Tag annual growth rate

Government Revenues – the only real benefit from the extractive sector?

Advocates of natural resource extraction in developing countries commonly list five benefits: economic growth, employment, infrastructure, community investments, and government revenue.

Our conclusion is unambiguous: the overwhelming benefit is government revenues. Here’s a roundup of why…

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.

A number of hurdles suggest that liquid natural gas exports are unlikely to begin before 2020

Offshore natural gas finds have been among the big stories in the sector over the past several years. The Italian oil company ENI reports 40 trillion cubit feet (tcf) of recoverable natural gas and American giant Anadarko reports 30tcf.

These projections, if proven, would place Mozambique among the top fifteen countries in total gas reserves.

Unlike coal where massive investments have already been made, the future of the gas sector is far less clear. Although exploration has led to ever-expanding reserves, it is important to note that no company has yet made the formal decision to develop a liquid natural gas (LNG) project in Mozambique.

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.

“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”.