Many resource-rich developing countries fail to realise the full development potential of their natural resources. This is especially acute in the case of oil, gas, and mineral resources. Evidence from many resource-rich countries shows their performance on human development indicators compares unfavourably to less-endowed countries. At the root of this underperformance—often referred to as the “resource curse”—is the failure by governments to properly address the institutional and policy challenges that come with natural resources. (IMF, 2010)
More than 50 countries depend on oil, gas and minerals as their most important sources of government and export revenues. Large-scale fisheries, forestry and leasing of agricultural lands are also becoming important sources of revenue. As the government is managing such resources in trust for the people, the people have a right to know what is being done with their natural wealth.
Mismanagement and corruption have many manifestations and can have dire consequences. Some countries negotiate poor terms with extractive companies, forsaking potential long-term benefits. Many countries do not collect resource revenues effectively. And even when resource revenues do end up in government coffers, they aren’t always spent in ways that benefit the public. (Revenue Watch, 2013).
Transparency and accountability are crucial in the governance of natural resources, from the decision to extract to the granting of concessions, the collection of revenues and the management of resource revenues. This can increase the efficiency of government policies, reduce opportunities for self-dealing and diversion of revenues for personal gain, raise the level of public trust and reduces the risk of social conflict. An informed and engaged public can hold the government to account, but will also help ensure that complex, large-scale projects meet government standards for environmental and social protection as well as revenue generation.
Public disclosure requirements can improve the quality of data the government gathers and maintains. This makes it easier for relevant bodies such as financial, energy and mining ministries, as well as environmental and regulatory agencies, to do their jobs. Reliable and frequent data can make it easier for governments to plan and manage their budgets and long-term development plans. Transparency also reduces the cost of capital.(Hameed, 2005)
NB: This topic relates to oil, gas, mining, forestry and fisheries as well as to the leasing of agricultural lands. However there are also separate sections dealing with specific issues in the forestry, fisheries and land sectors. This topic relates to oil, gas, mining, forestry and fisheries as well as to the leasing of agricultural lands. However there are also separate sections dealing with specific issues in the forestry, fisheries and land sectors. Other critical steps in support of extractive industry transparency and integrity are the enactment and implementation of Right to Information laws and the requirement that officials with a role in the oversight of the extractive sector disclose any conflicts of interest.