Africa’s oil, gas and mining sectors must create more direct and indirect jobs to drive prosperity
At UNCTAD’s 17th African OILGASMINE Conference and Exhibition, taking place in Khartoum, Sudan, from 23 to 26 November 2015, governments, the private sector, and civil society will discuss redefining the role of extractive industries in job creation, both within the sector and in the broader economy.
Conference participants from all over the world will analyse the potential for exploration and production of oil and gas, and investment opportunities, in Sudan and other African countries.
The oil, gas and mining industries – currently employing around 1 per cent of Africa’s workforce – can do more to create more stable, direct and indirect wage-paying jobs that not only promote economic growth but also protect the environment and foster social inclusion.
In Africa, only around 5 million new jobs are created for more than 12 million young women and men joining the labour force every year, but an International Finance Corporation study in Ghana found, for example, that the creation of one direct job in the mining sector could generate 27 additional jobs in the wider economy.
Africa holds 8 per cent of world oil reserves and gas reserves, and the United States Geological Society ranks the continent first or second in its share of world reserves of a long list of metals and minerals, such as bauxite, chromite, cobalt, ilmenite, industrial diamond, manganese, phosphate rock, platinum-group metals, rutile, soda ash, vermiculite and zirconium.
The benefits that the extractive industries could bring to developing countries include revenues for host countries through production sharing arrangements, royalties and income taxes. The development of the extractive industries could also generate wider economic benefits and promote inclusive growth and sustainable development.
The extractive industries, given their capital intensive nature, may not create many direct jobs, but their linkages with the broader economy may help generate additional jobs. Through these linkages the sector is connected with the suppliers of inputs; outputs are processed into added-value products; demand is generated for locally produced goods and services; and an enabling environment is created for new industries using skills and capabilities acquired from the extractive industries.
To compare Africa’s potential with developed country experience, a recent survey of the United States’ oil and gas industry revealed that the industry as a whole generated over 9.3 million permanent jobs across the nation, among which are 3.1 million jobs in retail trade, and half a million jobs in health services.
Such jobs are not created automatically. Targeted policies such as developing linkages, removing entry barriers to specific industry value chains, building the necessary infrastructure to attract investment, improving access to finance and developing workforce skills needed, are crucial to expanding job opportunities and increasing employment.
Artisanal mining, as a labour intensive mining process, is, for example, well known to generate more direct and indirect jobs than large-scale mining. In Africa artisanal mining is estimated to create about 8 million direct jobs which support over 45 million people.
The conference, organized by UNCTAD and the Government of Sudan, is being held in the context of the new development agenda: Sustainable Development Goal 8 calls for action “to achieve full and productive employment and decent work for all women and men, including for young people and persons with disabilities, and equal pay for work of equal value by 2030”.