Category Poverty

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.

“Minerals will not solve all our problems…” says President Guebuza.

President Guebuza

(2012-05-10) Mozambican President Armando Guebuza warned on Monday that the social and economic problems faced by Mozambicans will not be solved simply through the exploitation of mineral resources, but through integrating the mining sector with other areas of the economy.

Guebuza was speaking in London at a meeting with the Mozambican community resident in Britain.

He recognised that Mozambique could have a brilliant future thanks to the mineral resources it possesses, and others that may be discovered in the future. However, this will only come about gradually.

“The minerals we have discovered will not give their best results immediately”, he said. “It will take time for us to recover the investments made, It will take time but that doesn’t mean that we won’t have gains. We shall gain from the jobs created and the taxes paid. Gradually there will be benefits, although not at the level that would be desirable”.

“This situation is creating impatience”, Guebuza admitted. “But we must keep a cool and clear head, because the benefits will 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.