Our Staff Writer CHABY BARASA reports in this second and final installment (about the Fund)...
The mining sector's contribution to
Dr Honest Prosper Ngowi, Senior Lecturer, Researcher and Consultant (Economics and Business)
"The purpose should be to stabilise the economy by taking away extra money from circulation as part of ways of avoiding Dutch Disease. If the country gets 'too much' cash than the economy can absorb, the economy can operate artificially including very high inflation," he cautioned.
He says the funds should be used to diversify the economy away from natural gas (invest in non-gas related sectors such as agriculture, industry, tourism and others). "The Fund is important too as a way of saving. What is important when the country wants to use money from the fund is to use the interest rate (return) from the
Given the huge size of the expected cash, such funds should be placed or invested abroad with experienced fund Managers who will invest the funds on behalf of the Government. Best practices of such funds exist from some countries such as
He stressed on the need to learn from best performers, but also ruled out a
"We don't have to rush or work under pressure," notes
"Having wasted the opportunity in mining, the government must be smarter and make sure past mistakes are not repeated in the oil and gas sector," he says.
Dr Rugemeleza Nshala, Executive Director of Lawyers Environmental Action Team (LEAT) says ideally the country should have thought of having such funds to cater for mining revenue yesterday, but "all was not lost as government could ensure maximum revenue from the sector by addressing taxation, transfer pricing by mining firms and other pertinent challenges afflicting the sector," he observes.
To ensure the anticipated fund does not destabilise the economy, the funds must be spent wisely lest they lead to inflation, cautioned Dr Nshala, stressing that a clear strategy must also be in place to ensure the funds serve future generations. Dr Nshala calls for a clear vision and commitment, saying
Quoting various critics,
The report says
This is not the case with many African governments struggling to feed or educate their people," said
"In many of these countries as well, transparency is a big problem and the amount of leakage that takes place in public funds is a reason to be concerned."
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