The Curse of a Gift

           Typically having a natural talent or gift is a great thing to have. Something that gives you a leg up on the competition from the start is seen a very valuable thing to have going for you in many cases. However, in case of countries with valuable natural resources, theses natural gifts can lead to some unintended consequences that can lead to problems for these countries. These consequences can include weaker governmental infrastructure, poverty, and internal and external conflict due to a number of pressures. African and Middle Eastern countries are very susceptible to the problems that come with large natural resource pools. I believe that until a country has strong government and infrastructure or a diverse economy the natural resource will lead to problems.

            Africa has always been rich in natural resources. However many citizens of African countries continue to be steeped in poverty. In countries like Equatorial Guinea or the Republic of Congo where abundant oil, gas and minerals are abundant there is a massive disparity between the classes (Casey)[i]

            These natural resources have made a small group of people rich, leading to widespread corruption and left the majority of citizens poor. This corruption leads to states that do a terrible at providing health care and education to their citizens. This creates a large amount of poverty in the country. This makes it very easy for rebel groups to recruit. These people are poor and unemployed and the prospect of combat and looting is more attractive as a result

The article states that the resource curse could strike Africa again because Sub-Saharan Africa has been producing at a very high rate recently.   According to an African Energy Outlook report “30% of global oil and gas discoveries made over the past five years were from sub-Saharan Africa, which includes countries south of the Sahara desert” (Casey). At the same time only “290 million out of 915 million people have access to electricity”(Casey). That figure is rising and will continue to. “Four out of five people in the region depend on firewood and charcoal mainly for cooking due to the lack of electricity. The projection is that figure will rise 40 percent by 2040” (Casey).

International Energy Association (IEA) Chief Economist Fatih Birol has stated that “There is huge potential both for oil and gas and, when it comes to renewables, huge potential for hydropower, wind and solar, on the other hand, there is very little energy for the people in Africa” (Casey). There are many factors that link the extreme surplus of natural resources to the poverty of its average citizens.

            This is the biggest problem that citizens in countries facing the resource curse deal with. The country is rich in minerals but there are a number of factors that do allow this wealth to reach everyone.  The infrastructure in Sub-Saharan Africa has been severely negated to the point where most citizens’ do not have electricity and are using firewood instead. To escape the curse these countries must push through reforms and upgrade their infrastructures so that the wealth from the countries natural resource can be spread throughout the country more equally.

The IEA report said, touches on a number of major barriers to investment that are afflicting Sub-Saharan Africa like “widespread oil theft (worth $5 billion a year in Nigeria) to electricity tariffs across the region, which are among the highest in the world, and corruption” (Casey). However IEA states that the major issues are “the lack of investment and the second one is the governance issue” (Casey).  Birol goes on to say that “There are investments coming into the region but our study show that today $2 out of $3 in Africa is for export-related projects not for the Africans”. “We don’t see the investments can come if the governance issue is not fixed” (Casey). These statements show that efforts of these countries are concentrated on meeting the needs of countries who consume their oil and other consumer goods but not on the needs of their own citizens.

If a country does not have a strong government system in place before it discovers that it has a valuable natural resource then they are particular susceptible to the resource curse. The income that the natural resource creates goes to a private source. This makes it very easy for corruption to occur within the countries government. Money to fund the government is not coming from the country’s average citizens in the form of taxes. It is coming from the private industries that control the valuable resource. This often means that the government is listening to the interests of private industry. It also means that the government has no incentive to listen to its citizens or even invest in its own infrastructure. In order for countries to break free of the curse they must invest in themselves and diversify their economy so that they do not rely so much in contributions from these kinds of industries.

[1] http://fortune.com/2014/10/13/another-african-resource-curse-iea-says-energy-boom-not-helping-poorest/