Fixing the African paradox

Azerbaijan's sound public service measures can be a model for the continent's commodity-driven economies

In the past half-century or so, many countries around the world and primarily in Africa have experienced challenges in achieving sound public governance, especially those endowed with abundant oil and mineral wealth.

Scholars and experts have long analyzed the paradoxical relationship between commodity-driven economies and their continuing limitations in achieving good public governance.

Many have noted that although proceeds from natural resources can be decisive in advancing the economic stature of a country, they instead typically slow down such a process, usually as a result of inadequate management.

Today, these dynamics remain real in almost every low- to medium-income country that relies on revenues from commodity exports such as oil, gas and minerals. Although this is a global issue we face, it remains predominantly pronounced in Africa, where managing resources efficiently is still a major challenge for public stakeholders and their constituents to address.

While they benefit from significant financial inflows from their natural resources, which are primarily driven by exports to China - the continent's leading trading partner - African countries still continue to suffer from high income disparities, inadequate welfare systems, weak public information services, slow bureaucratic procedures and inefficient coordination among government-controlled agencies.

Such challenges are amplified by the fact that only a handful of these nations have successfully implemented programs to reduce their economic dependence on commodity revenues and become less vulnerable to price fluctuations. Even with the securing of huge investments from foreign partners like China in infrastructure and other sectors, African countries have struggled to create economic diversification and good public management systems.

With world market prices averaging around $50 a barrel over the past several months, many African producing countries have experienced significant losses in currency value, while also facing tremendous challenges in keeping their budgetary ambitions unchanged for 2015.

For example, in the cases of Nigeria and Angola, lower than expected market prices have further delayed the development of much-needed public management systems, leading to more discomfort for their underserved populations.

It took decades of persistent commodity revenue mismanagement in Africa and across other regions before corporate and public stakeholders pioneered the establishment of the Extractive Industry Transparency Index in 2003.

The index included a new set of guidelines and principles for participating countries to follow to ensure that their populations more fully benefit from revenues derived from oil, gas and mineral resources.

As a forward-thinking nation with significant fossil-fuel resources, Azerbaijan was among the first countries to explore the EITI. Since then, the country has made enormous strides to capitalize on its abundant natural resources and create vehicles for ensuring that its benefits trickle down to the population.

African governments would do well to replicate some of these exercises.

Exemplifying this ambition, Azerbaijan created the State Agency for Public Service and Social Innovations in 2012 to provide first-class public service to its citizens.

The agency functions as the central executive body that provides for the unified management of Azerbaijani Service and Assessment Network service centers, also known as ASAN.

Through this network, Azerbaijan has essentially created a unified platform where its citizens can access public services offered by as many as 10 varying state agencies in a single location.

More importantly, these centers serve as a way to coordinate the functions of civil servants, while more accurately assessing their performance and service to the public.

Additionally, ASAN centers have been built with the necessary capabilities to integrate databases across agencies and improve the efficacy of electronic services to the public.

Overall, more than 3.8 million people have benefited from access to ASAN service centers since their launch three years ago, with an increasing number of private firms also offering their services through these convenient platforms. Services at these centers include the issuance of various certificates, residence permits and licenses, as well as other documents.

What is evident through the establishment of an efficient bureaucratic mechanism like ASAN is Azerbaijan's intention to not only serve its public satisfactorily, but also to continue to enforce high standards of public service that can lead to desirable socioeconomic outcomes.

Such a public-private synergy makes the private sector more efficient and allows businesses to operate more productively by expending less time dealing with bureaucracy. This expedites economic diversification and business development and serves as a model for states reliant on commodity revenues that can help them to grow new industries and revenue streams.

By strengthening the country's public governance, Azerbaijan's leaders have sent a resonating signal of reliability and trust to their population, proving that their resources are put to the service of the public. It is through these kinds of relationships that governments can build the necessary foundations to adjust their policies in times of market hardship.

Certainly, African countries would be wise to take note of Azerbaijan's efforts.

No one knows when the next wave of market chaos will hit again.

The author is the director of the US representative office of the State Oil Company of the Azerbaijan Republic. The views do not necessarily reflect those of China Daily.

(China Daily Africa Weekly 05/01/2015 page11)