Creating Resource Corridors

At a Glance
  • A sequence of actions and investments along a transport route servicing large extractive industry projects to promote economic development and diversification constitutes a ‘resource corridor’. 
  • Hard infrastructure refers to physical investments in water, power, ICT or other types of infrastructure that complement the existing transport route, as well as feeder infrastructure to connect surrounding regions. 
  • Soft infrastructure refers to institutions, coordination mechanisms, regulations, and services to facilitate economic growth and well-being.
  • One of the key lessons learned from corridor and growth pole initiatives is that soft infrastructure considerations are just as important as the physical infrastructure itself.
  • Access to finance, land acquisition, and sound governance are fundamental in order to promote economic activity around transport infrastructure.
  • Coordination among government institutions and private sector actors is key to establishing financing arrangements, shared-use infrastructure solutions, and creating appropriate business environments.

A ‘resource corridor’ can be defined as a sequence of actions and investments along the transport route servicing a large extractive industry project to promote economic development and diversification. Economic opportunities tend to develop around large-scale investments and trading hubs. By coordinating investments in supporting ‘hard’ and ‘soft’ infrastructure around a natural resource project and along the transport route, these development opportunities can be accelerated.

Hard infrastructure refers to physical investments in water, power, ICT or other types of infrastructure that complement the existing transport route, as well as feeder infrastructure to connect surrounding regions. Soft infrastructure refers to institutions, coordination mechanisms, regulations, and services to facilitate economic growth and well-being. Given that pipeline infrastructure cannot be shared in the same way as road or rail infrastructure, resource corridors are most often associated with mining investments.

The concept of corridors and related growth pole development whereby specific geographical regions are identified and targeted to increase economic activity is not new. A resurgence of this economic planning tool occurred during the 2000s as demand and prices for commodities rose. Extractive industry projects were planned and developed in many resource rich countries that could serve as anchor investments for resource corridors. In African countries in particular, spatial development initiatives were developed by governments and development partners using geographic information systems (GIS) to assess the opportunities of resource corridors anchored around extractive industry projects and associated infrastructure. Resource corridors feature prominently in the regional integration literature and are also a key pillar of the African Mining Vision

The benefits associated with focusing on specific regions to boost economic development is particularly appealing in the African context given the large untapped reserves, the lack of infrastructure (or obsolete infrastructure), and financing gap that most governments face. Given limited government resources, prioritization can be made more manageable by leveraging private sector investments and focusing on high-potential growth areas to invest in supporting infrastructure. From a regional perspective, focusing on corridor projects to advance integration among neighboring countries is also advantageous. There is an incentive to discuss and negotiate agreements when there is a private sector company looking to develop a project that may benefit both countries and that hinges on cross-border agreements. Corridor specific agreements can lead the way in harmonizing administrative and trade policies among neighboring countries.

The results to date of this new wave of resource corridor planning are mixed. Many corridor projects continue to be at the planning stage as the planned extractive industry investments never materialized. After commodity prices came crashing down in 2014-2015, mining companies, in particular, retracted from large-scale greenfield mine and infrastructure investments and focused on managing on consolidating their cash-flows. Some corridor projects, however, did go ahead, such as the revamp of the Nacala corridor in Northern Mozambique anchored around the coking coal project by Vale.

One of the key lessons learned from corridor and growth pole initiatives is that soft infrastructure considerations are just as important as the physical infrastructure itself. Access to finance, land acquisition, and sound governance are fundamental in order to promote economic activity around transport infrastructure. Furthermore, coordination among government institution and private sector actors is key to agree on financing arrangements, shared use infrastructure solutions, and creating a business environment that supports projects to go ahead while securing that social and environmental standards are complied with. Environmental and climate change analyses and safeguards, in particular, have fallen short in recent resource corridor assessments and implementation. This is a key area that needs to be strengthened given that these geographical policies have a big impact on land-use change. Future climatic considerations will be key in determining infrastructure investments and agriculture potential, given that agriculture is a sector that features prominently in the corridor and growth pole strategies.

Leading Institutions:

 

Key Resources

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