The Case for Direct Transfers of Resource Revenues in Africa

Abstract

Noting that Africa’s resource-rich countries have not translated their wealth into sustained economic growth and poverty reduction, this paper shows that by transferring a portion of resource-related government revenues uniformly and universally as direct payments to the population, some countries could increase both private consumption and the provision of public goods, and thereby reduce poverty and enhance social welfare. We make the case based on theoretical considerations and explore how these direct dividend payments would look in practice in a group of selected African countries.

Keywords: Africa, extractive industries, poverty, public goods, direct dividend transfers

JEL Classification: H41, H5, I3, O10, O13, O15, Q3