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Managing Africa’s resources: Time to stop the ‘dig and export’ model, improve governance, create linkages

Managing Africa’s resources: Time to stop the ‘dig and export’ model, improve governance, create linkages
Photo credit: Frank Piasecki Poulsen

14 May 2018

The UN Economic Commission for Africa (ECA) has just released the fifth edition of the African Governance Report (AGR V), which urges countries endowed with abundant natural resources, to strengthen institutional and regulatory frameworks around the exploitation and use of these endowments.

A highly charged debate, moderated by ECA’s Deputy Executive Secretary and Chief Economist, Mr Abdalla Hamdok, characterized the launch, at events of the 51st Session of the Commission and Conference of African Ministers of Finance, Planning and Economic Development.

Eight resource-blessed countries studied

Building on the four previous reports, AGR V is themed around Natural Resource Governance and Domestic Revenue Mobilization for Structural Transformation. It is hinged on fact-finding studies in eight countries with a wide range of diversity with regards to their resource-base and their experience in resource management. These are: Botswana, Cameroon, Côte d’Ivoire, Egypt, Madagascar, Nigeria, Uganda Tanzania.

It interrogates why resource-rich countries seem unable to transform their economies and examines the functioning of institutions overseeing these resources. It quizzes how much impact development planning has had in the sectors concerned, and unpacks the degree to which natural resources are used to raise domestic revenue.

Findings border on gaps in transformation, accountability issues

Through the above method, the study arrives at the following findings:

  • Economic transformation remains very limited in resource-rich countries spite of impressive growth in the last two decades

  • The management of the resources is not optimal (governance inadequacies)

  • States over-depend on natural resources for their exports

  • Institutions overseeing the exploitation of these resources are weak, transparency in management is low, accountability is frail and the functioning of the sector itself is unpredictable

  • There is weak linkage between long-term development and plans and natural resource development plans in most of the countries studies, except for Botswana which has a long-term development plan especially in use of diamond resources.

The Head of ECA’s Macroeconomic Policy Division, Mr. Adam Elhiraika, pinpointed the main recommendations of the report which address the challenges mentioned. These are a call on the states concerned to: strengthen their institutional and regulatory framework, enhance transparency and accountability in resource-based sectors, prioritize resource-based development planning and make it more inclusive, develop links for structural transformation through value addition and route-in the private sector in planning process.

Eye-opener on outdated resource exploitation models

“This model of dig and export needs to stop!” exclaimed Mr Hamdok, who followed-on saying “we need to add value to the exploitation of our natural resources in the interest of the development of our continent.”

Mr. Kojo Busia, Head of ECA’s African Minerals Development Center couldn’t agree more and hailed the findings of the report which supports the case put forth by the African Mining Vision. It is a case for mineral-endowed countries to move from being structurally enclaved economies to much more integrated, diversified economies with upstream, downstream, side-stream and spatial-stream linkages that can broaden their tax base and enhance states’ accountability to citizens.

While Prof Annet Oguttu of the University of South Africa sized-up the work as “a wonderful report with a rigorous review process,” Nigeria’s Ambassador to Ethiopia, the AU and ECA – H.E. Bankole Adeoye concurred with the recommendations of the publication. He however added that it was time for Africa to ditch the ‘grand illusion’ about being resource rich. “We are endowed, not rich. Until we make natural resources work for us, we can’t say we are rich,” he argued.

Meanwhile, Ms. Bience Gawanas, UN Under-Secretary-General and Special Advisor to the Secretary General on African Affairs, gave merits to the work put in the report. She said it was indeed timely, in the context of the UN Secretary General’s reform which lays emphasis on the prevention rather than the management of conflict – a phenomenon which is common place in resource-blessed countries.

She noted that with the prevailing situation of illicit financial flows from Africa, there is great reason to advocate effective governance in the continent’s natural resource sectors, as AGR V contends.