How come majority of countries that are natural resource rich in Africa are poor? No easy answer. The most peddled response has been the “natural resource curse!” Listening to Michael Fairbanks recently in Bahamas, it became clear that lack of prosperity in natural resource-wealthy countries has little to do with curses, but more to do with governance structures.
One might as well argue that rich countries and emerging ones such as China are exploiting resources from Africa unfairly. True, some conflicts in mineral rich parts of Africa are wealthy nations-sponsored in order to exploit resources in an environment that has less accountability. What role do the people, especially the leaders in such countries play in turning resources into a curse?
Top political leaders in countries with subsurface wealth tend to have high numbers of breakfast, lunch and dinner meetings with investors. Little moves in terms of investment unless one dines with the president. While we may never know the confidential agreements that transpire between our leaders and investors, we can guess that this is where the actual curse is sown and nurtured.
Political opponents are keen to seize power to partake in signing “confidential deals” too. If elections do not favour them, the global market has a supply of investors who failed to dine with a given president and are thus ready to equip the opposition for purposes of accessing sub surface wealth. What follows, is political strife and civil wars in the name of nebulous global ideals such as human rights, democracy and people empowerment. Civil wars in Congo, Sudan and Nigeria, among other countries are a drive towards a lunch meeting with investors!
The curse of the continent therefore is not in its resources but rather in its lack of structures that should deny individuals the unfettered freedom to manipulate state power to amass wealth. The second curse is the temptation by experts to build more state owned enterprises, and nationalise subsurface wealth hence giving politicians an excuse to go out on lunch sprees with investors. The third curse is the assumption that subsurface wealth is synonymous with prosperity. Unless the African person torturously applies his mind on how best to exploit and position his product in the global market – wealthy nations will keep swooping on our resources like eagles on chicken!
Where should we start to dictate the development strategy for Africa? Let us try microeconomics, focus on entrepreneurial Africans and push them to actively exploit resources on the continent. The concern on the intensive capital needed to purchase or hire heavy machines and exploit sub surface wealth will be taken care of through predictable structures that can allow as many talented Africans to have lunch with investors. Our governments should only police and regulate to ensure that the thirst for wealth does not destroy the environment and hurt the rights of others.
Said Michael Fairbanks, “In the global economy, having lunch with the president is no longer going to be helpful.” We know in Africa, it still is and that is why we must urgently push for predictable rules of the game in mineral exploitation and wealth creation. More lunch meetings set up with ordinary people in Africa will not only benefit restaurants, but will ensure that Africans do not simply compete on the basis of commodity prices but in terms of value added products. This will in turn expand the taxation base for a given government while promoting citizen responsiveness towards the activities of the political elite.
This article was first published by Business Daily, a publication of Nation Media Group
By James Shikwati
Mr. Shikwati is the Director of Inter Region Economic Network
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