Toyin Akinosho
4 December 2008
column
Lagos — With the return of fierce bloodletting in the Congo, site of some of the world's most valuable gemstones, the age old theory of resource-curse has regained currency.
In Nigeria, it is that season again when the focus is on why the country has made so little use of the wealth that oil resources have provided.
Predictably, most of the commentators are saying that the very discovery of oil has everything to do with the extreme inadequacy in our collective well being. Scholars have struggled with the argument that the Nigerian civil war was fought for the control of oil resources. One recent book that strenuously tries to make the case is The Next Gulf; London, Washington and Oil Conflict In Nigeria, a work of three British intellectuals, which ought to be an excellent material, to go by the amount of research it digs into and the quantum of facts it deploys. The problem is that the analysis of the relationship between the civil war and control of Nigeria's oil reserves is stretched so thin that, in many places, the book reads like a string of conspiracy theories.
My view is always not to take Nigeria as an isolated case. The more I look at the map of the continent, the more I am convinced that the idea of portraying mineral wealth as the major culprit in Africa's endemic poverty and lack of development is reductive.
The most competitive economies in Africa in the last 10 years, to go by the ranking of the World Economic Forum, have been some of the least populated ones. Tunisia,(pop: 10 million), on the Northernmost tip of the continent, has far less volume of oil than its neighbours -Egypt, Algeria and Libya- yet it is one of Africa's three most competitive economies, far and away more prosperous than its larger, more populated and hydrocarbon-rich neighbours. Mauritius is not an oil producer; this scenic island nation makes money by simply being an export zone, yet it competes fiercely with Tunisia. Merely looking at these two countries and comparing with Nigeria and Angola, which are at the bottom of the UNDP's annual Human Development Index, is a good excuse for acolytes of resource curse. But when we study the map very closely, we find that this is not sufficient evidence.
In the east, the most unstable country in Africa; the one that everyone agrees is a failed state, is Somalia, which does not claim any significant mineral wealth. Here, armed gangs have been running the streets of Mogadishu, the capital, for upwards of 25 years, causing extreme pain for all and exacerbating the poverty. Somalia doesn't even have the other challenge that African political scientists like to cite as a reason for the continent's backwardness: tribalism. In effect, people of the same tribe are killing each other over territory. To the west of Somalia, landlocked Uganda has known real peace only in the last 21 out of its 40 years of independence. Yet it's not an extractive economy. To understand what "6% growth rate", from zero, means, is to visit the city of Kampala. This is the first major African city I'd visit that looks shabbier than Lagos. And it hasn't even got "the soul" that makes Lagos such a magnetic place for some of us. Warlordism was synonymous with the "Pearl of Africa" for a long time. And there are still barbarians at the gate, infiltrating the country's four borders and causing mayhem. Looking at the paltry revenue that Yoweri Museveni' s government makes out of tea and coffee exports, you wonder what it is that Uganda's political and rebel leaders want. Next door, Kenya has been ruled by only three Presidents in all of 40 years of independence; the poverty on the streets of Nairobi is of an enormous scale, and when the country decided to test democracy to the full for the very first time, it nearly tore into shreds. In the conflagration that was thrown up by the electoral disagreement, a year ago, hundreds of thousands of people lost the sense of what it means to have a life.
Niger and Chad are countries you don't want to visit. Each of them has been one vast shooting range for the last three decades. The crisis had flared up, in Chad, before the oil deposits were found. Indeed, West Africa as a whole has only started to heal, in the last five years, from the crisis that engulfed most of the countries in the Manu River Basin (Cote Dd'Ivoire, Sierra Leone and Liberia). For most of its post independent history, Cote d'Ivoire thrived as an agrarian economy. This cocoa producer used to be, from the West's point of view at least, a model agro-based economy. But everything unraveled one morning in Christmas season 2000 when an army General named Robert Guei took over and the world began to take a close notice. Everyone saw that beyond the splendid view of the Ebrie Lagoon that divides Abidjan's Business District from the leafy middle class suburb of Deaux Plateau, are throngs of masses of the poor who can't dream of access to the city's plentiful chic bars and cafes and the throbbing nightlife. Most of Cote d'Ivoire lives, like much of Africa, in abject want. The instability of the last seven years has revealed this hitherto hidden fact.
A short article in the oil industry newsletter African Energy summarized a research report by the American scholar, Michael Ross, published by Oxfam America and released a while ago. Ross reportedly argued that "extractive economies in Africa and the Middle East have a strong historical tendency towards authoritarian and unrepresentative regimes.." The report titled Extractive Industries and the Poor, is global in scope, covering 25 developing country oil economies, mostly in Africa and the Middle east, the main developing world areas for oil and mineral extraction.
I admit that there is some validity in Ross's conclusion, but the matter, in those two geographical zones, is far more complex.
Southern Africa provides us with the most weighty evidence against resource curse as a stand- alone theory for Africa's backwardness.
Until the turn of the 20th century, hydrocarbon geologists largely dismissed the Indian Ocean as a source of commercially developable hydrocarbons. The reserves, simply, were not as exciting as the pools in the south Atlantic. We knew that there was some gas in Mozambique and Tanzania, but in the light of significant volumes in the west and north of the continent, which had cornered the LNG market, it was clear that Mozambique and Tanzania had to develop own regional markets to gain value for their relatively little quantity of methane.
Things have changed in the last five years since Sasol, the South African petrochemical giant, commenced piping Mozambican gas to produce its synfuels and to replace coal as feedstock for its many products. In Tanzania, two power projects have been mopping up the gas resource. It so happens, however, that Mozambique, which had seen war since independence in the mid 70s (when it wasn't classified as a resource rich nation), has enjoyed tremendous peace and prosperity since its 5 trillion cubic feet of hydrocarbon reserves have become monetized. This is contrary to the resource curse argument.
I needn't repeat the case for Tanzania, a mining nation, which has peacefully moved from one elected government to another, even in the face of the huge challenges that are posed by the semi autonomous unit named Zanzibar.
Now for the easiest example. We all know that Botswana is an extractive economy. It holds the world's highest quality diamond and competes with South Africa for volume. The population is one million (twice that of oil rich Equatorial Guinea, a country which fits Ross's theory). Still, it has run a workable democracy for 36 years. Botswana's success is owed to what Pat Utomi has cited as "elite consensus".
Africa's poor standard of living, and lousy governance is fuelled by many sources and it is important that the discussion is more nuanced. The macabre dance in Zimbabwe lends weight to the argument about poor leadership. The "big man who dispenses the largesse", a very African cultural trait, is the reason why Kinshasa is in flames, and why Kenya is not delivering.
There is the challenge of building nation-states out of a complex mix of people and cultures - many of them with long, proud histories of their own - arbitrarily enclosed within colonial boundaries; there is the absence of widespread entrepreneurship in the modern sense-the type that built the railroads in the United States. The paucity of modern wealth creation machinery guarantees that control of power is the only access to wealth, no matter what value. There is enough evidence in Nigeria's political history to suggest that the charade that is going on in Abuja now would have happened the same way even if all we had was cocoa.
Akinosho is the publisher, Africa Oil and Gas Report.
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While I certainly believe this article makes many good points that the causality of the underdevelopment of Africa countries is often too simply explained as a resource curse issue, I believe that at the very least resource wealth can become an accelerating factor interacting with other factors discussed in this well written article: 1) The influx of foreign currency leads to strengthening of the local currency making local producers of other goods less competitive and imports more competitive. It has documented that in many cases the growth of an extractive industry has seen the decline of many other domestic industries.
2) The easy money associated with resource wealth can: a) Enable a government that is already inclined to not answer to its’ own people to become worse. b) The leadership in can more easily neglect to develop its’ most valuable resource: human capital. c) Increase the temptation of corruption and when combined with foreign actors pursuing their own self interest this can become an unholy alliance. 3) Internal wars would exist without the mineral wealth but the cash these resources allow to be raised plus the addition of bad foreign actors pursuing their own selfish interest certainly tend to make these wars more protracted, disruptive and bloody. 4) Ethnic conflict is the result of many factors however resources when they are disproportional controlled by one ethnic group can make the problem worse.
The question may be how can this is issue be better managed so that resource wealth does not become an additional toxic chemical added to all of issues the countries in question face?