What Do We Know about Mineral Resource Rent Sharing in Africa?

This study aimed to review theoretical and empirical studies on the sharing of resource rent in developing countries in order to identify the difficulties encountered in conducting this type of exercise, so that tools to mitigate them can subsequently be proposed. Having reviewed the theoretical approaches to the valuation of rent on a microeconomic level, we find that mineral resource rent is a concept that is difficult to understand and measure: rent can change as a project moves from one phase to the next, and risk and the discount rate of the resource must be taken into account. The most widely-accepted definition of rent relates to the calculation of the net present value of a project – ‘the excess of revenues over all costs of production, including those of discovery and development, as well as the normal return to capital’ (IMF 2012: 5). However, the possibility of capturing tax revenue in an economically neutral way can only be guaranteed if governments have the capacity to value the economic rent of a project. Due to the difficulty of obtaining all the information necessary to calculate mineral resource rent, governments are increasing the number of tax instruments, charges and fees in order to capture a share of resource rent that they deem fair, but which ultimately depends strictly on the objectives that they have set for themselves.