THE EXTRACTIVE INDUSTRY

7thg-Oct-2013

By –Nankwanga Eunice Kasirye

Nankwanga Eunice with  Luisa Moreno during an exclusive interview

The discovery of the extractive resources   in countries such as Uganda could easily be seen as an opportunity to transform lives economically. This is because literally the resources are expected to bring with the good jobs, infrastructural developments and other related economic strides.  An international resource analyst from Canada Luisa Morena makes an insight on the host country possibilities to attain better deals devoid of the resource curse.

But it is common that countries that discover the natural extractives such as oil, gas and minerals are always marred with political strife, governance inefficiencies and good gross domestic product not translated within the population

 Since the resource rich countries have no or little knowledge about the resources, their governments often have a problem in developing the resource. The sector is capital intensive and requires a pool of expertise that leaves the host country with no choice but develop cooperation between governments and multinationals. This is to help in acquiring capacities for the extraction and the entire development process of the resources.   It is often obvious that the international resource actors have vested interest and the situation places them at an advantage against the resource rich country.

Taking up asset finance loans is often an obvious option to help the host country develop some capacity in the sector. The loans are always taken against the resource as collateral with the lenders offering own expertise to appraise the resource underneath.

Luisa Moreno,Ph.D-Extractive  industry Analyst,Canada

But Luisa Moreno an extractive resource research Analyst from Canada says that it is important for host countries such as Uganda, to build internal capacities in the extractive industry through research and studies to avoid being manipulated. This is to help in acquiring an approximate accurate knowledge on the deposits and their values that obviously offers an advantage to the host country while negotiating deals with giant economies and the private sector resource actors on the same.

Driving experience from Canada where the sector is fairly at a mature stage, Luisa says oil companies have to be pressed to implement the local expertise into the development chain. It is imperative that the host country embed and   enforce the national content clause in their legislation.  This does not only improve the bargaining power of the host country but also reduces the cost of the international companies since the expertise is locally sourced.
The host resource countries therefore have the obligation to contract with the international corporations in a manner that gives them a better deal to avoid the resource curse. This is when competition eliminates expertise rent allowing the host country to receive a larger faction of resource market value.