Why are resource-rich nations so poor?

[Joel Nwokeoma]

Why are resource-rich nations amongst the poorest in the world with conditions of living that are at best brutish and cruel? This is one qustion that has endlessed agitated the minds of development economists over the years. And, it sure will many years to come.

Much of this resource-curse is evident in sub-saharan Africa, home to over 500 million people. From Nigeria to Liberia, Sierra Leone to Congo DR, Sudan to Gabon. The resources range from oil and gas to diamond, aptly regarded by Paul Collier as "a guerrilla's best friend", to gold and large forest reserves, among others. But this unwholesome reality is not a wholly African affair. Some economists say it is also prevalent in countries as diverse as Venuezuela, Burma and Russia.

Over the years, however, the case of Nigeria has become very instructive. Regarded as the sixth largest producer of crude oil in the world with a daily production quota of at least 3 million Barrel Per Day, which gives the country over 80 % of its annual revenue, Nigeria consistently gets mentioned on the wrong side of human development indicators of various international agencies.
For instance, Nigeria is almost always ranked "low" in such indexes as primary education, health, poverty reduction, capapcity building, water and sanitation.

In 2003 alone, for example, the World Bank noted that Nigeria generated about $17 billion, much of the revenue coming from oil and gas proceeds, yet when the United Nations Development Programme (UNDP) published its World Human Development Report in 2004, Nigeria was placed 177 out of 151 countries studied, with 70% of its 140 million population living on less than a dollar per day and 43 % lacking sanitation and clean water. Besides, its infant mortality rate is to be among the highest in the world. Most recently, it was also reported among the countries that would not meet the Millennium Development Goals.

A recent report by a Canadian lobby group, Africa Canada working with a group of lawyers called Green Advocates on Liberia reechoed the reality in the war-torn West African nation. The report ostensibly inspired by the works of Jeffry Sachs and Paul Collier highlighted the economic dangers facing nations that depend on raw material(resource) for export and concluded that a major reorganisation of the billion dollar worth raw materials sector is imperative if the populace must benefit therefrom.

Such efforts are not even evident in the corruption-ridden oil and gas industry in Nigeria, but there is no denying the need for it in the country. But far more than an inquest into the various raw materials sectors in sub-saharan Africa is the need to improve on the governance structure of resource-rich nations. It is worrying enough that democracies of most resource-rich nations seem accursed, what with a rambustious and conflicted electoral process, poor accountability and opaque system of public administration. Nigeria's last attempt at conducting an election in May 2007 was widely regarded as flawed by both domestic and international observers, and has since become a subject of intense litigation by stakeholders in law courts.
It is no more a guess why poverty seems to subsist in resource-rich nations. Its management by an elite and political leadership that does not owe its ascension to power on popular participation and involvement has been very unhelpful and anti-people.

[Mike Banda]

Joel,what ever you have said in this article is true of most of our nations in Africa.I agree in totality with your sentiments and share your grief.
I wish to add that our countries are in the habit of exporting un-processed material at very low prices.We are given raw deal for these rare resources.The same materials come back as very expensive and resource-gobbling imports.Its high time we started exporting processed articles.
I also concur with you on the high levels of corruption and mismanagement in our public institutions.In addition,we have very weak laws and national policies that allow the so-called providers of Foreign Direct Investment to come in and are given Tax Holiday! They even find it very easy to externalise their earnings because our Laws are porous.
Lastly..wars have also negatively affected most African states.The sad thing is that its not really our nationals fighting amongst themselves but there are some external forces somewhere.

[Susan Somach]

I don't think it's a question of the democracies being "accursed" - which implies some inherent, uncontrollable situation. Nor is it fair to merely blame the "elite and political leadership" for its own corruption and ineptitude. The overwhelming curse of these resource-rich countries is that they have resources that the dominant resource-using countries want. And, to secure the needed supply of those resources at the lowest possible cost, these countries (yes, including the US) have promoted, installed and/or supported corrupt, anti-democratic regimes with money, weapons, and other types of military support. While we are busy teaching democratic principles to many developing countries, we tend to ignore them when they conflict with our economic interests. The lessons are numerous, including Nigeria as well as South America and the Middle East. Just look at Iraq...

[Joel Nwokeoma]

Thanks Susan for your insights on my piece on the "resource curse" theory. Time was when activists and scholars in developing countries thought every viewpoint from developed nations would almost always turn blind eye to the anti-democratic activities of their governments. I remember when in a Masters class some years ago, we were told that we (developing countries) were alone in the struggle to expose some western hypocrises about developing countries. Yours was indeed a very refreshing departure. Thanks

[Annamarie Bohus]

I agree with you, Susan. For a very long time, the resource-rich nations have been exploited by the dominant resource-using nations who care little about the consequences and long-term effects of their machinations. Greed is the motivator, and the common denominator between the exploiters and their exploited, corrupted puppets. The only hope for a civil, just society is by transforming our predominant global culture of war into a culture of peace. This is a monumental task, but it can, and must, be done.

[Cosmas Nkhara Bahali]

Helo Susan,

You have touched the main reasons as to why theresource-rich countries are getting poorer.the names such as freedom, democracy, corrupt leaders, terror are the main weapons to kill psychologically the whole country.

what do you thinka re the solutions!

Cosmas
[e-mail]

[sonique]

this is so true and can be attributed to poor leadership and illiteracy.Aricans have the resources but don't have the know how.Maybe we can learn from each other.Look at a country like botswana,beacause of good leadership the country has been able to utilise its resources for positive development.South africa is also a success story.Good governance is core.Economic freedom is also important.Africa is ravaged by wars which make resource harnessing impossible.Development can not take place in an uncondusive environment.Ethnicity is a culprit as people of different tribes fight against each other.This has been a major factor in Nigeria,Sudan.Everyone wants to benefit from the resources and when leaders fail to allocate resources equally then people will engage in war at the expense of development .In Nigeria the southerners fight he northerners.The same story repeats itself in Sudan.The Congo has been ravaged by war and is one of the most resource rich country in Africa.I think mismanagement is key.I don't know whether the theory of underdevelopment still applies but don't you think that all africa does is export raw materials at low prices and again buys finished products at a higher price.We need to advance technologically.Africans need to engage in research and find solutions to their problems.This continent is full of people who go to school just to get jobs.If that mentality was to change I think Africa would be going to greater heights.We need problem solvers ---and maybe we won't need to rely on outsiders to solve our own problems.

[Elaine Friedland]

The curse of dependence upon the export of raw materials is that the state becomes a "rentier state," where the source of government revenue is not from its own population, but from foreign corporations importing the resource. The government leaders become totally independent of the local population and do not need to provide services.

Democratic representation in the industrialized countries developed because the government was dependent upon the taxes of the local population. This relationship non-elite and elite produced the bargaining power of non-elite.

I think here is a tendency of "rentier states" to avoid industrialization because it would dilute the power of the elite.

[Gil Hardwick]

My view, and I understand that it may be misinterpreted, is that wealthy nations are not wealthy simply because of their global positioning but because they enjoy what I might call a 'foundation wealth' which acts as a spring-board for all their other activity. There are two criteria to be met. One is access to extensive grasslands and deep fertile soils in major urban hinterlands, and the second is cities positioned at the intersection of key trading routes.

It is those two phenomena in concert that allows very large populations to be sustained on excess production and profit from exchange, which allows sufficient leisure time to relax and enjoy life, which in turn inevitably leads to higher education, the development of a sophisticated built environment and with it civil infrastructure and a robust intellectual life.

A significant part of the 'problem' in your poor resource rich nation governance, in my experience, originates in misguided efforts to apply the same infrastructure as the key world population centres. Believe me when I say the same problem applies in rural and remote inland Australia as it does anywhere else.

What we might care to reconsider are not nation-state security borders in this case especially derived from old colonial prerogatives displacing natural intelligence as the delimiting frame of reference, but bioregions and catchments supporting agriculture to provide the basics of food and welfare security first.

The 'resources', then, if the people are lucky, become the cream on the cake rather than the core wealth the exchange of which everyone depends, and which of course makes them so acutely vulnerable to exploitation.

Well, I have written on this matter for almost forty years now, and have so many others. And yes, I tend to agree with Susan except for the simple fact of global diaspora over the past 250 years leading to the current population distribution.

It is not hard to see who is hosting the most number of people, nor their origins, although having said that I dare promote the idea that violence and dictatorial stupidity are unwarranted were it not for the fact that most people in the world have still not recovered psychologically from the Great War and the Great Depression, and the Cold War, and all the rest of it going back to the Seven Years (French and Indian) War if you will, so they still think they are at risk despite their objective security and well-being.

The simple fact is that most Westerners are not living in your present but in their own past. I think it is a matter of establishing fellowship on an understanding that life is full of suffering, and there are none of us free of it.

Perhaps we might rather change our way of doing things, and the oppressed peoples present themselves as teachers rather than victims, as people with knowledge and wisdom to impart rather than blame to cast. I know a lot of people are very worried about the world situation, but the wrong message is being sent through to them.

Kindest regards, sincerely,

Gil

[Elaine Friedland]

A research paper on this problem focusing specifically upon Mozambique's potential of being plagued by the natural resource curse:
Exploring Natural Resources in Mozambique Will it Be a Blessing or a Curse? 13-09-2007; Aurelio Bucuane & Peter Mulder
http://www.iese.ac.mz/index.php?option=com_docman&task=cat_view...