Conference explores ways to use extractive industry revenues for human development

Oct 21, 2011

Ulaanbaatar – Extractive industries can drive human development if they are managed in transparent, inclusive and sustainable ways, concluded participants at a two-day international conference on  Avoiding the Resource Curse: Management Extractive Industries for Human Development.

The Government of Mongolia and the United Nations Development Programme hosted the conference which featured government officials, delegates, NGOs, civil society, the Asian Development Bank, JICA and private sector representatives from 20 countries. They examined how countries manage their natural resources and how mining revenues can foster development and reduce poverty.

While the extraction of mineral resources can bring about great benefits, it has also been a curse for a number of resource-rich countries where the use of natural resources has been associated with corruption, growing inequality, political instability and conflict.

“Countries still in the early stages of extractive industry development have the opportunity to design good management systems before large revenues start flowing. There is a window now for these countries to design policies which will avoid the resource curse,” said UNDP Administrator Helen Clark in her address to the conference.

Mongolia has shown an average growth of nine percent a year, largely due to copper prices and gold production. However, poverty has persisted. More than 30 percent of the population lives on less than US$1.25 a day.

“Domestic resource mobilization is crucial, and therefore we set up a Human Development Fund. Revenues and royalties from the mining industry will be pooled and used to support health and education and other social services along with our efforts towards economic diversification,” said Mongolian Prime Minister Sukhbaatar Batbold at his opening address to the conference.

“We see the natural resources beneath our soil not as mere consumption sources, as these should turn into intellectual wealth of the Mongolians. Our goal is to have every Mongolian educated and empowered with necessary knowledge and technical skills,” added the Prime Minister.

 “Avoiding a resource curse is not a simple question of making sure that mining companies are responsible. It has to ensure that the communities benefit, the country benefits and that sustainable development is on the agenda,” said participant, Mr. Jesus Vicente Garganera, National Coordinator Alyansa Tigil Mina in the Philippines.

The conference examined the relationship between extraction and conflict, and the need to take into account the impact on indigenous communities in any extractive industry. The overarching importance of strong governance and effective institutions was stressed as key ingredients for ensuring that resource revenues contribute to human development. Also vital are policies to prevent corruption, the design of legal foundations to govern extraction, and the need for transparency in extractive industry management.

They also emphasized the need to design programmes to mitigate the impact of extractive industries on the environment and the adverse effects on local communities. Finally, though mineral extraction can transform people’s lives, inclusive development and long-term sustainability will not be realized without a diversified economy that is competitive in world markets and employs a large number of workers.

 “Afghanistan is a country with tremendous potential for mineral resources and their revenue for the development of the country.  We learned from this conference some shared experiences in managing revenue from extractive industries.  Such instructions will help us to further improve the policies that we will introduce in the near future,” said Mr. Wahidullah Shahrani,  Minister of Mines in Afghanistan.

Ms Emilia Pires, Minister of Finance from Timor-Leste, said that her country is working to diversify its economy. “This conference showed us evidence-based examples of what happens when a country does not diversify and depends too heavily on one industry. We cannot let mining destroy our beaches, mountains and natural beauty. We have to find ways to sustainably develop tourism and other industries.”

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