African countries must consider all options at their disposal to enhance socio-economic development and competitiveness in the global economy. Improved physical and natural resources infrastructure, such as transport, communication, information technology, health and environment facilities together with a conducive macro-economic environment would encourage the flow of FDI and facilitate regional and international private sector involvement. In turn, these will encourage undertaking of large-scale infrastructure programmes and projects such as multi-country irrigation, power generation and supply projects, and joint venture mining projects. Such undertakings will enhance regional integration, provide employment and raise the standard of living of millions of Africans.  

To this effect, a number of priority actions should be considered. These will include creating an enabling policy environment that entails political stability; improving legal and regulatory framework; deregulating, liberalizing; and reducing complexity of bureaucracy. It is also important to strengthen financial institutions; reduce inflation and real interest rates; invest in human capital and institutional capacity. Other measures include: reducing the host country risk to entrepreneurs; improving perceptions about Africa; creating an appropriate fiscal regime; and promoting flows of capital, skills and labour through elimination of barriers and greater regional integration.

Promotion of good governance, credible political track record, peace and stability are important for socio-economic development. Achieving sustainable development, growth and integrated management of natural resources requires an environment where decentralization of responsibilities, privatization, beneficiary-community participation and increased role of women is promoted, and accountability, transparency and the rule of law ensured. There is need to develop a reservoir of skilled labour force and invest in people's education and training. To improve the quality and competitiveness of natural resources development and utilization in Africa, particular attention should be given to enhancing infrastructure, notably in transport, communications and public utilities.

For Africa not to lag further behind in the area of science and technology, there is need  to enhance capacity and to internalize modern techniques and methods. Local research and development capabilities need to be strengthened and expanded with a view to increasing the rate at which natural resources are used domestically and exported with added value. In the case of small-scale mining, for example, there is need for developing appropriate technologies that should be simple to use, but effective in improving ore recovery, productivity and income, and reducing environmental impacts. In a wider context, efforts should be deployed to strengthen Africa’s regional Centres of Excellence.

Paucity of development finance is a crucial constraint to the exploitation and utilization of natural resources. As official development assistance is stagnant or declining, alternative sources of financing need to be tapped, notably from the private sector. Additionally, regional development institutions such as the Southern African Development Bank (SADB), the West African Development Bank (BOAD), and the East African Development Bank (EADB) are called upon to attach particular importance to financing regional infrastructure, natural resources development and utilization projects.  

African countries will need to create an enabling environment in order to encourage domestic and foreign private investment in the development of natural resources, science and technology so that they can operate efficiently. A productive and symbiotic relationship should be developed between the public and the private sector. Governments should take lead in creating basic infrastructure and an enabling environment for private sector participation in natural resources development.  

Some investors have poor and uninformed perception of available investment opportunities in Africa. There is need therefore for concerted, focused and effective marketing campaigns. African governments would have to draw prioritized results-oriented action plans, specific to each country's needs and endowments. To this effect, information on Africa's natural resources endowments needs to be collected, collated and widely and cost-effectively disseminated to potential investors. This requires that connectivity is ensured and that data bases, meta-databases, and data exchange mechanisms are established and efficiently managed.

Another important factor is mitigating environmental impact. There is need to pay more attention to addressing the problem of environmental degradation caused in the process of exploiting natural resources. Practices leading to environmental degradation should be discontinued; use of environment-friendly techniques and technologies promoted and new corporate behaviour based on improved performance, better and more inclusive relationships and engagement with stakeholders instituted.

Health issues such as the long-term implications of HIV/AIDS on the workforce need to be addressed. In the mining sector, for example, operating costs escalate because the social welfare and health care costs of employees are primarily the responsibility of the mining companies. Governments and the private sector have to articulate options to effectively reduce the spread of HIV/AIDS and minimise its impact on the economy.

The utilization and exploitation of natural resources should be pursued to the extent possible within a regional integration framework. Wider economic space and markets can provide impetus for the establishment of competitive industries and enterprises. At the same time, fostering local participation is important. This involves community participation, especially women, in the planning and implementation of projects and programmes. It is only through consultation with the communities that their needs and aspirations can be realized.

The development and utilization of natural resources is an involved and costly undertaking hence the importance of partnerships with development partners, particularly the UN agencies, bilateral sources, international and regional financial institutions. No doubt, the type of partnership and assistance required would vary from country to another. To have a consistent and productive partnership, a clear and transparent accountability framework should be agreed upon between the parties. Partnership should be premised on: enhancing the flow of foreign direct investment (FDI); financing of core projects and programmes; co-operation on the transfer of knowledge and technology and enhancing private sector participation. It is also important to promote capacity building and institutional strengthening, through: supporting projects; exchanging programmes; twinning schemes and other collaborative arrangements.

An agreed framework for co-operation should be established between African countries (e.g. New African Initiative), through regional co-operation and integration (e.g. Africa Water Vision; SADC programme of action; electricity grids; ECA-sponsored institutions;) and at the international level with multilateral and bilateral partners

Source: ECA/RCID/FSSDD/014/01-CNRST-2

An Issues Paper