In what political economists like Paul collier and Ian bannon regarded as the resource curse and violent conflicts in their book, natural resources and violent conflicts. The picture and the discourse is on whether the more natural resource dependent a country is the higher the chances of conflict, this was contrasted with the less resource endowed countries.
Primary commodities of GDP being an aspect cited for study, if the GDP of a primary commodity country’s exports was at 25 percent the country’s chances of having a civil war were ranked at 33 percent in contrast to if at GDP 10 percent which would stand at 11 percent chance of civil war. Meaning the hugely resource endowed countries suffer from high prospects of civil war or instability.
Africa is one continent endowed with minerals from oil, gold, alluvial diamonds; such resources have led instead to violent conflict due to mismanagement leading to a resource curse. Africa had seven civil wars in 1970’s, eight in 1980’s and fourteen in 1990’s. All taking either a form of separatist movements or ideological like Angola’s Cabinda province, Sudan- South Sudan and the Dr.Congo all rooted in mineral wealth.
The economic shocks have neither spared most mineral resource African countries. Their over reliance on primary commodities for exports vulnerable to price shocks has kept economic hardships on the continent. This is blamed partially on our economies but also on the restrictive policies of the OECD countries, which take in African resources when not processed or value added cheaply.
Whenever the need for value addition arises by the less developed world they impose tariffs and non tariffs. Including subsidies that are granted to their farmers which are responsible for the high global food prices. All these contribute to slow economic growth and budgetary constraints in mineral rich countries, resources being pulled from key sectors like agriculture to the manufacturing industry creating a dollar- denominated economy.
The advent of the military in controlling mines and mineral wealth has not helped matters; most African big men prefer to appease the military in return for loyalty by giving out mineral concessions. This was the case of Suharto in Indonesia on overthrowing his predecessor Sukarno, embarked on giving out secretly the pertamina gas deal to his generals.
The military in return was not accountable to the public which could happen anywhere in any African mineral country. With defense spending take a lion’s share from the resource revenues neglecting key sectors like health, education and environment. One key aspect to get out of this resource curse is by building transparency, accountable systems which attract public scrutiny as indicated in the IMF fiscal transparency code, including the report on observance of standards and codes.
All these preventive mechanisms are meant to create an environment for responsible governments and accountability, though they are voluntary. Most African governments are bedeviled by elite corruption and mismanagement of mineral resource. The swindled monies are wired to unbudgeted accounts overseas according to transparency international and publish what you pay campaign group reports.
The other fact is the inability of resource hit economies to track down huge monies collected from oil. This weakens institutions of the state in provision of social services. State patronage to buy off political support and constant defiance to public accountability? The taxation system is weakened by over reliance on resource funds and foreign aid; the later can spur growth if well managed.
One way out of this is to have an effective civil service to counter social conflicts, private companies dealing with mineral resources publishing what they pay to host governments.
BP the British oil giant has started to open up information for public scrutiny. Though at some point it came under rebuke by several governments that prefer secrecy in oil dealings with private companies.
The issue of confidentiality clauses between companies and governments should not deter transparency. Companies may not disclose their confidential commercial information to the public, but disclose their payments to host governments. The best way to go is subscribing to the extraction and transparency industry initiative (ETI). Several governments are adamant on the above, seeking technical advice from the World Bank /IMF which have in place mechanisms to help countries set up accountable, transparency systems for proper management of oil funds.
Norway and Botswana have been successful because of initiating such systems in place. Unlike Sierraleone which in 1970 discovered Diamonds at the same time with Botswana? The later has managed to succeed while Freetown went to the dogs.
Its out of strong convictions that ethnic wars resulting from mineral resource and military coups could be tamed. if strong and effective institutions are built for public scrutiny and acceptance of information flow with a vibrant civil society accountable to the public. This could be good piece of advise to any sitting government to rethink in terms of policy.
About The Author: ELAMU DENIS EJULU is a Journalist and Social Critic
Email:email@example.com Blogger: ejulu.blogspot.com.