Extractive industries, agriculture and infrastructure projects generate important revenues for government via taxes, royalties and production shares. For some countries, these revenues are the sole source of funding for social development and economic growth. Unfortunately, in some places, a lack of accountability and transparency in revenue management can exacerbate poor governance, leading to corruption, conflict and increasing inequality. In addition, revenue flows may not reach to the local government level, creating challenges in the delivery of basic social services and infrastructure.

In the absence of strong local institutional capacity and adequate revenues, companies can face pressure from communities to take on the government’s responsibilities to deliver social services. Building partnerships with local governments and other stakeholders to improve capacity for revenue management, social service delivery, and management of public infrastructure is an excellent way for companies to respond. Public-private sector partnerships can provide substantially better outcomes for all parties. Transparent investment and collaboration in capacity building and strengthening of local government help build better relationships and long-term development outcomes that benefit the business.