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Extractive Industry (EI) Management \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ - PowerPoint PPT Presentation

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Extractive Industry (EI) Management ____________________________________________________________. Issues and Challenges & The Role of the ADB --------------------------------------------------------------------------------------------------------- Presentation by G. NEGATU

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Extractive industry ei management

Extractive Industry (EI) Management____________________________________________________________

Issues and Challenges


The Role of the ADB


Presentation by G. NEGATU

Ag. Manager, Governance Division (OSGE.1)

African Development Bank


Defining natural resources
Defining Natural Resources

  • Natural resources are “gifts of nature”.

  • They are classified in three main groups:

    • Renewable (land, water, forestry, fisheries)

    • Non-renewable (minerals, fossil fuels, metals)

    • Non-depletable (wind, solar, energy)

The adb and the ei sector
The ADB and the EI Sector

  • Traditionally financed lending/non lending operations

  • Currently involved in private sector operations related to extraction of Natural gas, Minerals, Gold, Titanium, Copper, Alumina, Platinum, Coal, Zinc

  • The Bank Group….

    • Ensures transparency through its due diligence work;

    • Ensures environmental & social protection through safeguard measures; and

    • Fights corruption & promotes good governance through sector specific anti-corruption measures.

  • The Bank Group is also developing a new strategy to guide its engagement in the sector.

Background context of sector in africa
Background & Context of Sector in Africa

  • African countries increasingly dependent on natural resource exploitation to finance Development and progress in MDGs

  • Several RMCs are joining league of oil economies and mineral exporters (Uganda, Sudan, Sao Tome and Principe, Mauritania, Tanzania)

  • Heavy dependence on EI has political and economic risks:

    • Commodity price volatility in global market;

    • Low income elasticity of world demand – low revenue;

    • Creates enclave economies; with few linkages to the rest of the economy.

Overview of ei management in africa
Overview of EI Management in Africa

  • Political Issues:

    • Powerful & corrupt vested interests;

    • Conflict over ownership/exploitation rights (Sudan, Angola/Cabinda, Niger Delta); and

    • Illegal exploitation of resources (logging, oil theft).

  • Economic Issues:

    • Economic distortions (Dutch disease);

    • Enclave nature of activities (lack of linkages to economy, foreign ownership); and

    • Lack of corporate social responsibility.

Overview of ei management in africa cont
Overview of EI Management in Africa (cont.)

  • Environmental Concerns:

    • Over-exploitation (timber in Ghana and Cameroon, Copper in Zambia); and

    • Ecological degradation (strip mining, gas flaring).

  • The Globalization Factor:

    • Intense geo-political competition for natural resources–India & China with limited resources and insatiable appetite; implications for price and standards

Overview of ei management in africa cont1
Overview of EI Management in Africa (cont.)

  • But all is not lost……

    • Some RMC are managing their natural resources well (Botswana, South Africa, Morocco, Namibia)

  • Key lessons: successful harnessing natural resources for growth and poverty reduction depends on:

    • Sound management & regulatory practices;

    • Good governance & institutional capacity;

    • Respect for the rule of law; and

    • Good infrastructure

Key challenges for nrm in africa
Key Challenges for NRM in Africa

  • Irreversibility of losses and conservation need determined by:

    • Traditions;

    • Property rights enforcement; and

    • Preference for the present relative the future.

  • Creating viable, integrated, and diversified value chain that sustain wealth and guard environment.

  • Prudent investment of windfall revenue to diversify economic base and ensure predictable revenue flows

Key challenges for nrm in africa cont
Key Challenges for NRM in Africa (cont)

  • Equitable distribution of benefits

    • National versus regional and local;

    • Inter-generational equity; present vs. future generations

    • Targeted Pro-poor interventions & outcomes

  • Implementation of good governance and sound macroeconomic policies to:

    • Curbing rent seeking and corrupt practices;

    • Manage foreign exchange rate escalation—Dutch disease

    • Stabilization of revenue volatility and diversification;

  • Building domestic capacity: technical and managerial capacity for domestic natural resource management

Way forward the role of the adb
Way Forward & The Role of the ADB

  • Dialogue on Economic Management:

    • Policy dialogue on effective revenue stabilization and expenditure management through (DBS, CSP, CGP).

  • Governance & Institution Building:

    • Enhanced ADB governance programming to promote transparency, accountability & decentralized revenue sharing.

    • Building capacity in sector ministries & local governments to improve NRM, accountability & transparency of revenue management, legislative capacity to create an enabling environment & promote stakeholder participation; all done through ISP, TA, DBS, SWAP, Grants

Partnerships for regional effectiveness
Partnerships for Regional Effectiveness

  • Local Level Partnership: with stakeholders to build capacity to manage natural resources, curb corruption & reduce conflicts

  • Regional Partnership: because many natural resources span national borders and create inter- jurisdictional externalities; to complement regional agreements/initiatives (NEPAD/APRM); for better harmonization of laws, instruments & support programs

  • International Partnership: to promote transparency, combat corruption and reduce possible conflicts; develop joint strategies to implement and enforce international standards and treaties; and promote corporate citizenship and reduce trade barriers

  • Government, Private Sector & Local Stakeholders Partnership for effective agenda setting, informed participation up-stream in the management of resources and revenues, and accountability pacts

Partnerships cont
….Partnerships (cont.)

  • Knowledge sharing & best practices

    • Generate relevant and timely knowledge on developments in cutting edge technologies.

    • Distill lessons and best practices in the sectors, based on regional and global experience.

    • Convene other development partners around a harmonized and coordinated regional strategy and action plan for building capacity in the EI sector.