Africa Progress Report 2013

Equity in Extractives

Africa’s economies have been riding the crest of a global commodity wave that could transform the continent’s prospects. The 2013 Africa Progress Report explains how this unprecedented chance could lift millions out of poverty and improve the prospects of generations to come.

The report sets out an agenda for maximising Africa’s natural resource wealth and using it to improve well-being. African governments should start with a strengthened focus on fiscal policy and equitable public spending on infrastructure, health, education, water and sanitation. Moves towards greater transparency and accountability should be broadened and deepened.

International action can create an enabling environment for strengthened governance in Africa. Tax evasion, illicit transfers of wealth and unfair pricing practices are sustained through global trading and financial systems – and global problems need multilateral solutions. African citizens should demand that their governments meet the highest standards of propriety and disclosure. Governments in developed countries should demand the same thing of companies registered in, or linked to, their jurisdictions.

Foreign investors can play a critical role in facilitating change by partnering with governments to strengthen transparency, by supporting skills development, and by carefully assessing the social and environmental impacts of their operations – and many companies are providing leadership in these areas.

The surge in resource wealth brings with it complex challenges and very real risks. Yet it also brings an unrivalled opportunity. And with new exploration revealing much larger reserves than were previously known, Africa stands to reap a natural resource windfall. If this resource wealth is managed effectively and equitably, it could put the region on a pathway towards dynamic and inclusive growth.

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Africa’s economic fortunes have changed dramatically in the past decade. Economic growth –especially in countries rich in natural resources – has been driving up average incomes, and most countries have recovered from the past years’ global recession.

Some resource-rich countries have made impressive strides in improving the lives of their people.But overall progress has been uneven – and in some areas it has fallen short of expectations. Aftera decade of strong growth, several of Africa’s resource-rich countries remain at the bottom of the international league-table for human development. Others register some of the world’s largest inequalities in wealth and in wellbeing, as captured by indicators such as life expectancy and education.

Chapter One of the report reviews the record of the past decade and the potential for resource wealth to accelerate human development. Chapter two looks at the gap between wealth and wellbeing in resource-rich countries, and explores the complex and varied interaction between economic growth, inequality and poverty reduction. Chapter three documents the environmental threats posed by extractive industries, their failure to provide a long-term boost to local economiesand job markets, and the risks and opportunities presented by artisanal mining.