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interesting idea.but the idea of handouts is just not appealing to me. i reckon states should invest in improving their competitive advantages and their structural challenges. 25 of the 44 subsaharan African countries face crippling power shortages this year according to a study published in the New York Times. similarly changing weather and prolonged droughts have an effect on the agricultural patterns of African countries and on the food security. then the educational needs in this century. the list is endless. a bounty like oil must be used not to go around handing out cash but to addressing the structural and economic challenges faced in the continent today. also a rebalancing of our economies. but if our pple just sit waiting for handouts then what will happen in 30 or so years when the resource runs out? what will happen in 5 or so years when the oil price collapses? if 700million Africans consumes less electricity than 38 million portugese then it would be irresponsible to get oil money and give it as handouts. we need to invest in the future. my two cents.

@ Anders

 

You make a good point. In fact, the paper by Moses and Young does make such suggestion. In fact, it can be structured in so many ways including what you just mentioned. The point, which I think the authors made is the need to create a constituency to monitor the funds. The authors made reference to Alaska where the system works.

 

Now, one has to bear in mind that Alaska is just a state and the intricacies involved in having such a mechanism in a diverse country as Nigeria or Ghana is much. However, the issue the recommendation addresses, accountability, is quite important.

Coming from a country where everything revolves around taxation (Denmark - loving taxes) - how about channeling money from resource extraction directly to the citizens and at the same time let them know that some of the money was kept for the treasury. Like this:
"The direct cash payment for this quarter amounts to 50$ of which 40 $ has been creditted to your account, and the remaining 10$ has been retained by the Revenue Authorities to pay for national social services"
Then people would want to be asking for some returns for those 10 bucks!!

@Kobina,

 

I just spent the last couple of minutes reading the article by Todd Moses and Lauren Young titled " Saving Ghana from its oil: the case for direct cash payment"

 

Let me add that the authors make a very convincing argument. I agree with them that one of the major reasons resource rich countries like Nigeria have squandered its wealth is because there is no viable and watchful constituency to checkmate the excesses of government. Through direct payment, a constituency of the people will be created and they can act as the watch dog to government's use of the resources.

 

While I am a bit concerned about what the outcome of this will be for Nigeria, I think the idea calls for further research particularly considering it works in Alaska (yes, a state not a country).

@Ahmed and Emeka: Good points. That's why we're here--to share ideas from around the world to customize our solutions.  

By the way, you may be interested in this blog post by the Center for Global Development in reaction to this post: http://bit.ly/mG4g1z 

I have a feeling this idea will be up for considerable debate 

 

@Ahmed: I will investigate the spell check for you

I don't know what to think of Giugale's recommendations. As a Nigerian, I can just imagine the intricacies and arguments that would arise should the Federal Government announce that money will be distributed to everybody. How much will be distributed? What formula would be used? What would happen to the infrastructure deficit which the country urgently needs?

 

I agree with Finoh that it is high time Africans began to make recommendations for their own problems. I do not agree that direct transfer of resource revenue to citizens will solve anything. Did the author consider the implication this would have to the economy re: inflation?

 

While we recognize that most resource rich developing countries have mismanaged their resources, the discussion should be on how to better manage and channel these resources to developing critical infrastructure that would benefit the citizens. I bet that a good road network linking rural areas to markets would benefit a crop grower more than $100 given to him a month for living in a resource rich country.

 

 

 

Kobina: Alaska is not a country. But even as a state in the USA, its economy cannot be compared with any African country. But even as you say it doles out the oil revenues as a cash give-back to its citizens, if it gets into financial trouble it can always recover by raising individual income and or property taxes or run to the feds in Washington DC. Uganda or Ghana or Burkina Faso do not have those options. Besides these countries have more pressing needs for their oil revenues, such as Uganda wants to do by planning to spend oil revenues on energy/tranportation infrastructure.

 

Kobina, can you imagine the logistical nightmares if Uganda or Ghana decides to distribute to everyone of its citizens the revenue from oil sales?  If it is attempted in Sierra Leone, every tribal chief and his people would draw their machetes!

NB: Kobina, how does one do SPELLCHECK when blogging? [ one old technophobic gizzard, right?]

@Ahmed: Alaska does make direct transfers and I understand it has helped to create an oil constituency to keep the government on its feet and to keep the cash flowing (surprise!)

I have personally been partially partial to this model since I read a piece by Todd Moss and Lauren Young of the Center for Global Development.

What I would have liked to see in Guigale's version is more attention to the infrastructural obstacles to delivery and how to go about that. Moss and Young do propose some solutions and possible spillovers from developing such an infrastructure. 

Of course, it's all easier said than done, but we have to start doing somewhere. 

What do I think ?

( 1) I liken Africans to the Philistines in the Bible: Everything you read about them is written by someone else.

Someone always thinks he or she knows what is good for the Africans! Has anyone ever polled Africans to determine their opinions on what they really want for their countries?

What an audacity, but where is the Africans' perspectives, if any?

 

Do governments tag revenues by sources?

I thought all government revenues go to the national treasury pool from which by the budgetary process government policies are funded. Are there examples of countries where governments extract money from a particular revenue stream and distribute that money amongst its citizens, not by tax returns, for whatever reason(s)?

I wish here in my state the federal government distributed tobacco tax revenues back to the citizens since the state of North Carolina is a tobacco producing state!

(2) The Egyptian pyramids have stood the test of times since before Christ was born. My fishing and drinking buddy jokes that if the World Bank advised the Pharoahs, the pyramids would not have been built; the cost/benefit analysis alone would cost half of the total expenditure for building the structures and the caveats would have  scared the kings/queens from even trying.

 

Please, let us hear from Africans about their Perspectives on whether extractive industries tranparency per se will overnight lead to socio-economic developments in their countries as they mine their natural resources-oil, gold, iron ore, diamonds, etc.