Q: As the new Director for the Energy and Extractives Global Practice at the World Bank, can you tell us about the greatest challenges you face in Extractives?
A: Extractive industries are complex and often risky, but when managed well they can foster transformative development in those countries that most need it. Extractives play a dominant role in 81 countries whose economies together account for a quarter of world GDP. These 81 countries also represent half of the world’s population and nearly 70 percent of those in extreme poverty. Given the need of these countries, a focus on natural resource management is important, but we must work diligently to mitigate the risks and improve governance structures so that the wealth generated from these activities benefits the poor. Similarly, a cornerstone of all the work we do is to mitigate the social and environmental impacts of extractives projects so that they benefit neighboring communities as well as broader economic growth. We also look forward to strengthening our work to improve governance of the extractive industries through efforts like the Extractive Industries Transparency Initiative (EITI) and minimizing the environmental footprint of projects by reducing routine gas flaring (Global Gas Flaring Reduction, GGFR).
Q: Given your background, can you tell us more about how the World Bank and the International Finance Corporation (IFC), the private sector arm of the World Bank Group (WBG), work together on Extractives?
A: The public policy and private sector arms of the WBG work closely together when it comes to extractive industries. The regulation, governance and oversight of the industry cannot be separated from the private sector investment and performance. This is why the World Bank and the IFC´s efforts complement one another. While the IFC may invest in a private sector venture that has potential to promote development, the corresponding government negotiation with that company, regulation of their operations and taxation/administration of revenues are essential to assuring that the investment contributes to the sustainable development of the country. The WBG support to a country will depend on its request and specific needs (some countries may need more assistance on governance than on attracting private sector investment) but ultimately each country needs both private sector investment and governance capacity for effective, well managed extractive industries that benefit society as a whole.
Q: How do you envision countries benefiting from extractive industries?
A: I envision countries being able to transform more of their resource wealth into better living standards for the poor. This could be a game changer in Africa considering the amount of resources in that region. Another important aspect of extractive industries contributing to development is generating more understanding and dialogue between government, communities and companies that represents the shared benefits from the industry. As extractive industries and government operate in a more transparent manner, this trust will be generated and resource wealth can ideally become a source of development and not one of conflict.