Extractive industries
Asian-driven resource booms in Africa : rethinking the impacts on development
Accruing benefits from mining in Africa
Authors:
C. Breisinger; J. Thurlow
Publisher:
International Food Policy Research Institute , 2008
Today’s resource boom in Africa, driven by Asian economic growth, offers new opportunities for resource-rich African countries. Contrary to the experience of previous booms, however, most mining
profits now accrue to foreign companies, leaving little room for governments to use revenues for pro-poor
investments or to mitigate adverse distributional impacts.
Taking Zambia as a case study, this paper shows that despite privatisation, Dutch disease remains a valid concern and may hamper economic diversification, worsen income distribution, and undermine poverty reduction strategies. Mining royalties must, therefore, be increased and used to finance growth-inducing investments that encourage pro-poor economic diversification, else many African countries will remain caught in a resource trap.
The study finds that privatisation has indeed altered the context of resource booms and that it raises new challenges for African governments. While private ownership will undoubtedly bolster the previously-failing competitiveness of African mining, it will also transfer many of the benefits of resource booms into foreign hands. African governments must raise taxes to finance the investments needed to mitigate the adverse effects of the resource boom and direct their countries along a path of sustained and poverty-reducing growth.
[Adapted from author]
