This brief discusses key fiscal practices which should be addressed urgently to save South Sudan from chronic economic disasters. After many years of war with successive repressive regimes in Khartoum, South Sudan attained independence in 2011. The young nation immediately faced challenges in creating institutions and operating them in an environment of weak enforcement and compliance.
Lack of robust coordination among key institutions of economic governance, weak oversight institutions encourage mismanagement of resources with impunity which partly accounted for the onset of the 2013 conflict. To provide steady resource needed for reconstruction and sustainable development investment and mitigate fiscal crises, the government of South Sudan needs to implement strategies conducive of healthier public finances, including expenditure control to avoid overspending, pruning agency-shopping and improving tax collections through administrative reforms. Building institutions is not a spontaneous act but rather a contextual endeavour, which exacts both time and resources. Read the full Policy Brief.
Le problème du financement des économies africaines se pose avec plus d’acuité dans un contexte où les Etats élaborent des plans d’émergence conformément aux Objectifs de Développement Durable des Nations Unies et à l’Agenda 2063 de l’Union Africaine. L’Afrique des Idées a réuni des experts lors de sa Conférence Annuelle pour réfléchir sur les moyens d’amplifier la mobilisation des ressources financières à destination des économies africaines. La question de la mobilisation des ressources internes et de la mise en place de modèles de financement innovants a constitué la principale problématique de cette rencontre. Les conclusions de cette réflexion se trouvent dans ce Livre blanc téléchargeable gratuitement.
The discovery of the Jubilee oil field in 2007 transformed the Ghanaian oil industry. It has been followed by a slew of other discoveries and additional projects are scheduled for production start-up in the coming years.
As the commercial oil and gas sector expands, a key objective of the state will be the optimisation of “government take” from the industry. This currently occurs through a variety of mechanisms including direct taxation, royalties and state participation in industrial projects.
Designing an optimal strategy for government take is a complex task which has even more importance for developing countries where a properly managed resource boom could drive significant economic growth. Governments have a desire to obtain maximum petroleum receipts as soon as possible but must balance this against the need to create an attractive investor environment for the growth of the sector. Getting the balance right in the early years is crucial. Greedy governments may generate some short-term returns but will stifle the necessary further investment that would permit a fuller exploration and development of the country’s hydrocarbon endowment. Conversely, unduly low taxation represents an obvious missed opportunity.
Fiscal design cannot be conducted in the absence of regional context, oil and gas capital is internationally mobile and competition between states for investment is fierce. Governments cannot design their own fiscal terms without carefully monitoring what is going on next door.
It is in this dynamic setting that Ghana is currently reviewing its petroleum legislation. The structuring of government take is an important part of the debate. This paper seeks to appraise the existing Ghanaian mechanisms of government take and makes recommendations on how the approach to the AOE could be revisited for future negotiation and the issue of revenue delay to the state for further analysis by policymakers. Read the full study