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The Challenges of Human Development in Oil and Gas Economies Dr. John O. Kakonge Senior Deputy Director Special Unit for South-South Cooperation UNDP New York Seminar on the Negotiation and Implementation of Oil, Gas and Mining Contracts Libreville, Gabon April 2008
Energy has become the defining issue of our age in national, regional and global contexts of our interdependent world, and developing countries will have an important role to play in shaping the outcome.
Within the next 3 to 7 years as many as 30 new oil-producing countries could reach commercial exploitation of their oil and gas sectors — all of which are developing countries.
Even in the new energy era, it is not necessarily a blessing for a country to be endowed with petroleum resources. It is how governments arrange for their resources to be extracted and how revenues are used that determine the success or failure of being a petroleum-endowed state.
Effective macro-economic policy for oil-endowed countries must be given high priority attention if governments are to manage the wider economy and ensure that oil revenues are used in a positive and sustainable manner.
Effective policy requirement include:
a rational rate of public sector investments to increase productivity and employment in the non-oil sectors
Promotion of human resource development and skills formation
Policies and actions to encourage competitiveness across the economy
Open and transparent financial, legal and regulatory systems
UNDP Focus Area: Private Sector Partnerships and Corporate Social Responsibility
UNDP has been working closely with a number of oil and gas companies to improve the human development situation of various communities in our programme countries.
Madagascar -- the Growing Sustainable Business Initiative
(UNDP / Total and EDF)
Sierra Leone / Liberia -- Diamonds for Development initiative
UNDP has been working closely with its programme countries in terms of national development goals and strategies .
In Cambodia , support technical, analytical and implementing capacities of the country’s civil service by assisting in the creation of several training modules on capital budgeting, public-sector management and risk management.
UNDP has worked, in partnership with other organizations and donors, in the establishment of national oil funds created for the purposes of managing oil revenues and ensuring the allocation of benefits towards human development goals as part of the Extractive Industries Transparency Initiative (EITI) .
East Timor is one such country that has established a permanent Petroleum Fund.
UNDP Focus Area: Knowledge-Sharing and Policy Dialogue
UNDP role providing technical support and world-class expertise in helping developing countries examine policy questions of specific interest to them:
In Azerbaijan , supported the government in the preparation of a report titled “Turning Black Gold into Human Gold”. The report emphasized the importance of developing an internationally competitive non-oil sector and investing in human capital .
In Nigeria , supported the government to prepare the “2006 Niger Delta Human Development Report” to respond to the tension between the management of natural resources and human development concerns .
Sharing of solutions and experiences among developing countries also constitutes a major concern for UNDP in its efforts to reconcile human development with the challenges presented by oil and gas industries in these countries.
In recent meetings, UNDP, through the Special Unit for South-South Cooperation, has been able to bring together established oil producers in the South alongside new and emerging oil-exporting countries (Qatar, September 2007).
UNDP Regional Programme has just approved a programme to support the African countries in the management of their natural resources, including oil and gas.
Special Unit for South-South Cooperation is also developing a sub-regional project to assist in the capacity-building of emerging oil- and gas-producing countries in the South, including those in Africa. The training will be offered within the institutions of the South.