A joint study by the Organisation for Economic Cooperation (OECD) and the African Development Bank (ADB) said African states should renegotiate unfavourable contracts with multinational mining companies to ensure they get fair returns on natural resources.
The report recommends that foreign mining companies enter competitive bidding to ensure African governments get higher rewards from mineral, energy and other resources.
In recent times emerging companies hungry for resources have been enticed by African minerals and metals, a trend that could lead to self-sufficiency in African nations, according to the OECD and ADB, but only if tax and other domestic revenues are increased.
Such a move would require strict policing, however, and a new attitude by African governments, which are often reluctant to renegotiate unfavourable contracts and tax arrangements for fear of scaring-off investors.
“Where multinational firms fail to abide by minimal corporate governance standards in terms of tax contributions, governments should consider renegotiating concessions,” the report said.
Ghana, Africa’s second largest gold producer, has already said it wants to increase mining royalties two-fold while Sierra Leone increased royalties last year in the mining sector.