Bilal, S., I. Ramdoo. 2012.Thematic Focus: "Extractive sector for development". GREAT Insights, Volume 1, Issue 5. July 2012. Maastricht: ECDPM.
Extractive resources are becoming increasingly important for the economy of a growing number of countries. This is particularly true for Africa, where new natural resources discoveries are opening the prospect that domestic resources will further stimulate development opportunities.
The challenge for resource-rich countries however is to effectively take advantage of such good fortunes to foster long-term, sustainable and equitable development. This is no little challenge. The extractive sector has often been quoted for its sad track record of malpractices, ranging from rent-capture by local or/and international elites to widespread corruption, illicit capital flight, environmental degradation, labour and social outrages, population displacement, or fuelling conflicts, to mention just a few. As a reaction, the civil society has traditionally played the role of watchdog. Today, the international community is increasingly paying attention to the need to improve governance. The Extractive Industries Transparency Initiative
(EITI), the US Dodd-Frank Act, the EU financial transparency regulations or various OECD initiatives (on due diligence, transparency, corruption, etc) are just some of the more prominent ones. This is a welcomed move.
More is yet to be done. Greater attention must be paid to the potential synergies among the key stakeholders in the extractive sector. The extractive industry, resource-rich countries’ governments and the international community must act together to make extractive resources work for development. How can a resource-rich country best combine new opportunities from its extractive sector with the development assistance it receives and with initiatives by the industries geared towards local community and national development? Donors tend to not directly engage with the extractive industry, though there is widespread recognition that private investment and initiatives in mining or oil can usefully contribute to development, notably of infrastructures. How to best tap this private sector dynamics remains a distant concern for too many.
Moreover, the linkages between the extractive sector and other sectors of the economy, in terms of vertical but also horizontal and diagonal value-chains must be fostered further.
This issue of GREAT Insights brings together a wealth of expertise on these questions, including from African development perspectives and from the extractive sector. ECDPM is committed to contribute to make the extractive sector work for development, bridging the private sector, international partners (traditional donors and emerging powers) and developing countries efforts to that end.
San Bilal and Isabelle Ramdoo are respectively Head of Economic Governance Programme and Policy Officer Trade & Economic Governance at ECDPM
This article was published in GREAT Insights Volume 1, Issue 5 (July 2012)