Overview

About 3.5 billion people live in countries rich in oil, gas or minerals. But all too often these resources have become a source of conflict rather than opportunity. Many of these countries also suffer from poverty, corruption, and conflict stemming from weak governance. This must change, especially as some of the world’s lowest-income countries have abundant resources. Non-renewable mineral resources play a dominant role in 81 countries, which collectively account for a quarter of world GDP, half of the world’s population, and nearly 70% of those in extreme poverty. Africa is home to about 30% of the world’s mineral reserves, 10% of the world’s oil, and 8% of the world’s natural gas. 

The World Bank Group helps countries seize opportunities for development, poverty reduction, and boosting shared prosperity. Most of the Bank Group extractive industries interventions are in the governance area, to improve domestic resource mobilization, increase transparency, and promote inclusive growth so they provide benefits for local people while ensuring industry respect local community needs and the environment.

 

Last Updated: Apr 05,2016

The Bank Group’s work in the extractives sector focuses on three main pillars that support the overall goals of ending extreme poverty and boosting shared prosperity: 1) governance and domestic resource mobilization; 2) inclusive growth, jobs and infrastructure; and 3) environmental and social sustainability.

Governance and Domestic Resource Mobilization: The Bank Group works with governments to support the development of fiscal policies for oil, gas, and mining regimes and capacity building for effective revenue administration. This starts with supporting capacity building for contract negotiation, and includes regulatory frameworks, tax and royalty administration as well as revenue management.

To support transparent revenue management, the Bank supports the implementation of the Extractive Industries Transparency Initiative (EITI) through technical assistance to countries working to publish and verify company payments and government revenues from oil, gas, and mining activities. A total of 51 countries are now implementing this standard, of which 31 are compliant. For over 10 years the EITI Multi-Donor Trust Fund, managed by the World Bank, provided technical assistance to governments implementing EITI requirements. Moving forward, World Bank support to EITI will be administered through the EGPS Multi-Donor Trust. 

Inclusive Growth, Jobs, and Infrastructure: Local communities stand to benefit more if they participate actively in the extractive industry’s operations. This provides a chance to leverage the industry’s infrastructure, job creation, and small business opportunities to help enable sustainable development over time.

The Bank is working to promote dialogue on Local Content Policy as an area where local procurement and human resources can encourage economic diversification. Where direct employment can often be low due to mechanization, the Bank focuses its efforts on workers skill development to help increase local employment in higher income positions.

We also help governments integrate extractive industry-driven infrastructure development into long-term economic planning and identify policy instruments conducive to shared use infrastructure development.

Environmental and Social Sustainability: We work with governments to develop strategic Environmental and Social Assessments to anticipate sector-wide impacts and to incorporate environmental and social priorities into extractive industries’ policies and regulatory arrangements. One specific area of focus is ending routine gas flaring at oil production sites around the world as a way to increase energy access, improve efficiency, and mitigate climate change. The Global Gas Flaring Reduction Partnership (GGFR) works with industry and governments around the world to harness otherwise wasted natural gas, and to put it to productive use rather than flaring it into the atmosphere.

 

Last Updated: Apr 05,2016

The Bank Group is active in the extractive industries in about 70 countries and is the largest provider of extractives-related development assistance by a significant margin. Our cumulative investment over the past decade was about $9 billion. In FY15, World Bank lending operations in extractives totaled $480 million directed to the poorest countries, with an additional $19 million in co-financing from other donors. Most of these projects were implemented in Africa, with one in South Asia and one in East Asia. In addition, the Bank had new trust fund commitments in FY15 of over $38 million for extractive sector reforms.

Governance and Domestic Resource Mobilization:

Ghana: The Ghana Oil and Gas Capacity Building Project has successfully improved regulatory capacity while furthering the transparency of revenues and payments in the country’s oil and gas sector. At the inception of the project, the Petroleum Commission of Ghana (PCG) did not yet exist and the project has played a crucial role in helping PCG assume its role as an upstream oil and gas regulator. Today, PCG has 68 staff members, of which roughly one-third are technical staff in geology, geophysics, and engineering. PCG is beginning to function as a credible regulator on resource management and local content issues, which are two of its key mandates. In parallel and in cooperation with Ghana EITI, the oil and gas unit at the Ministry of Finance received training and equipment to support preparation of quarterly reports on oil and gas revenue. These reports are now published regularly and are a key output that demonstrate improved capacity and enhanced transparency in the sector.

Inclusive Growth, Jobs, and Infrastructure:

Guinea: The Bank began funding development of a mining infrastructure plan for Guinea in FY13 that explored the principle of shared, multi-use infrastructure for mining companies and the wider economy. Instead of each mine developing its own rail and port infrastructure, the model showed that shared, multi-use infrastructure was practical and economically viable and would also lead to significant savings in capital costs, a reduced environmental footprint and economic benefits for the country. Three infrastructure corridors were proposed - the northern (bauxite), northeast (gold) and southeast (iron ore). Guinea has been using the model to promote infrastructure investment in the country and to coordinate infrastructure plans for the mining sector. The Bank Group is now working with the government to prepare the necessary legal and institutional frameworks to create the enabling environment for development of the infrastructure.

Social and Environmental Sustainability: Papua New Guinea:  As part of a mining technical assistance program that started in FY08, small grants for women are being supported and a national multi-departmental Women in Mining Technical Committee has been established and trained. In addition, programs supporting empowerment of women in oil, gas, and mining communities (which include components on Artisanal and Small Scale Mining, literacy and numeracy, and adolescent girls empowerment) have to date supported training for over a thousand women.

Last Updated: Apr 05,2016

To achieve goals of sustainability and improved governance in extractive industries, which are important drivers of economic growth and poverty reduction in many developing countries, the Bank Group has developed partnerships with a wide range of organizations in the sector. This helps align efforts, while also leveraging resources and expertise to bolster our efforts to end poverty and boost shared prosperity.

Last Updated: Apr 05,2016


1 million jobs
generated in South Africa are linked to mining and mining supply industries
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