Resource curse not the only reason for Africa’s poverty

Africa is blessed with abundant minerals, hydrocarbons, agricultural land and forests, but the continent remains the poorest in the world. This situation can improve through increased transparency, says research and advocacy organisation Good Governance Africa (GGA) CEO John Endres.

Transparency regarding the sources and destinations of funds derived from mineral exploitation needs to be increased. In addition, accountability mechanisms across Africa relating to elections, laws, courts and law enforcement agencies need to be strengthened, he emphasises.

“Citizens also need to be educated more broadly about their civic rights, duties and democracy, which would help eliminate impunity.”

Endres adds that, often, African citi- zens do not have a voice or insight regarding the allocation and beneficiation of their country’s resources.

“The lack of transparency and accountability is so widespread that citizens are unaware of what happens to a country’s revenue. “The absence of any visible improvement in infrastructure and services from the billions earned from resource extraction and rents can be an indication of corruption and abuse.”

GGA emphasises that transparency is a problem across Africa. While the situation has somewhat improved owing to transparency initiatives, such as Transparency International, the US Dodd-Frank Wall Street Reform and Consumer Protection Act, the Extractive Industries Transparency Initiative and various European Union initiatives, those determined to hide their activities and reve- nues still have ample opportunity to do so.

In addition, the World Gold Council published the Conflict-Free Gold Standard in October. The industry-led approach is aimed at combating the potential abuses involved in the mining of gold to fund armed conflict.

Endres adds that many human rights abuses in pursuit of mineral exploitation still occur across Africa but each case needs to be looked at individually as the phenomena vary substantially.

“Instead of creating prosperity, resources have often fostered corruption, undermined inclusive economic growth, incited armed conflict and damaged the environment,” he stresses.

Endres says these problems are still evi- dent across Africa in countries such as Equatorial Guinea, Nigeria, Angola, the Democratic Republic of Congo, especially the South Kivu province, South Africa and Zimbabwe.

First World Countries Not Primarily To Blame

Further, he clarifies that First World countries do not generally abuse and exploit Africa. They enter into commercial relationships with the governments of these countries, as they would anywhere they operate.

He explains that African countries sell assets, such as mineral resources, to buyers, most of which are industrialised nations or companies from such nations. In return, the African countries receive payment in foreign currency. Both sides engage in this transaction as it benefits them – no one is being forced.

However, there are many instances where the benefits of mineral transactions do not filter through to the wider population of these countries. “Rulers of certain African countries may use the money for their personal gain to buy expensive houses or shop for weapons to use against their own citizens,” Endres points out.

“It is such African leaders who are the primary abusers of their nation’s citizens, albeit, at times, with the complicity of the resource buyers.”

Resources Do Not Equal Wealth

Resources alone do not generate wealth for a country or continent, GGA states, providing the examples of wealthy countries like Germany, Japan and South Korea – First World countries with very few minerals.

On the other hand, Endres notes, “there are many countries that appear to be worse off because of their natural resources”.

Governance and democracy across Africa suffer from what has become known as the resource curse – an appreciation of the local currency owing to foreign exchange inflows that can devastate local industries by rendering them incapable of competing with global imports.

“Governments work best when they are held accountable by independent institutions, voters and taxpayers,” Endres emphasises.

However, he states that, in resource-rich countries, governments are not dependent on taxpayers for funds as they gain direct control of resource revenues, often leading to populism, irresponsible politics, corruption, short-sightedness and inefficient service delivery.

“This explains why most African citizens remain poor even though their countries may be rich in resources.”

Endres also notes, however, that resources can be a blessing. Countries benefit when they use their resources transparently and invest revenues in infrastructure, education and health to generate future wealth.

Wealth Increase Across Africa Oversold

Endres notes that wealth across Africa is on the increase.

“In many countries, the gross domestic product (GDP) is growing faster than popu- lations, meaning citizens are theoretically better off. But the growth in GDP is not necessarily impacting a large number of people.

“The substantial growth in middle class citizens across Africa has been oversold by the media and is not stable yet.”

However, Endres states that economic equality in Africa has started to improve and is likely to continue improving. “If it does, there will be reduced poverty levels, a rise in the number of African middle class citizens and improvements in demo- cracy and governance.”

GGA Promoting African Transparency

GGA highlights positive and negative developments in governance across Africa, with the intention of promoting good practice. It adds to the increasing pressure placed on undemocratic governments by a growing army of citizens, activists, nongovernmental organisations, donors, the media and businesses to improve the economic equilibrium of these countries.

GGA also conducts research to identify better practices which governments can use to run their countries.