.

Welcome to The Chapa!

Grab a seat and hold on, this is going to be an exciting ride. With international human rights standards as our roadmap, our destination is the future of Mozambique where all children’s rights are fulfilled.  The journey will be long and bumpy, with unexpected diversions a certainty.  The trip will also be expensive and staying the course may require tough choices along the way.

An ever present factor along our social policy journey is the debate over identifying fiscal space in the budget for social and economic development.   But what is fiscal space?  It depends who you ask, i.e. it means different things to different people in the development, financial and aid communities.   Experts have defined it as space to spend a government’s budget without jeopardizing the stability of the economy.   The same experts debate how certain resources in the budget can be labeled or calculated.  And yes, yet another group of experts, including the UN, define it in relation to how government’s mobilize resources to combat poverty and achieve the Millennium Development Goals (MDGs).

All aboard the Social Policy blog

In Lewis Carroll’s, Alice in Wonderland, Alice asks the Cheshire cat to tell her the way to go. “That depends a good deal on where you want to get to,” answers the cat. “I don’t much care where,” Alice replies, “as long as I get somewhere.” The cat responds, “Oh, you’re sure to do that, if only you walk long enough.”

Alice in Wonderland

Social policy is about achieving social outcomes in cost-effective ways. It’s the final destination of the long path of sustainable development. But choosing the ‘right’ route (the means) to achieve those goals is as important as the final destination. And understanding the bumps and detours along the way makes all the difference…

The Chapa will take us down that road, asking questions at each stop and collecting innovative ideas along the way. <

Join the ride.