This document summarizes some of the key challenges in managing wealth from natural resources. It discusses how overdependence on extractive industries can cause issues like Dutch disease. It also explores challenges around equitable social and economic distribution of resource wealth, as well as political instability and conflicts that can arise from competition over control of resources. Environmental impacts of extraction activities are another challenge, requiring balancing environmental protection with development needs. Overall, the document examines economic, social, political and environmental factors that complicate natural resource wealth management.

1. NATURAL RESOURCES
WEALTH MANAGEMENT
CHALLENGES
Felix niwagaba bamanekola

2. WEALTH ISSUES
Resource Wealth Management Challenges in relation to extractive industries.
Introduction. Wealth of natural resources must still be wealth even when not extracted but then it will not make sense to people when it does not
help them to live well in the world of lots of needs, wants which must be met to satisfy a man. This calls for then to extract this wealth for the well
being of a man, this where challenges of management start to arise.
Natural resource wealth management has become so complicated that even the extractive industries have failed to manage resource revenues they get
from these industries. Recall early years of extractive industries beginning, ancient Asians dug or used oil spillages as medicine, Africans did iron ore
mining and iron smelting and this was before colonial times but still there used to be inter regional boundary conflicts, cultural, tribal and ownership
conflicts because of there natural resources. This indicates that management of natural resources wealth had been a problem mainly because of uneven
distribution, personal interests differences. During the colonial era period: Europeans colonized most of the world countries, chopping continents into
many colonies so called countries today. They were mainly after exploitation of natural resource wealth and wanting to have control over resource
wealth, this gave birth to world wars and hence the beginning of resource curse in the world blessed natural resource wealth. As of today the number of
resource wealth demand have multiplied that of early years of extractive industries and this has come up with many fierce competitors like USA,
China, Israel, North Korea, India, Russia and other Developed countries-Europe in mind. So if management of resource wealth faced challenges
when demand and actors were few what of today and in future when demand has increased and multiplied.
This paper will enlighten us about the challenges of natural resource wealth management in relation to economic, political and
social issues.

3. CHALLNGES
 Economy and natural resource wealth, Most of the countries with natural resource wealth tend to focus their
attention on these extractive industry sectors forgetting other sectors.
 This brings about over dependence on this sector and with time yields so-called Dutch disease and its related effects.
Dutch disease comes about when a country having the capacity and possibility of developing and gaining from different
sectors spends much on mineral resources extractive industry, planning and national budget concentrates on this industry
lugging behind other sectors let say agricultural industry which employs most of the local people and as a heart of developing
countries economy. With time non-mineral resources exports start to decline because a shift from non-mineral industry to
mineral extractive industry. Un employment on the side of non-extractive industry personnel increase, non-mineral products
reduce like food products increasing dependence on imports and poverty ratios. This finally will create a natural resource
economy making resource wealth management difficult for example in developing countries which have got no or less
personnel to do extractive industry activities, have less skills and experience, limited capital and other resources to invest in
extractive industry such as fossil fuels mining and production. Loan dependency for most of their economic activities finance
whether commercial or developmental. International funding is the result of this and hence control and exploitation of their
wealth. Still when the natural resources revenue start to flow, loans must be cleared and after clearing of the loans there is also
a change of planning for how to spend and consume the resource revenues.

4. CONT
Appreciation of the local currency will discourage exportation because of increased
price for local products as compared to neighboring countries’ currencies. More to
that much income from the natural resource wealth will call for high standard of
living and luxury life of the citizens forcing the country for do more importation
and not forgetting inflation. The fact that the industry needs technical workers,
employment will not be equally distributed, income will also be distributed poorly
and power and control over these revenues will be in the hands of few elites at last
bringing about resource wealth conflicts and wars. When this matures resource
curse will be the result and this takes us to the next challenge of social inequalities.

5. CONT
 Social, society and natural resource wealth, natural resources wealth distribution among the societies,
people governance and management is a big challenge. This arises because of many things talk of corruption,
different interests, races, regional differences in that these factors confuses the wealth planning bring about
conflicts on who is taking what and why questions. For example most of wealth resource countries find it difficult
to get the right ratios of wealth distribution such countries include West Africa, Sudan and Southern Sudan,
Nigeria, Saud Arabia, DRC and these issues are arising in Uganda about regional sharing of oil wealth, student
scholarships.
Still going away from the conflicts on distribution, there are other health challenges issues for extractive industries
workers and other stakeholders who are affected either inhaling toxic gases, accidents in mines. Rewarding
structures in the extractive industry brings also about income inequalities and related problems because of worker
kind needed.

6. CONT
Politics and natural resource wealth, If all persons were the same: leadership, power, hard work, laws, state and other
institutions would not be needed as of now. Persons are different and what brings difference is wealth-money for one who
controls money controls the world and for this case USA controls money in away that the world uses US dollar as the World
currency, after all she is a super power.
To control the wealth or money, all wealth sources must be controlled where natural resources- extractive industry is a key.
Recall every person, institution, country wants to become the super power hence increase the competitive rate on the control
for natural resources to control wealth-money and so the world. This brings in countries like China, Russia, India, Israel,
South and North Korea in the game that was earlier played by European countries only. For this fact resource wealth
management challenges triples due to many players, take a case of DRC, Southern Sudan and Sudan, Libya, Middle East
countries. Politics and resource wealth management cannot match mainly because of different parties interests, values.
Looking back to the Libya’s crisis where NATO and USA opened up a war and as the war was going on Americans were busy
robbing the oil and unfortunately up to now Libya’s instability have multiplying instead of calming down. Another good
example is Iraq under Saddam Hussein where USA did the same in 2003. Middle East political instabilities are also due fossil
fuel and definitely politics and resource wealth yield war in most of the times if observations are made from long ago in
colonial times, world wars times.

7. CONT
Environment and Natural resource wealth management, Extractive industry and environment cannot match
the fact that every activity in this sector has got negative consequences on the environment mention air, water, and
soil pollution. For example a mere digging of holes during mining let say gold, coal may lead to erosion, mass
wasting, earthquakes due to integration of soil and rock formation of that particular area. Then what of oil, coal
nuclear exploration, development and production activities; all these harden health and safety in the extractive
industry hence calling for more costs which is challenging in the sector for much of the wealth is some times
spend on compensation, safe technologies to reduce the environmental impacts.
Climate change is challenging natural resource wealth management in a way that planers must compare people,
environment to draw a conclusion of where to make wealth-spending focus now or in the future. If people are
chosen over environment problems will arise in future, if environment is chosen over people then no
development, wars and conflicts. Wealth spending balance from the natural resources is needed for sustainable
development to occur and this is the challenge.

8. OWNER
 Saiu felix niwagaba
 2015
 Oil, gas and energy management student
 World peaceful atomic love policy