African Governance Report V - 2018

Natural Resource Governance and Domestic Revenue Mobilization for Structural Transformation

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Exploitation of natural resources has dominated economic activity in Africa but the benefits have accrued only to a privileged few. The continent’s most common strategy of exporting commodities in their raw (non-valued added) form has led to disappointing results, reflected in unsustainable and non-inclusive economic growth, marginal improvements in the well-being of the population, and low levels of economic diversification and transformation. This edition examines efforts to improve the governance of Africa’s abundant natural resources, emphasizing the need to strengthen natural resource governance institutions and frameworks to enhance domestic revenue, the promotion of economic diversification, and structural transformation.

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Mobilizing domestic revenue

Domestic revenue mobilization is widely accepted as the most sustainable path to economic development, to which end, many African countries need to improve their ability to raise and manage tax revenue and lift the tax base. This is very critical given that their development outcomes from natural resource endowments have been mixed at best. They need to prioritize the agenda for maximizing these endowments’ impacts, particularly to improve their citizens’ well-being. Governments should strengthen fiscal policy and equitable public spending and reinforce moves towards greater transparency and accountability in natural resource governance. Governments also need to encourage deeper corporate governance as part of a wider industrial policy that tightens the natural resource–development nexus.

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