African states should consider renegotiating unfavourable contracts with multinationals to ensure they get a fair return on their natural resources, a joint OECD/African Development Bank study urged today.
The growing presence of companies from China and other emerging countries on the continent also gives governments the chance to reap higher rewards from mineral, energy and other resources by putting them to competitive bidding, it said.
"Where multinational firms fail to abide by minimal corporate governance standards in terms of tax contributions, governments should consider renegotiating concessions," the report to the Bank's annual meeting argued.
"African states are entitled to receive a fair deal for the exploitation of their natural resources," it concluded.
The proposal was one of several made in a joint paper by the bank and the Paris-based Organisation for Economic Co-operation and Development aimed at gradually weaning the continent off foreign aid by boosting tax and other domestic revenues.
The lack of transparency surrounding many resource contracts in Africa and the fact that many of its governments have little experience in negotiating production agreements and tax regimes mean their terms vary wildly.
The report said some African governments were often hesitant to revisit unfavourable contracts and tax arrangements for fear of scaring off investors, but said that was unlikely to happen.
"Multinational enterprises may threaten to leave but they are unlikely to actually abandon the exploitation of mines because of a reasonable rise in taxes or royalties," it said.
Several mineral-rich countries have already made it clear they want to see more revenues from their resource sectors.