Resource-rich countries still 'cursed'

World Bank says mineral wealth not cutting poverty

Richard Lee's picture


Strategic communications for WWF

October 8th, 2012

Headline growth figures - and the attendant gushing media headlines - often obscure important realities. Yes - Africa is rising and many of its economies are growing strongly on the back of strong demand for its vast natural resources. And surely this shows that the drip down effect is working as the continent's middle class expands and more countries become 'techincally' middle-income? But the answer to that - encapsulated in a World Bank report - is actually 'no'.

As a report in the Guardian newspaper makes clear, Africa's Pulse notes that the decline in poverty rates in resource-rich countries has generally lagged behind that of countries without riches in the ground. Some countries, such as Angola, Congo-Brazzaville and Gabon, have witnessed an increase in the percentage of the population living in extreme poverty.

The World Bank's research confirms that, to a large extent, the benefits of growth have not reached the poorest segments of society. It raises questions for aid donors and African governments on how to deal with the 'resource curse'.

"Resource-rich African countries have to make the conscious choice to invest in better health, education, and jobs, and less poverty for their people, because it will not happen automatically when countries strike it rich," said Shantayanan Devarajan, the World Bank's chief economist for Africa and lead author of Africa's Pulse. 

How to ensure that natural resources benefit the general population, not just the elite, is a question likely to grow more acute as discoveries of oil, gas and other minerals in African countries are expected to generate considerable wealth in the future.

But there are risks, with a fragile global economic recovery posing the greatest threat. A "hard landing" for the Chinese economy would adversely affect growth prospects. Over the past decade, sub-Saharan exports to China have risen from 5% to around 19.3% in 2010, with producers of oil (Sudan, Congo) and metal and mineral exporters (Zambia, Mauritania, the Democratic Republic of the Congo) among countries heavily dependent on Chinese appetite for commodities.

The report also noted that oil-rich countries systematically perform worse than any other country groups in terms of voice and accountability, political stability, rule of law and the control of corruption. 

Anti-poverty campaigners have been pressing for more trransparency and accountability in the natural resource sector as a way of putting pressure on governments. A focus of such efforts is the Extractive Industries Transparency Initiative (EITI).



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