Africa has been slow to convert its natural resources endowments to tangible development outcomes because of weaknesses in governance, according to the fifth edition of the African Governance Report published by the UN Economic Commission for Africa (ECA).
The report launched during the ongoing ECA Conference of Ministers in Addis Ababa (Ethiopia), argues that the good governance of natural resources in Africa requires institutions that have both the proper mandate and capacity to manage resources efficiently. They also require the capabilities to formulate, implement and enforce sound policies and regulations.
Abdalla Hamdok, ECA deputy executive secretary and chief economist, says that, although natural resources had become a central activity on the continent, there remains serious challenges to achieving sustainable and inclusive growth with value-added outputs.
He explains that good governance is the key to enabling resource-rich countries to effectively transform their economies.
“Africa is very rich in minerals but has very little value addition to them, leading to less revenues generated by countries from natural resources,” says Hamdok when commenting on the common strategy of exporting commodities in their raw form. “Countries need to critically think on the importance of value addition for their exports if they want to benefit fully from it.”
Adam Elhiraika, ECA director of the macroeconomic policy division, says ownership rights to natural is the major challenge to good resource governance in Africa.
In relation to economic diversification, he comments: “African countries’ dependent upon natural resources that are limited lead to economies with an inability to spread growth to other sectors and across the population.”
The report, based on case studies from eight geographically diverse countries (Botswana, Cameroon, Cote d’Ivoire, Egypt, Madagascar, Nigeria, Tanzania and Uganda), drew upon a range of empirical evidence.
“Among these countries, Botswana is the only country that has a long term development plan on the utilisation of its natural resources for the benefit of its citizens,” notes Elhiraika.
Bience Gawanas, the UN secretary-general’s special adviser on Africa, says: “The paradox for African countries is that they are rich in resources yet they are poor because only very few benefit from these resources.
“Resources should not just increase the GDP of our countries but improve the lives of our people.”
She also highlights that illicit financial flows and corruption in the continent are make it essential for nations to exercise good governance of their natural resources. Frequently the direct exploitation of natural resources − including agriculture, forestry, oil, gas and minerals − that often dominates economic activity has only benefited the few in many societies.
Among the recommendations by the report is the requirement for the strengthening of institutional and regulatory frameworks to enhance transparency and accountability in economic governance. Such effective governance is vital for sustainable development, poverty eradication and socio-economic transformation.