Building capacity to help Africa trade better

Good governance and the management of natural resource endowments

Trade Briefs

Good governance and the management of natural resource endowments

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The importance of good governance for regional integration arrangements is a constant theme in tralac writings. We consider respect for the rule of law and the availability of sound institutional arrangements as vital for regional integration and economic development. The more comprehensive and ambitious regional arrangements become, and the more advanced the integration process, the stronger the need to heed this call.

Why has it remained so difficult to pursue effective legal and institutional arrangements in the African RECs? Political scientists offer many explanations, from colonial legacies, weak states, and the effect of poverty itself, to sensitivities about loss of sovereign policy space. There is also evidence that the “natural resources curse” is a specific problem and another explanation for governance failures. The discovery of mineral wealth and the export practices around such commodities frequently lead to bad governance. There is corruption in awarding mining licences, while governments lose billions through tax evasion, failures to police foreign companies, or bribes. Mining and the extraction business are considered outside the ambit of the regulation associated with the implementation of international or regional legal agreements.

This is a short sighted and in many ways a misguided view. Essential services, transport and finances, which mining operations rely on, are regulated by inter-state legal arrangements, while the good governance imperative remains extremely relevant in terms of the public interest aspect of governance. The International Monetary Fund has just published a “Staff Discussion Note” which argues specifically for good governance in this context.

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Good governance and the management of natural resource endowments - Author(s): Gerhard Erasmus

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