sharing in governance of extractive industries
Resource-rich African countries are facing significant economic headwinds. Nigeria, Africa’s largest oil producer, depends on oil for over 90% of its foreign exchange earnings and three-quarters of government revenue. The slump in oil prices has adversely affected Nigeria’s economic prospects, pushing GDP growth into negative territory to -1.5% in 2016.
Zambia, the second largest producer of copper in Africa, has also registered an increase in fiscal deficits to about 10% of GDP in 2016. This is due to falling prices of copper, which contributed about 73% of total exports in 2015. In both countries, rents from extractive resources have failed to leverage sustainable economic growth and development. In Zambia, for example, the incidence of poverty did not change, at 60%, during 2000–10, despite a doubling of economic output.
But there are more to the challenges that low commodity prices presents to the economies of Nigeria and Zambia. Trade misinvoicing represents an additional challenge to both economies too.
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