By Sam Mucunguzi
The rise in world prices of natural resources, coupled with the resource discoveries induced by high prices, is transforming Africa’s opportunities. The economic future of Africa will be determined by whether this opportunity is seized or missed. The history of resource extraction in Africa is not encouraging. This article reviews and develops the political economy of natural resources as a guide to how Africa might avoid a repetition of that history.
The core purpose of the state is to provide public goods. Exactly which public goods and services can reasonably be considered nonoptional varies considerably even among developed countries. However, two can reasonably be considered as meta-goods, necessary rather than optional: security and accountability. Without them, development is liable to be frustrated. Without security against violence, property rights are void; and without accountability, both property rights and the supply of other public goods depend upon the personal whim of the ruler. Take a look at South Sudan, Congo, the benefits of natural resources are almost in hands-on no state sympathizers which makes the curse more spread (Paul Collier, The Political Economy of Natural resources)
Weinstein (2005) provides a convincing argument for this channel by endogenizing the motivation of the rebel group. He argues that in countries with valuable natural resources, many of the recruits will be motivated by loot-seeking rather than by any political cause. The rebel organization will not be able to screen out such recruits so that, even if the rebellion starts out with a political agenda, over time it is likely to become loot-seeking. The evolution of FARC—the Revolutionary Armed Forces of Colombia—from a rural protest movement to a multi-million- dollar drug producer and trafficker may be an illustration. Combined with the financial feasibility effect, this implies that those rebellions that are most feasible, and so most common, are also those most likely to become motivated by loot-seeking. Natural resources can make rebellion attractive even if there is no realistic prospect of capturing the state itself.
I wish to commend the government of Uganda especially the president, Museveni that has maintained peace and security in the country and caution him on a more serious factor that might make the curse of natural resources befall our citizens. We have many natural resources like Gold, Tin, Cobalt, Oil and gas, forests and many more, all these have the potential to propel the country to middle income, I repeat to the stage where Ugandans can aptly say we can fund our budget and provide reasonable services like good health care system, Education and Technology if we invest in research. All this possible if corruption is addressed with clear-cut measures.
Another channel is that the governments of resource-rich countries tend to be less accountable to their citizens. The provocation of rebellion might be one extreme consequence of a lack of accountability, but evidently, there might be many other adverse consequences. I now, therefore, turn to this larger issue of whether resource revenues make a government less accountable. Congo and Nigeria are clear examples, the money stolen from oil and gas industry is more than what is formally collected and the increased formation of rebel movements like Boko Haram should send a signal to other developing counties that are into oil and gas and other natural resources to be more accountable to its citizens.
Why Natural Assets Generate Divergent Elite Interests. To understand the effect of resource revenues on accountability requires first a broader discussion of the conditions under which the objectives of elites are reasonably congruent with those of ordinary citizens. Broadly, these are either that both happen to share overarching goals, or that elites have no choice but to deliver what ordinary citizens want.
One dimension of importance for congruence is the size of the elite relative to the population. Adam and O’Connell (1999) develop a simple model in which the ruling elite has a choice between a national public good and redistribution toward itself. The smaller the size of the elite, the stronger is the incentive to opt for redistribution. This is one reason why democratic accountability should improve government performance: attracting support by means of public goods instead of redistribution becomes more cost-effective because democracy radically expands the required support base. However, public goods may become more cost-effective than patronage with a support base considerably smaller than that implied by universal suffrage and so some governments that are de jure autocratic may approximate the priorities.
Since the 1990s, many failing states have democratized. If elections achieve accountability to a rational electorate, then it should be expected to improve government performance. Electoral accountability might go wrong if voters have limited information and politicians are thereby able to embezzle the public purse with little fear of prosecution. Besley (2006) analyzes the implications of these characteristics. He shows that there is a point at which elections fail to discipline those politicians whose interests are divergent from those of voters. Beyond this point, this type of politician finds power very attractive and this alters the pool of candidates facing voters. This selection effect may powerfully gear up the adverse consequence of poor incentives: in the extreme, voters may face no real choice because the entire pool of candidates consists of people who will abuse power.
However, even the context posited by Besley may be considerably closer to normality than what characterizes failing states. Commonly in these states incumbents can win elections by means of technologies that are excluded in a conventional election because they are illegitimate. Three such techniques are vote-buying, voter intimidation, and ballot fraud. In research by, Collier and Hoeffler found that in conditions of poor governance, incumbents are far more likely to win elections than in conditions of good governance. A reasonable interpretation is that these illegitimate techniques are considerably more effective than the strategy of trying to be a good government.