To extract or not to extract: Natural resources decision process comes with two tails

By Maxwell Suuk

Over the years, a number of developing countries have seen curses rather than blessings after discovering their resources. Nations went to war for natural resources possessions. These resource revenues is also blamed for the slow economic growth rates, inequality and poverty. A situation whereby revenues raises a country's exchange rate as well as make a country less competitive in the other sectors.

Oil-rich Angola is a classic example. It suffered similar fate for years. Between 2005 to 2010, an average of around 17 per cent annually was realized according to the global human development index where the country scored a mere 0.49 with its people still wallowing in abject poverty. This is where the Natural Resource Decision Chain comes in. To extract or not extract? Media Capacity Development Officer at the Natural Resource Governance Institute, George Lugalambi told selected journalists from three African countries, the decision chain is very relevant. George took the journalists in the first leg of two phased training course on oil, gas and mining in Tanzania that "the decision to extract is very critical after a country discovers its resource".

Ghana got less negotiation skills therefore only 25 per cent of its oil revenue goes to the national purse. Poverty is still visible in parts of the country.

But to decide on extraction according to George, borders on four thematic areas. Discovery and decision to extract, negotiating a good deal, managing revenues as well as investing for sustainable development. Platforms like The Extractive Industries Transparency Initiative works to improve revenue management in many resource-rich countries.

The absence of any of these dwindles the fortunes over its minerals.

The Open Government Partnership co-chaired by the United States and Brazil, aims to fight corruption by securing concrete national action plans to fight corruption from governments. The Publish What You Pay and Publish What You Lend campaigns call on transnational corporations and banks to publicize their payments and loans to local authorities.

The Equator Principles seek to ensure that private bank investments do not exacerbate environmental and social risks. The World Bank-sponsored Stolen Assets Recovery (StAR) Initiative assists successor governments in tracking down the wealth looted by deposed autocrats.

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Maxwell Suuk, Journalist in Northern Ghana

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