In a bid to propel transitional African economies towards stability and growth, a financial modelling option is now on the table from which a handful of African countries are benefiting.
That’s according to a statement from the African Development Bank’s Financial Modelling for the Extractives (FIMES) project.
The exporting countries all have resources that are extracted for overseas buyers with the exporting country harnessing tax revenue for the benefit of the local economy.
FIMES is a multi-country project funded by the African Development Bank Group's Transition Support Facility and implemented by the African Natural Resources Management and Investment Centre (ANRC).
The project aims to strengthen the capacity for financial modelling and domestic tax revenue collection, a vital element for any country’s economic growth.
To date it is believed to have boosted the institutional capacity and resilience of seven beneficiary transitional countries – Guinea, Liberia, Madagascar, Niger, Sierra Leone, South Sudan, and Zimbabwe.
Acting director of the African Centre for Natural Resource Management and Investment, Vanessa Ushie, said FIMES pioneers large-scale efforts by the AfDB to build financial modelling capacity in Africa.
"In all beneficiary countries, the lessons and experiences shared at a recent workshop indicate that FIMES has supported legislative revisions in the petroleum and mining sector and generated comprehensive knowledge and data on key natural resources, leading to better investment agreements, policy decisions and revenue flows," Ushie said.
Treasury inspector at Madagascar's Ministry of Economy and Finance, Rakotosalama Tojo Hasina Fanomezana, said his country anticipated a surge in mining's contribution to the national gross domestic product from 4% to potentially 15% within the next three years.
He stressed that it’s thanks to the capacity-building efforts in financial modelling for the extractive sector through FIMES.
The service manager at the Guinean Ministry of Budget, Aboubacar Sidiki Diakité, said the knowledge gained from FIMES and put into practice enabled the treasuries of their respective countries to generate more tax revenue in the mining sector.
He said FIMES allowed for more informed decisions on tax regimes and to derive value from foreign investment. In South Sudan, the project also helped create opportunities to support economic diversification through increased non-oil investment.
Participants agreed FIMES fortified tax revenues and promoted economic diversification and long-term stability across participating nations, while emerging as a cornerstone for fostering resilience and sustainable development in Africa's extractive industries amidst global climate and trade challenges.
