14 ways African governments can extract more from their natural riches

Africa is rich in oil, gas and diamonds, but foreign companies often reap the benefits rather than citizens. Our panel had these
messages for governments

Take accurate measurements: One issue that receives relatively little attention with regards to government monitoring of production is accurate measurement of the volume of oil that gets extracted. Governments are left to take companies at their word. Technology exists that can be inserted into oil wells to monitor production levels and ensure that governments know exactly how much oil is being produced, and by which companies.
Joseph Kraus, senior policy manager, One, Washington DC, @hurrayforfacts

Place conditions on incentives: As global investors turn to Africa for investment opportunities, governments need to ease up on costly incentives. Incentives for businesses should be performance-based: you get a tax credit after demonstrating the value you have contributed to the local economy through employment, infrastructure development or sourcing local materials. This would let governments offer fiscal incentives in a way that ensures benefits for the local population.
David Rice, director, Africapitalism Institute, Lagos, Nigeria, @AfricapInst

Employ long-term tax advisers: Tax experts trained in revenue authorities in the developed world can be sent to specific countries to develop processes and structures as well as mentor staff. This has happened in Liberia with a long-termAusAid adviser helping their natural resources tax unit.
Steve Macey, manager - revenue and extractives, Adam Smith International, London, UK, @adamsmithint

Encourage legislators to be well-informed: In Uganda, members of parliament were only permitted to read the government-signed oil production agreements within the parliamentary library. They couldn’t even make copies so they could to take the time to study them. Better-informed and more assertive legislators would be in a position to evaluate the options available to a country and to demand that the government is (more) transparent in its dealing with companies.
George Lugalambi, media capacity development officer, Natural Resource Governance Institute (NRGI), Kampala, Uganda, @glugalambi

Train lawyers: Some governments work with NGOs and donors to provide scholarship and training to government lawyers. Good talent, especially at the mid-senior level, is hard to find for the state and private sectors. Retention of good talent is even harder because there are other opportunities, locally and globally.
Jacqueline Muna Musiitwa, founder, Hoja Law Group, Nairobi, Kenya,@nubiancounsel

Increase state ownership of extractives: Direct state participation in the mining sector, fraught as it with many challenges, may indeed result in increased government revenues. The case of Botswana is instructive. The government and De-Beers formed JV, Debswana. Why is this model not being replicated?
Gilbert Makore, coordinator, Publish What You Pay Zimbabwe, Harare, Zimbabwe,@gilbert_makore

Legislate to ensure resources are processed in-country: Botswana made some tough decisions to turn its natural resource wealth (diamonds) into better conditions to spread prosperity in the country. The government outlawed the export of rough diamonds which forced international firms to invest in creating the ability to refine, cut and policy diamonds in country. This not only allowed the government to collect a higher royalty on exported diamonds, but created more jobs and spurred greater positive economic spillovers. These types of laws are needed across Africa to ensure economic growth is inclusive, but a phased-in approach must be taken to allow businesses to transition to the new regime.
David Rice

Reach out to young people: Governments must make the industry accessible to young entrepreneurs. The problem is that the key industries in Africa that could bring prosperity are run by few people. To eradicate this injustice, the use of technology will be crucial in the next decades.
Marieme Jamme, co-founder, Africa Gathering, London, UK, @mjamme

Don’t just parachute in experts: Africa continues to suffer because of skills gaps. Parachuted experts cures the immediate problem, but Africans need to be self-sufficient.
Jacqueline Muna Musiitwa

Incite the private sector to invest in local universities: Investing in local skills development is not just about providing scholarships for foreign study, but supporting the relevant subjects in local universities in Africa.
Gilbert Makore

Improve transparency: Contracts ought to be transparent so that citizens can ensure that governments are entering into fair deals for the country’s natural resource wealth. The recently launched Open Contracting Partnership is one initiative that could help make an impact in this area, though a number of governments have already agreed to make natural resource contracts publicly available.
Joe Kraus

Explore geology: There is no way a country can negotiate for mining deals that increase revenue base when they do not know what they are selling. Countries like Australia have vast knowledge of their resource base, to the extent of knowing that this resource will be exhausted at this rate of mining by this date.
Gilbert Makore

Know they can call the shots: Governments have what multinational companies want. As the available supply of natural resources shrinks, the amount firms will be willing to pay increases. Natural resource projects are high cost and long-term investments, but high quarterly profits posted by many multinational companiesdemonstrate they are profiting handsomely from their operations. Governments must think carefully before handing out low tax rates and tax holidays.
Joe Kraus

source:the guardian