Africa Governance Report calls for sustainable management of natural resources
The fifth edition of the African Governance Report (AGR-V) recently launched in Kigali Rwanda has examined efforts made to improve the governance of Africa’s abundant natural resources
Entitled Natural Resource Governance and Domestic Revenue Mobilization for Structural Transformation, the report, which is produced by the Economic Commission for Africa (ECA), builds on the themes and recommendations of previous African Governance Reports which place good economic governance at the centre of Africa’s structural transformation.
“There is urgent need to sustainably manage Africa’s diverse natural resources, including land and water for agriculture, forests, minerals, oil and gas,” ECA’s Macroeconomic Policy Division Director, Adam Elhiraika said in his presentation.
“The direct exploitation of natural resources has dominated economic activity, with benefits not being channelled down to everyone; and this has to change.”
The report says that if well managed and sustainably exploited, natural resources have the potential to drastically improve domestic revenue mobilization and promotion of economic diversification across Africa.
It says Africa has been slow to convert its natural resources endowments to tangible development outcomes.
The ECA Director said good natural resource governance required good institutions both formal and informal.
“Africa has been slow due to weaknesses in governance and the wider capacities of the African state. Hence, a capable state with legitimacy and political will is needed to minimize harm from exploiting resources and to maximize positive development outcomes,” he said.
Many African countries are applying concurrent governance frameworks backed by donor countries and international institutions, adding a layer of externally oriented accountability that does not always support mutual reinforcement of domestic institutions and regimes, said Mr. Elhiraika in his presentation.
“Ownership rights to natural resources is one of the challenges of good resource governance in Africa. In many countries ownership rights are vested in the State in trust for the community. However, this ownership arrangement is a means of control by the political elite and with widespread opacity in the management of resources,” he added.
Natural resources are major contributors to public domestic revenue in Africa, largely expressing the structural dependence of resource-rich African economies on one or a few raw material export commodities and hence their vulnerability to price and demand volatility.
As part of wider governance reforms for the natural resource sector, greater engagement of the private sector is required to optimize resources from natural resource rents and expand revenue base, the report says.
Moreover, it adds, the decision-making chain of government should follow the entire value chain from information on resource deposits, to deal making, development, extraction, downstream value addition and project closure.
Mr. Elhiraika said good natural resource governance must be underpinned by resource based development planning.
AGR-V emphasizes the need to strengthen natural resource governance institutions and frameworks for the enhancement of domestic revenue mobilization, promotion of economic diversification, and ultimately, structural transformation.
The fifth edition of the Report is based on empirical evidence drawn from case studies done in Botswana, Cameroon, Côte d’Ivoire, Egypt, Madagascar, Nigeria, Uganda and Tanzania.
The case studies address four broad issues; resource-rich African countries and their inability to transform their economies; institutions for improving the development impact of Africa’s natural resources; development planning and African policy outcomes; and raising of domestic revenue in Africa.