Taxation and Sustainable Management of Natural Resources in Africa

Published on 7th February 2009

There is a general misconception in Africa and indeed the third world that natural resources are free. This state of affairs has caused some degree of irresponsibility in their exploitation, utilization and disposal of their waste and emissions. Given the liberalized nature of economic management and private ownership of resources in mixed economies of third world countries, natural resources have been overexploited, underutilized and mismanaged with consequences on environmental degradation.


Poverty and inadequate information on the need to manage natural resources in a sustainable way by citizens of third world countries has necessitated public policy intervention by the governments concerned.


Government public intervention can take one or a combination of any of the following forms: Legal regulation; Fiscal intervention in form of taxes and subsidies; Public ownership and control; Licences and Promoting alternative forms. The choice of intervention should be guided by the objective of achieving sustainable use and conservation of the natural resource endowments.


The prudent use of natural resources is a necessary condition for sustainable growth in developing economies such as in Africa. In a substantial way, the use of natural resources in any country is governed by the tax structure which should be simple to administer.


The legal and regulatory regimes in Africa have tended to be fragile and not elaborate enough to afford a wide range of economic activity for the country.   There is a also a tendency to under value the environmental consequences of production process where environmental spill over effects of production (externalities) are neither captured nor mitigated.


I will highlight some possibilities of creating a framework in which the sustainable use of natural resources endowments can take place.


(i)  A variety of policy investments exist for sustainable use of natural resources. Taxes on extraction of raw materials can be applied to provide incentives for optimal use of the materials.  Licences can also be used to limit the quantities extracted and incentives to promote re-use or recycling.


(ii) There is also an Integrated Product Policy (IPP) which targets production and consumption. This approach aims to stimulate product designs with efficient use of raw materials in production.   There is also an approach or policy investments that are used to manage the demand for resources, via affecting the price.


African countries can also seek and adopt measures for integrated and sustainable use of natural resources.   These can take the following forms:-


(i) Sustainable economic policy; where economic growth is derived from the use of natural resources.


(ii) Sustainable agricultural policy, where the objective is to integrate farming with environmental concerns of soil and water conservation.


(iii) Sustainable fisheries and water policy which aims at conservation, management and exploitation of living and non-living aquatic resources. Including limiting the environmental impact of resource exploitation.


(iv) Sustainable energy policy which aims to ensure safe and sustainable supply of energy including use of alternative safe sources of energy.


(v) An efficient transport policy where the use of land for transport infrastructure is optimized.

Experts in these various fields should be employed by governments to pay attention to the aspects of development with due regard to sustainable exploitation, use, management and safe disposal of products of natural resources to raise living standards of our people.

By Hon. Nsubuga William,    

Member of Parliament, Uganda



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