The African Executive | Why is Resource Rich Africa Poor?

Why Is Resource Rich Africa Poor?

Asks James Shikwati, a Kenyan libertarian commentator and head of the Inter-Region Economic Network (Kenya)rkthat rich countries and emerging ones such as China are exploiting resources from Africa unfairly. True, some conflicts in mineral rich parts of Africa are wealthy nations-sponsored in order to exploit resources in an environment that has less accountability. What role do the people, especially the leaders in such countries play in turning resources into a curse? Top political leaders in countries with subsurface wealth tend to have high numbers of breakfast, lunch and dinner meetings with investors. Little moves in terms of investment unless one dines with the president. While we may never know the confidential agreements that transpire between our leaders and investors, we can guess that this is where the actual curse is sown and nurtured. Political opponents are keen to seize power to partake in signing 'confidential deals' too. If elections do not favour them, the global market has a supply of investors who failed to dine with a given president and are thus ready to equip the opposition for purposes of accessing sub surface wealth. What follows, is political strife and civil wars in the name of nebulous global ideals such as human rights, democracy and people empowerment. Civil wars in Congo, Sudan and Nigeria, among other countries are a drive towards a lunch meeting with investors!"

Mr. Shikwati continues his commentary: "The curse of the continent therefore is not in its resources but rather in its lack of structures that should deny individuals the unfettered freedom to manipulate state power to amass wealth. The second curse is the temptation by experts to build more state owned enterprises, and nationalise subsurface wealth hence giving politicians an excuse to go out on lunch sprees with investors. The third curse is the assumption that subsurface wealth is synonymous with prosperity. Unless the African person torturously applies his mind on how best to exploit and position his product in the global market – wealthy nations will keep swooping on our resources like eagles on chicken!"

Mr. Shikwati discusses steps to improve Africa: "Where should we start to dictate the development strategy for Africa? Let us try microeconomics, focus on entrepreneurial Africans and push them to actively exploit resources on the continent. The concern on the intensive capital needed to purchase or hire heavy machines and exploit sub surface wealth will be taken care of through predictable structures that can allow as many talented Africans to have lunch with investors. Our governments should only police and regulate to ensure that the thirst for wealth does not destroy the environment and hurt the rights of others.....More lunch meetings set up with ordinary people in Africa will not only benefit restaurants, but will ensure that Africans do not simply compete on the basis of commodity prices but in terms of value added products. This will in turn expand the taxation base for a given government while promoting citizen responsiveness towards the activities of the political elite."
---------------------------


Great article.

Key phrase is: "Value Added Production and Full Product Chain Control".

The key 3-5 (Nigeria, Ethiopia, Congo, Kenya, South Africa) nations in SSAfrica have to accomplish that or Africa will always be poor.

Africa is poor because it has been exploited for centuries by the white man. Africa has always been nothing more then a continent full of puppets, you should realize that by just looking at the slave trade. They are nothing more then modern day economic puppets.

In my opinion....Egypt, South Africa, and Libya should just expand across the entire continent and kick these European, American, and Asian business out. I truly feel that unless there are a smaller amount of countries in Africa, there will always be corruption and war. There should be no more then 8 countries in Africa. They should use common sense and realize that they will never get anywhere unless they merge and work together.

__________________
ShadyPolitics.com

I agree and disagree with u shady. See I agree that America, Europe, and Asia are sucking Africa dry of their great recources. And then again Africa wasn't very smart on the whole slave trade mumbo jumbo back in the day. They don't have a joined continent such as America, even if we have some imagration problems with Mexico. If even some of their Civs. were joined they might have had a chance. An example of what they should have done would be America and England, our bond with England is great probably one reason all other countries aren't bombing us. They could have created a great army and sent the Asians, Portuguese, etc al back on their ships and away from Africa.

Then why do other countries in the Third World manage to turn themselves into economic powerhouses within the space of a few decades (Japan, Singapore, Taiwan, South Korea, Hong Kong)? None of those countries have tons of natural resources. All have been colonized, controlled, or exploited by "the white man." Yet they're now all rich. The reason is that they embraced hard work, went to work in industries they could dominate, and assisted business rather than imposing tons of costs on it.

In Africa the governments are corrupt, they don't protect private property and often nationalize it (making it pointless to try to build or grow your assets), and the governments spend most of their time trying to get Western aid rather than become self sufficient. It's no mystery why one group of countries succeeded and the other are still "puppets."

Asia was rich in resources which developed imperialism there (mostly spices and gold). Korea has been kept artificially rich by US help based on old Trueman Doctrine sentiments, thus on ideologies, not economics or because its people work harder (South Korea got a $50 Billion bail out by the IMF, while Thailand did not get anything during the same economic crisis).
Hong Kong is a small island (not an entire fricken continent) that has been exclusively "white" at first and was thus supported by the dominion economy.
Also, Asia has had Japan, a sort of hegemon and other priviously mentionned artifical economic entity that Africa is lacking which provides manufacturing jobs in the rest of Asian at the beginning. Asia's fertile land and greater population has provided it with an agricultural output to allow a base for their governments to be protectionist in terms of development (a policy that is not allowed in most of Africa by the IMF and lack of base). India's economy is based on over-population and thus cheap labour. A protectionist governemnt allows for investors to have confidence in creating jobs in a region, the IMF's Washington Concensus has failed to do so.
Hard work is not based on people. Thailand's economy has never recovered since the disaster in 1997, yet its sweatshop workers work just as long and hard as China's 10 years ago. Only difference to let's say Singapore, China or India is that the IMF forced the Washington Concensus on the Thailand.

Africa is poor because they have not adequately developed their economies yet, this is something which takes much time and are therefore in the beginning stages of economic development and industrialization. They are no different today than the US or Britain were in the early 1800s, in fact they are better off today.

This development process takes time and that is all, how much time is a factor of many things but bitching about it won't help it go faster.

People say that Africa is exploited, but is it? If they were not selling their resources to others then how would those resources be worth anything to them?

i think we should first divide Africa into Arab and Sub-Saharan africa, i mean, the Arab states in Africa dont have that much of problems compared with other African nations...

Egypt for example is much richer then countries such as Burundi, Tanzania and Madagascar, the main reason i think is that the North has always been developing, thousands of years ago, and has been intouch with the outside world more then Africa, another reason for this i think is that the Majority of Northen Africans are Arab, Sunni Muslims
while the rest of Africa is fighting over Ethnic power, the North doesnt have that..

The Africans need to get over their Ethnic problems and act as united front to develope their countries, and i agree with shady, the African continent will act much better if it was devided into bigger nations of aroun 8 to 10 states, the smaller ethnic groups will simply fail to fight the rest of the minorities... if a country is created of several minorities, it is harder for them to persecute each others, since the law should include all minorities...

__________________

The awnser on your question is: Capitalism and Colonisation...
European powers injected capitalism as a trade system in Africa very late if you compair with Asia...
Portugese colonists had trade post at the coast, but the exploration of deep Africa began very late
Europeans start to invest in Asia earlier (India, Indo-China, Indonesia,...) and later on they invested more in Asia than in Africa, because Africa was a dark spot on the map and they weren't sure their invesments would have a enormous profit...
When investments began in the mid 19th century they weren't that big (again if you compair them with other part of the colonised world)...
I'm not only talking about economic capital, but also about human capital...
Africa was a mysterious continent, and Europeans prefered to go to other places (United States, Latin-America and Asia)

The capitalism that was injected, was a depended capitalism...
Their markets were built around the metropoles of the 'mother country', so the surplus that was created there was transfered to Europe...

Investments only took place in sectors with easy profit (mines, plantages,...) so they were traditional ecomies not modern...
When they became independed, they didn't inhereted national modern markets, but they inhereted depended tradtional economies...

They couldn't compete with the new Western modern economies, so the West started to exploit them even more...
Please realize that it is possible we have high wages because they have
extremly low wages...

__________________
"Nos pays sont devenus trop petits pour le monde actuel, à l'échelle des moyens techniques modernes, à la mesure de l'Amérique et de la Russie aujourd'hui, de la Chine et de l'Inde demain. L'unité des peuples européens réunis dans les Etats-Unis d'Europe est le moyen de relever leur niveau de vie et de maintenir la paix. Elle est le grand espoir et la chance de notre époque. Nous aussi, nous allons vers notre but, les Etats-Unis d'Europe, dans une course sans retour."

Jean Monnet - Rome 1957

The different ethnic groups in for example Rwanda and Burundi had a system that balanced the ethnic differences, there were Hutu and Tutsi ages ago but it wasn't the only source for their identity...
Their political, economical, religious and social systems were woven together, and everyone knew his or her place in it...it harmonised society.
I can give you the whole explanation if you want but it all comes down to this...
When Germans came (and after WOI the Belgians took it over without a problem) they wanted 'ordnung muss sein' and they started to divide the peoples in Hutu or Tutsi, they destroyed the harmonious system...
Hatred prevailed and we all know what happended, Europeans gave certain ethnic groups all over Africa advantages...
After decolonisation they had a better position in the new formed countries and they could work themself up to the highest elites without a great effort, so the effects of 100 years ago are still present today...
The only way to tackle this is democracy and (most important) education...

__________________
"Nos pays sont devenus trop petits pour le monde actuel, à l'échelle des moyens techniques modernes, à la mesure de l'Amérique et de la Russie aujourd'hui, de la Chine et de l'Inde demain. L'unité des peuples européens réunis dans les Etats-Unis d'Europe est le moyen de relever leur niveau de vie et de maintenir la paix. Elle est le grand espoir et la chance de notre époque. Nous aussi, nous allons vers notre but, les Etats-Unis d'Europe, dans une course sans retour."

Jean Monnet - Rome 1957

Africa is poor because they have too much tribal fighting and drama.

Yes, they were exploited by "the white man" at various points... but now they are being exploited by their fellow black men instead.

Europeans should not get the blame any more. They dump huge amounts of cash into the place for little return.