Tag public policy

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.

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.