Translating The Extractive Resources To Economic Growth And Transformation

Abstract

Most African countries are heavily endowed with natural resources. This
gives the continent both the potential for, and threat to, growth/development.
Natural resources yield “rents,” or profits from their production, which are
crucial for resource-led development. The literature on the “rentier state” and
how resource rents interact with institutions and political economy dynamics
shows that rent flows through the socio-economic system influence development
outcomes. Although the natural resources sector provides significant
opportunities for the near term, it also does have significant risks for future
generations, and the costs and benefits of resource extraction are seldom
borne equitably. Ensuring social equity is a major challenge in natural resource
governance, generally falling to governments to referee trade-offs and protect
the most vulnerable, including current and future generations. It is critical,
therefore, for the continent to address itself to important policy questions to
ensure that natural resources are a boon for Africa’s sustainable growth.