Travelling across Africa these days you are likely to run into increasing numbers of mining, oil, and gas industry personnel engaged in exploration, drilling, and extraction across the continent. Although commodity prices are moderating, the discoveries being made in Africa offer the real prospect of significant revenue to many cash-poor, aid-dependent governments in the decade ahead. If you care about development, the question is whether these revenues will catalyze broad economic development and whether they will benefit the poor in Africa.
Some analysts are predicting that the commodity price boom of the new millennium is something that has played itself out. Except for shale gas and its downward pressure on U.S. natural gas prices, however, natural resource-based commodity prices have remained high by historical records in the last few years, despite the feebleness of the recent global economic recovery.
With oil in Niger and Uganda, natural gas in Mozambique and Tanzania, iron ore in Guinea and Sierra Leone―African countries are increasingly finding rich new deposits of oil, gas, or minerals and just as quickly, attracting the courtship of international companies that are drawn to Africa’s new bonanza in extractives wealth.
In country after country in Sub-Saharan Africa, new discoveries of oil, natural gas and mineral deposits have been making headlines every other week it seems. When Ghana’s Jubilee oil field hits peak production in 2013, it will produce 120,000 barrels a day. Uganda’s Lake Albert Rift Basin fields could potentially produce even greater quantities. Billions of dollars a year could flow into Mozambique and Tanzania thanks to natural gas findings. And in Sierra Leone, mining iron ore in Tonkolili could boost GDP by a remarkable 25 percent in 2012.
My strong hope is that all the people living in these resource-rich African countries also get to share in this new oil and mineral wealth. So far, with one of few exceptions being Botswana, natural resources haven’t always improved the lives of people and their families. From what I see on my constant travels to the continent, economic growth in most resource-rich countries is not automatically translating into better health, education, and other key services for poor people.
Many resource-rich countries tend to gravitate towards the bottom of the global Human Development Index, which is a composite measure of life expectancy, education and income.
One strikingly effective way to make sure that all people, especially the poorest, share in the new minerals prosperity is through safety nets and social protection programs. These are designed to protect vulnerable families and promote job opportunities among poor people who are able to work. This in turn makes communities stronger and more secure, while reducing painful inequalities between people.
Social protection programs are already central to poverty-fighting, higher growth national strategies across Africa, and have played a significant role reducing chronic poverty and helping families become more resilient in the face of setbacks such as unemployment, sudden illness, or natural disasters such as droughts or floods. These programs have also allowed families to invest in more livestock or grow more food, and increase their earnings.
- Labor and Social Protection
- Social Development
- Agriculture and Rural Development
- Sub-Saharan Africa
- social safety nets
- social protection
- Human Development Index
- cash transfers
|The Goldridge Mine pit in Solomon Islands|
History records that the first European to come to Solomon Islands, Alvaro De Mendana, in 1568 gave the archipelago its name because he believed this area of the South Pacific was where King Solomon got the gold he used to build the Temple of Jerusalem. The Spaniards did search for gold during their exploration of the islands, but somewhat fruitlessly such that they left and never returned.
The title of this post may seem a bit odd. What can an island of 20 million people and a diverse continent of 47 countries have in common? The answer: Both were thought to have initial advantages that would generate rapid economic growth; instead, they have fallen painfully short of expectations.
In the African case, the advantage was its rich natural resources such as oil and minerals. But instead of exploiting this potential ticket to poverty reduction, Africa’s natural resource producers have seen their per capita income grow more slowly than that of non-mineral countries. Nigeria is a case in point. Its per capita income in 1970 (before the oil boom) was $913; today it is $454.
Sri Lanka’s asset is its human resources—reflected in the high levels of literacy and low levels of child and maternal mortality that have stood out since the 1960s. Like Africa, Sri Lanka has been an exercise in disappointment. In fact, there is no other country with a lower infant mortality rate and a lower per capita income than Sri Lanka.
The question for Africa and Sri Lanka is therefore how to manage the enormous assets they posses in a way that translates into sustainable wellbeing for their populations?