The World Bank observed that by adopting a stronger set of policies, putting reforms into place, investing in improved fiscal management, and fostering good governance, these nations might achieve a revenue increase of double.
“In a time of energy transition and rising demand for metals and minerals, resource-rich governments in Sub-Saharan Africa have an opportunity to better leverage their resources to finance their public programs, diversify their economy, and expand energy access,” the statement by the global lender reads in part.
The Washington-based bank highlighted that generally speaking, nations only receive roughly 40% of the potential earnings from natural resources.
“In other words, at a time when countries are burdened by slow growth and high debt, governments could more than double revenues from natural resources such as minerals, oil, and gas by adopting a better set of policies, implementing reforms, and investing in better fiscal administration and promoting good governance,” the bank added.
According to James Cust, a senior economist in the World Bank Africa Region, “Maximizing government revenues in the form of royalties and taxes paid by private natural resource industries, alongside attracting new investment, would offer a double dividend for people and planet by increasing fiscal space and removing implicit production subsidies.”
The World Bank also suggested that all natural resources, including petroleum, be completely taxed to recover the entire cost of any environmental and social repercussions that are not usually fully paid by producers.
It issued a warning that skipping natural resource taxes would result in implicit production subsidies and an increase in carbon emissions. The World Bank observed that in nations whose high borrowing and debt servicing costs prevent them from making necessary development investments, the promise of improved income is considerable.
