Karl Wohlmuth and Tino Urban, Institute for World Economics and International Management (IWIM), University of Bremen

Most African countries continue to be heavily dependent on the export of a few, mostly unprocessed raw materials. These include classic commodities, such as mineral products, e.g. copper and nickel, precious metals and gemstones, e.g. gold and diamond, agricultural commodities, e.g. cotton and leather, and semi-luxury foods, e.g. coffee or cocoa. Even the new export economies in Africa that are exporting crude oil display a high level of resource dependence. In contrast to other developing regions there has been little progress in reducing resource dependence in Africa. The reasons are political, institutional and economic, but the insufficiently enabling global economic framework and initiatives for Africa are also to blame. The consequences have been severe: high macroeconomic vulnerability to fluctuations in price and demand, a high risk of internal and cross-border conflicts over these resources and the danger of export revenues being appropriated by the state apparatus, the elite or other interest groups at the cost of the poor. These potentially negative impacts of natural resource wealth on the political environment, state apparatus, economic structure and society at large find expression in the term "resource curse". The risks affect both traditional commodity exporters as well as the numerous new oil-exporting countries in Africa. Many African nations have developed plans for more effectively utilizing export revenues and for achieving sustainable production and export diversification. These include processing raw materials and using local inputs, developing new products, upgrading quality standards and introducing product branding. A comprehensive diversification of the industrial and service sectors is also planned. However, there has been little success in implementing these plans by way of strategies and policies. Just a few African countries, such as South Africa and Mauritius, have been able to effectively diversify production and exports. Ghana and some other countries are showing initial successes in "non-traditional" export products. Even relatively prosperous African nations such as Botswana and Namibia have achieved only limited – and possibly unsustainable – progress in bringing about the necessary diversification for the future.

The 12th edition of the African Development Perspectives Yearbook published in April 2007 is entitled "Africa – Commodity Dependence, Resource Curse and Export Diversification". It contains detailed analyses and development theory perspectives on the challenges at the policy and economic level in managing the high dependence on natural resources in numerous African states. 

Case studies from Côte d'Ivoire, Angola, Sudan, the Democratic Republic of Congo, Cameroon and Nigeria have been drawn upon for an in-depth analysis and evaluation of country-specific commodity dependencies. The report highlights the problems faced by these countries in managing their natural resources. It also outlines the repercussions of the resulting low resistance to economic and social crises, military conflicts and environmental degradation. It goes on to suggest areas for intervention by governments on the one hand and the international community on the other to help manage this problem. 

The high resource dependence of these countries coupled with poor handling of resource wealth, especially with regard to resources of high geostrategic significance like oil, are primarily responsible for the above problems. The term "resource curse" was coined in the context of this apparent paradox. The country case studies have been used to illustrate the general and specific manifestations of this resource curse. Concrete areas for action have been identified for overcoming these problems in the long term. Apart from actions relating to economic policy, such as structural adjustment programmes and sustained export diversification programmes, the suggested solutions include steps to develop efficient institutions for good governance (at the national, sub regional and local levels). In addition to the comparative country case studies, the report also contains discussions of relevant publications and documentation relating to important research programmes, pertinent projects and organizations active in this field.

Volume 11 of the African Development Perspectives Yearbook entitled "Africa – Escaping the Primary Commodities Dilemma" is a supplement to Volume 12. It contains further fundamental insights into the opportunities and options available to overcome Africa's resource curse and enhance Africa's position in global supply chains in the long term.

Both Volumes 11 and 12 of the Yearbook offer comprehensive background information, educative insights and inspiration as well as constructive and realistic recommendations for action with regard to growth and development strategies at the national, sub-regional and local level. They are addressed at economic and political decision-makers, researchers, experts from international organizations, members of the press and all those actively involved in bringing about sustainable growth and pro poor development in the African continent.  

The African Development Perspectives Yearbook vol. 1-13 are available at
http://www.iwim.uni-bremen.de/africa/africanyearbook.htm

Further information about the activities of the Research Group on African Development Perspectives and links to further studies are available at
http://www.iwim.uni-bremen.de
 

Published in: ECC-Newsletter, April 2008