In his book ‘The Bottom Billion’, Paul Collier states that ‘about 29% of the people in the bottom billion live in countries in which resource wealth dominates the economy’. In Nigeria, the largest oil producing country in Africa, the Niger Delta alone provides 80% of the government’s revenue and 95% of export earnings.
Revenues from oil are often far greater than the amount of money countries receive in overseas development aid. For example, in 2006 Angola’s income increased to over $30 billion because of oil. This was almost as much as the whole of the African continent received in aid that year. This may sound like a brilliant solution to the ‘bottom billion’s’ development issues; however, in many countries this has not proven to be the case.
This may seem strange, especially if you consider the benefits natural resources have brought to more developed countries such as Norway and Canada. Nevertheless, Collier argues that the key difference between these and the ‘bottom billion’ countries is that the ‘bottom billion’ countries lack ‘checks and balances’. One reason for this is that the resource rich countries have no need to collect taxes from their people, so there is less public scrutiny of government spending in the ‘bottom billion’ nations. This allows widespread corruption to continue and for the wealth to stay in the pockets of a small minority. For example, in Angola most of the money has stayed with the richest 5% of the population, with the other 95% living on less than a dollar a day (R. Dowden (2008) ‘Africa: Altered States, Ordinary Miracles’).
You may think that since the spread of democracy to many African countries in the 1990s there will have been better checks and balances so people could benefit from the oil. However, this is not always the case as resource rich democracies can use ‘politics of patronage’. This means the governing party bribes people to vote for it because it has the money to do so and can get away with it. So maybe an autocracy would be better? Collier argues against this, stating that autocracy only works in societies which are not ethnically diverse.
Furthermore, an abundance of natural resources can lead to a recurring cycle of conflict because natural resources can motivate and finance conflict. For example, Nigeria’s Delta region has seen violence occurring since 1998, with militant groups such as the Niger Delta People’s Volunteer Force and MEND fighting to gain control of the oil resources which they believe are rightfully theirs. The unequal distribution of wealth has been a major factor in triggering the violence.
Another reason for discontent is the devastating environmental consequences of the extraction of natural resources such as oil. For instance in the Niger Delta pollution is a major problem – over 500 oil spills have occurred in the 5 years to 2010. If this wasn’t bad enough, oil companies have been known to cause damage and then blame local people for sabotaging the pipelines.
Finally, resource exports cause the countries’ currencies to rise against other currencies. This means exports become uncompetitive. For example, in Nigeria in the 1970s oil revenues built up so the value of Nigeria’s currency increased, leading to wage increases, so prices of other exports like peanuts and cocoa also increased. This meant that people in nations like the UK began to buy their peanuts and cocoa from other countries instead. ‘Bottom billion’ resource rich countries will therefore find it difficult to follow the route to development taken by countries such as China through manufacturing.
Nevertheless there is reason for optimism as ‘bottom billion’ countries can take steps to make natural resources an opportunity rather than a curse. In 2004, for example, Nigeria adopted the ‘Extractive Industries Transparency Initiative’ and this appears to be having some positive results.
Imogen (13W)
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