AfDB to play a greater role in natural resources stewardship on the continent

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“The current commodity super-cycle being enjoyed by resource-driven economies could simply disappear without lasting benefits if it is not harnessed into durable development outcomes. To contribute to addressing this challenge on the African continent, the African Development Bank has established the African Natural Resources Center, to offer real-time and coordinated advisory services, technical assistance, and capacity building to its Regional Member Countries,” said Mthuli Ncube, AfDB Vice-President and Chief Economist, while chairing a panel on “Better stewardship of Natural Resources” as part of the 2013 conference on “Challenges of Government” at the Blavatnik School of Government, University of Oxford, UK, on December 10.

The conference, which took stock of the challenges posed by “people power”, brought together global experts and policymakers for a two-day examination of how Governments can respond to the rising expectations of citizens in service delivery, job creation and development, and how citizens’ action can shape and improve Governments’ policies. The AfDB-led panel fielded experts and practitioners including Paul Collier, University of Oxford; Richard Konteh, Chief of Staff to the President of Sierra Leone; Sheila Khama, the newly appointed Director of the African Natural Resources Center at the AfDB; and Frazer Thompson, Senior Fellow of the McKinsey Global Institute. The discussion looked at how Governments can harness natural resources for the benefit of their citizens, while managing citizens’ expectations for rising living standards.

Collier framed the challenge in terms of ensuring that for each natural asset that is depleted, a more productive and durable asset is created: infrastructures, human capital, and crucially, sustainable cities, which will become the platform to diversify the economy away from natural resources dependency. The example of Malaysia, which used an early resource boom to finance the development of a high-value electronic sector and to stimulate rapid urbanization, could offer a model for other resource-driven economies.

“What is really crucial for Governments is to set out the overall vision of how to transform a geological windfall into development outcomes – to set out the narrative, and choose between key policy trade-offs, whether revenue maximization, infrastructure development, or job creation – and explain it and communicate it to citizens,” said Khama, drawing on her extensive experience in the private sector and in policy think-tanks on the African continent. Understanding the true value of the natural resources, in order to extract a fair share of rents and plan policy delivery, is one of the key challenges for the Government of Sierra Leone and many other developing countries, explained Konteh, while outlining the complexities of designing the right concessional and contractual arrangements, as well as managing the time lags between starting exploitation of a resource and the time when revenues materialize. Thompson outlined the need for a fundamental paradigm shift in natural resource exploitation – a “resource-tiger” model, combining more efficient extraction of resources; maximizing value capture; and transforming them into productive investment, including new models of infrastructure pooling.

The panel agreed that there is a clear role for the private sector, and the need for Government to ensure that companies’ priorities are aligned with local communities’ needs, putting more emphasis on job creation and the domestic supply chain, thus making sure that more value is retained in the domestic economy. Companies also need to communicate more effectively with local communities about the economic impact of the contribution that they make.

In summarising the conclusions of the panel, Ncube highlighted the importance of providing trusted and impartial advice to developing countries, as they make decisions on natural resources management which will determine their development patterns for the next decade. He pointed to the increasing role that the AfDB hopes to play, through the African Natural Resources Center.