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AfDB and University of Göteborg Host Discussion on Structural Transformation and Natural Resources Management in Africa
The African Development Bank’s Ten Year Strategy is gaining momentum. As part of this drive and in a quest to widen the discussion on structural transformation and natural resource management in Africa, the Bank’s Development Research Department (EDRE) in conjunction with the Department of Economics, University of Göteborg, hosted a side event on August 26, 2013 during the 28th Annual Congress of the European Economic Association/67th European Meeting of the Econometric Society in Göteborg, Sweden.
The event was also part of EDRE’s continued dissemination of its research work on structural transformation and natural resource management in Africa – the theme for the 2013 African Economic Outlook. In particular, the event was aimed at sharing results from a collaborative research project jointly being undertaken with the Korean Institute for International Economic Policy (KIEP).
The discussion was led by Abebe Shimeles, Manager of EDRE.2, with presentations from a carefully selected panel of experts which included a representative from KIEP. As part of capacity building and forging networks and partnerships, the Bank also supported participation of emerging African researchers and doctoral students in order to expose them to cutting edge research presented at the Congress.
In his opening remarks, Prof Måns Söderbom of the University of Göteborg noted the growing realization that Africa’s booming natural resource sector offers an opportunity for employment creation and poverty reduction. These comments were echoed by the panelists. Shimeles drew attention to Africa’s new resource discoveries, with Bank estimates indicating potential for a huge revenue stream in the order of US $1.5 trillion in net present value terms. This represents about 150 per cent of Africa’s current GDP. The panelists argued that with such huge revenue potential, Africa’s resource-rich countries should devise strategic policies that optimize the use of the revenues, promote investment in smart infrastructure projects and knowledge to address the skills gap.
Noting that natural resources are finite, it is important to address problems of licensing and contracting and put in place a sound fiscal framework for the natural resource sector while avoiding political pitfalls that have hitherto characterized natural resource management on the continent. The Bank’s legal support to regional member countries with respect to resource contracts offers therefore a new window for fostering transparency and amelioration political risk.
A natural resource led structural transformation will not occur in a vacuum. African countries are thus encouraged to learn from South Korea’s experience, a country which 50 years ago had the same level of income as most African countries. However, with effective and visionary leadership, Korean is now one of the leading developed countries. Thus was achieved by exploiting abundant human capital, its main resource, through skills development and investment in infrastructure.
In this regard, the Bank is leading initiatives for financial additionality aimed at closing the infrastructure financing gap by crowding-in other sources of finance from development financial institutions, the private sector and others. The Bank’s transformation agenda is also reflected in the implementation of rigorous social and environmental management systems with good monitoring and tracking indicators. Its advocacy work through flagship publications has also increased the Bank’s visibility as Africa’s premier development institution and source of evidence-based knowledge on African development issues.