4 December 2012

Africa: World Bank Urges Mapping of Natural Resources

Maputo — African countries endowed with enormous reserves of natural resources should undertake detailed mapping of them, in order to be in a better condition to negotiate contracts with companies wishing to exploit those resources, advised the World Bank’s deputy president for poverty reduction and economic management, Otaviano Canuto, in Maputo on Tuesday.

Giving a lecture on “The Extractive Industry: Challenges and Prospects for Mozambique”, Canuto said that, although Mozambique could reap enormous benefits from its mineral resources, the lack of an exhaustive geological survey would make it difficult to arrive at a reasonable estimate of the size of the reserves.

“Countries can make enormous gains, but more detailed maps have to be drawn up about the riches in the subsoil, and these have to be in the public domain”, he said.

The World Bank, Canuto added, insists that this should be on the list of priorities for any government.

He also stressed that government should establish an environment of transparency in the contracts they sign with investors. That was a sine qua non for assessing who gains what from the exploitation of resources. He advised that contracts should not be rigid, but also should not be too flexible – in general they should contain clauses which envisage how to deal with situations that will vary over the life span of the contract.

“This is a healthy principle about contracts that we can generalise about, based on experience from across the world”, he said. The possibility of changing circumstances should be envisaged at the time contracts are negotiated and signed.

Other challenges facing governments, Canuto said, are establishing the tax framework for investment in natural resources and building up the capacity of the public sector, so that it can make a proper cost-benefit analysis of the investment, and advocate fairer measures in distributing the benefits.

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