Policies Required to Effectively Manage Benefits from Natural Resources in MEFMI Region

Over the last five years, four (4) MEFMI countries have made discoveries of natural resources. These are gas in Mozambique and Tanzania and oil in Kenya and Uganda.

The new findings add to the six (6) MEFMI countries which are natural resource-rich – Angola, Botswana, Lesotho, Namibia, Zambia and Zimbabwe.

Similarly, more than 150,000 metric tonnes of platinum have recently been discovered in Southern African countries including those in the MEFMI region such as Zimbabwe. Additionally, four (4) out of the ten (10) diamond producing countries in the world are from the MEFMI region, namely Angola, Botswana, Namibia and Zimbabwe.  

It is projected that Africa as a continent will expand its metal and mineral production by 78% between 2010 and 2017, compared to only 30% in the Americas and Asia.

Improved prospects for corporate profits in the mining industry are expected propel MEFMI states to be the new world of resource-based growth and economic frontier, in the medium to long-term, broaden fiscal space and provide an opportunity to tackle abject poverty, which has eluded the region for decades.

MEFMI and a number of its technical and financial cooperating partners realise that there is great need for a formally organised and well-coordinated way of providing capacity and to share strategies in this area with partners who have common goals and objectives with MEFMI, in oder to support capacity building programmes in natural resources management. This can only be tapped on and realised by developing a deliberate and comprehensive capacity building programme.

Cognisant of these developments, MEFMI will develop a Natural Resources Management Capacity Building Programme (MEFMI NRM-CBP), with a clear plan of intervention, taking advantage of the willingness to support by a number of technical and financial cooperating partners.

As part of targeted capacity interventions, MEFMI Executive Director, Dr Caleb Fundanga recently attended the inception workshop on “Best Practices in Establishing and Managing a Sovereign Wealth Fund” on 14 May 2015 at the Rainbow Towers in Harare, Zimbabwe. During the meeting, Dr. Fundanga pointed out that managing natural resources is critical in the MEFMI region and identified three (3) key aspects.  He stated that concessions, taxation, policy stability and prudential management are key to ensuring that countries benefit.  He further pointed out that MEFMI’s mandate as a capacity building institution will focus on identified regional initiatives in natural resources management, including initiatives by the African Economic Research Consortium (AERC) through conferences which MEFMI is involved.

He underscored the need for the current generation to put in place policies that will leave a lasting impact and legacy for the future generations. Dr. Fundanga also shared lessons from the political economy of natural resources management with reference to Norway where he led a study visit of senior government officials from Zimbabwe. Dr. Fundanga pointed out that there was consensus by Norwegian politicians on how oil revenue was taxed, invested and managed.  He stated that this was in total contrast to the situation in some countries in Sub-Saharan Africa region, where sometimes, some politicians are involved in businesses which create conflict of interest and make policy creation and implementation problematic.

On issues of taxation, he indicated that governments in Africa are unable to raise significant revenue from natural resources because of huge concessions. He argued for the need to understand the political economy which influences concessioning and underscored the need for transparency in taxation which discourages evasion, citing the case of Norway where the public can access tax records of public officials online.

He further stated that he was involved in a research with the Christian Michelson Institute (CMI) on tax havens and the effect on people’s behaviour and their participation in political activities. He pointed out that all the political issues and questions surrounding natural resources need to be addressed in order for success to be visible in management of natural resources for the benefit of the economy. He noted that transformation of resources into financial assets which are interest earning was not easy.