A study of the resources-for-infrastructure agreements in oil-rich markets

Abstract

Infrastructure acts as a catalyst for human and economic development and is critical to the general functioning of a society. It defines a country’s international competitiveness and creates jobs (Chen, 2018). However, in Sub-Saharan Africa (SSA), it is well documented that, in terms of the most common measures of infrastructure development, the region typically lags behind most developing regions (Calderon et al., 2018). Although the region is abundantly rich in natural resources, with discoveries being continuously made, the lack of infrastructure remains one of the significant obstacles to sustaining economic development in the region. Given the constraints on traditional sources of infrastructure finance, resources-for-infrastructure (R4I) deals present one of the most promising financing techniques for bridging the infrastructure gaps in SSA (Halland et al., 2014). Its potential use, however, begs the question of whether R4I deals guarantee remunerative returns by ensuring the mutuality of benefits between host nations and foreign developers. In answering this question, we used a theoretical or doctrinal approach. Although certain aspects of R4I deals as a financing mechanism are flawed, this mechanism can be leveraged to address the huge infrastructure deficit in the region. This paper thus informs policymakers on the aspects of R4I deals that need reform.