Being Resource-Rich in Africa

A significant amount of the world's resources and minerals are in countries on the African continent. From diamonds to oil reserves, you would think these resource-rich nations would be some of the most economically advantaged. Instead, the presence of resources, like oil, in countries such as Sudan and South Sudan, has only created more problems and turmoil in the region.

Disagreement over oil reserves and how the profits should be dispersed throughout the country is a major reason for Sudan's ongoing civil war (arguably the longest in history) and the eventual secession of South Sudan.

Countries rich in resources are actually more prone to conflict, as these resources can be used to finance war or rebellion efforts that otherwise wouldn't be sustainable. The profits can be used by corrupt governments to finance their own needs without any need for input from civilians, leaving them less accountable to their people. However, these are the same resources that have helped African nations to develop some of the fastest growing economies in the world.

According to the IMF's 2012 World Economic Outlook, of the 20 fastest growing economies in the world, 10 are located in Sub-Saharan Africa. South Sudan ranks # 2 in the world. Others who make the list include the Republic of Congo, Zambia, Ghana and Mozambique.

While the growth of these economies is strong overall, how are the citizens of these countries affected? Ghana for example, has developed an economic system that has enabled its oil profits to be dispersed broadly across the country and it has actually had positive effects in alleviating poverty. Botswana, and its diamond economy, has grown from one of the poorest nations in the world to a now "middle-income country,". But other resource-rich countries, like Mozambique, are struggling to see similar results.

In Cateme, Mozambique, the site of a new coal mine (currently the biggest in the world), many residents had expectations of new wealth and prosperity as a result of the new coal industry there. Instead, many were disappointed when they displaced from their homes and their farms, and relocated to an area 25 miles away, "living in crumbling, leaky houses, farming barren plots of land, [and] far from any kind of jobs that the mines might create,".

Large coal mining companies are investing billions of dollars into operations in Mozambique, but who is actually seeing that money? Also rich in natural gas reserves, Mozambique has gas projects that have been estimated by the World Bank to be capable of bringing in as much as $70 billion.

Yet millions of people are still living below the poverty line, and some economists feel that they will continue to do so. According to the U.S. Agency for International Development, these megaprojects based on oil, gas, and minerals, rarely create a significant number of new jobs in these countries and do not encourage local entrepreneurship.

Most Mozambique citizens live in rural agricultural areas and less than 1% of these farmers are commercial farmers. Over 99% are small-scale and family-based sustenance farmers. Left in this isolated position, most of Mozambique's rural citizens "languish even as the country surges." Furthermore, those villagers who were forced to move from their homes located on top of the coal reserves were left with false promises of new and improved housing, public services, and new fields to farm.

How can countries with some of the fastest growing economies in the world ignore the needs of their poorer citizens or even leave them worse off? One Mozambique farmer, who was displaced from his home, observed this when he commented: "The rich get richer and the poor get poorer... That is what is happening here."

As evident from places like Ghana and Botswana, it is possible to produce real positive and widespread economic results and increase the overall standard of living in countries that are able to utilize their access to resources in a productive way. But we have to address the questions: what's stopping this from happening in every country with a resource boom and what can be done to ensure that the citizens of these countries see the effects of this economic growth?

Disclaimer: The views expressed in this blog post do not necessarily reflect the official policy of Citizens for Global Solutions.

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