New fund gives Africans leverage over extractive industries

A man from the Democratic Republic of Congo shows wolframite in his hand. The World Bank is proposing a $50 million trust fund to help Africa secure the best natural-resorce contracts. Photo by: Julien Harneis / CC BY-SA

The World Bank is proposing a $50 million trust fund to help Africa secure the “best” natural-resource contracts, with terms for enhancing environmental, social and economic sustainability.

The announcement comes shortly after the bank released a report saying that growing oil and mineral investments in the region have not translated to lower levels of poverty. As of 2009, Africa accounted for 15 percent of the world’s oil reserves, 40 percent of global gold supply and 80 percent of the platinum group of metals.

“Being able to negotiate the best-possible deals is essential for African countries to convert more of their natural resources wealth into inclusive and sustainable growth,” Makhtar Diop, World Bank’s vice president for Africa, said in a press release. “These natural resources could be transformational for the continent.”

The trust fund aims to provide African countries the technical capacity to assess contractual terms from oil, gas and mining investments through the following areas of assistance, according to a concept note.

  • Legal advice to secure better terms from contracts in extractive industries.

  • Carry out diagnostic assessments to identify capacity gaps, “create opportunities for development and manage risks.”

  • Technical assistance to evaluate the impact of and find solutions to environmental and social risks.

  • Provide advice on developing upstream and downstream value chains for extractive industries.

Although generally demand-driven, the trust fund will give preference to countries willing to receive advisory services. In the pilot phase, preference would also be given to countries with notable oil, gas, or mineral reserves and ongoing contract negotiations, and significant social and environmental challenges.

To ensure all avenues of cooperation can be explored, there will be regular round-table discussions and forums with development partners such as the African Development Bank, Extractive Industries Transparency Initiative, and other companies and organizations in the industry.

Find World Bank projects and tenders in Africa, and see which organizations are working in the region. Read more development aid news online, and subscribe to The Development Newswire to receive top international development headlines from the world’s leading donors, news sources and opinion leaders — emailed to you FREE every business day.

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    Adrienne Valdez

    Adrienne Valdez is a staff writer for Devex, covering breaking international development news for the Development Newswire. Before joining Devex, Adrienne worked as a news correspondent for a public-sector modernization publication.