The African Development Bank Group places renewed emphasis on Natural Resources Management as a transformational platform, emphasizing the role of natural resources in widening access to resources, promoting inclusive growth and transition to green growth. In order to respond to the challenges facing sustainable management and use of Africa’s natural resources, the AfDB created the African Natural Resources Center (ECNR). The ECNR under the Economic Governance and Knowledge Management Complex is a non-lending knowledge building entity of the African Development Bank. It’s mandate is to assist African governments maximise development outcomes derived from natural resources in Africa by boosting the capacity of the governments to achieve inclusive and sustainable growth from natural resources.
One of the ways in which the Regional Member Countries (RMCs) can benefit from the natural resources is by using the resources to industrialize and add value to the produced raw materials to provide useable products. In addition, this creates employment and by participating in such businesses, this could yield higher returns on investment. The decisions on value addition and participation in business opportunities has to be objective and based on reliable information.
2. Objective of the Study:
In addition to export earnings from oil, many oil producing countries in Africa would aspire to derive greater economic value from crude oil. By taking advantage of availability of crude oil, producing countries can leverage their crude oil and potentially play to their comparative economic advantage. However, availability of crude oil alone is inadequate to afford these countries sufficient justification to undertake activities of the oil value without the risk of eroding economic value. The prevailing national economic conditions, international trade environment and their negative and/or positive impact upon these country’s ability to successfully leverage the comparative advantage are major considerations. Based on this, it becomes clear that the call for value chain involvement needs greater understanding of these and other considerations.
The specific objectives of the study are therefore;
a) Evaluation of entry barriers to the different components of the value chain for both private firms and governments.
b) Development of a tool to avail options and permit assessment of possible policy trade-offs.
c) Rigorously analyze value chains for oil to determine the type, inputs and scale of economic benefits feasible. Assessing pre-determined economic benefits from value chain analysis of oil will be undertaken in order to ensure that the information derived from the analysis is useful for decision-making.
d) From the Bank’s perspective, the analysis will add to the level of knowledge in the operations departments as well as in the private sector department, especially as relates to the extractives. The knowledge will strengthen capacity to develop sector strategies and contribute to the Bank’s pipeline of public and private sector loans while mitigating investment risk. In the short term, this study will be part of the Center’s contribution to the Bank’s “enabling environment” work streams for the industrialize Africa strategy