Control over natural resource revenues is a contentious,
politically divisive issue in most developing countries-especially
for oil production. A typical policy response of the center
in such cases has been to introduce revenue sharing arrangements.
Such measures have generally not assuaged the aspirations
of the oil-producing regions and have exposed them to
volatility in their revenue flows that they are generally
unable to cope with. An alternative is to assign more
stable revenue bases to the regional administrations,
together with a general-purpose transfer system that incorporates
a floor. This acts as an insurance mechanism for the regional
administrations and facilitates the stable provision of
public services in the oil-production regions, as well
as the possibility of redistribution. We use the recent
history of oil-revenue sharing in Nigeria to illustrate
the propositions: Control over natural resource revenues
is a contentious, politically divisive issue in most developing
countries-especially for oil production. A typical policy
response of the center in such cases has been to introduce
revenue sharing arrangements. Such measures have generally
not assuaged the aspirations of the oil-producing regions
and have exposed them to volatility in their revenue flows
that they are generally unable to cope with. An alternative
is to assign more stable revenue bases to the regional
administrations, together with a general-purpose transfer
system that incorporates a floor. This acts as an insurance
mechanism for the regional administrations and facilitates
the stable provision of public services in the oil-production
regions, as well as the possibility of redistribution.
We use the recent history of oil-revenue sharing in Nigeria
to illustrate the propositions
The
world's seven richest nations have agreed to increase
debt relief for the poorest countries by US$1 billion.
The seven countries - which with Russia form the Group
of Eight (G8) - will reduce the debt repayments for
up to 22 African states under the Highly Indebted Poor
Countries Initiative (HIPC). But aid agencies said the
debt relief would barely make up for the fall in commodity
prices such as coffee and cotton on which many developing
nations' economies are reliant. Proponents of the debt
relief plan, led by Canada with backing from Britain
and Germany, hope the beneficiaries will use the money
that is not being sent to banks for investment in areas
such as health care and education.
The African Presidents - Algeria's Abdelaziz Bouteflika,
Nigeria's Olusegun Obasanjo, Senegal's Abdoulaye Wade
and South Africa's Thabo Mbeki - also want to win backing
for their Nepad plan at the G8 Summit, which offers
good governance in return for investment and development
aid. Canada's Prime Minister Jean Chretien is keen to
devote new resources to Africa, but US President George
W Bush does not want to be tied to one area and Japan
has said it needs to concentrate its aid on the Asia-Pacific
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WANGONeT 2003