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Dealing With Africa’s Resource Curse

Dr. Ravinder Rena, The Monitor (Kampala) via All Africa
…Africa’s vast mineral wealth and strategic significance have encouraged foreign powers to intervene in African affairs. During the Cold War era, 1945-1990, there was increasing superpower intervention in Africa. The United States and the Soviet Union were major players on the African scene.

The 19th-Century scramble for Africa saw the great powers rush to control land so they could exploit natural resources. The key question for many is: will the exploitation of Africa’s rich resources benefit anyone other than the continent’s elites?

Oil is perhaps the most important lure, with competition between foreign states and companies to secure resources so intense it attracts more than 50 per cent of all foreign direct investment. In 2006, annual Foreign Direct Investment (FDI) raised to a historic high of $38.8 billion, exceeding record levels of 2005 — a growth of 78 per cent from 2004.

According to the UN World Investment Report, FDI cash was concentrated in a few industries, notably oil, gas and mining. And six oil-producing countries — Algeria, Chad, Egypt, Equatorial Guinea, Nigeria, and Sudan — hogged around 48 per cent of it.

European firms represent roughly two-thirds of the total FDI in Africa. More than half of European investment originates from the UK and France, going mainly to countries with which they have historic ties. French oil companies such as Total, locked out of the Middle East through France’s opposition to the Iraq war, have made large investments in Francophone countries such as Cameroon, Chad, and Gabon.

The US is interested in the region as a cheap and reliable alternative to the increasingly volatile Persian Gulf. West Africa already supplies about 12 per cent of US crude oil imports, and America’s National Intelligence Council predicts that this share will rise to 25 per cent by 2015. As is often the case with oil, military involvement follows behind trade. In February 2007 the US set up an Africa command (Africom).

…The global demand for natural resources will bring benefits to Africa — increased FDI and, as exports grow, improving balance of trade figures — but one of the main concerns is that the scramble for Africa is fuelling corruption, environmental degradation, and internal dissent.

The windfall gains from resource extraction cause more problems in Africa. It reduces a state’s incentive to impose a free and just taxation system, and encourages corruption and acquisition of weaponry and thus develops wars.

In the form of Neo-colonisation, Africa is being fragmented into many pieces at the will of super power countries and concentrating more on the exploitation of Africa’s rich resources than providing them the development aid.
(2 September 2007)

Zimbabwe: Funny thing happened at fuel queue the other day

Lenox Mhlanga, New Zimbabwe
“WHAT’S news in Zimbabwe nowadays if one might pose a breathtakingly idiotic question?”

It surely must be the fuel shortage. Actually, to call it a shortage is an understatement. It should be termed a total disappearance of a petroleum by-product. Fuel has become so scarce that some of us have difficulties in imagining what it looked or smelt like.

Scattered all over, either hidden or in full view, are once fashionable and not so fashionable vehicles forging a very sedentary existence in splendid abandonment. Some of these have been turned into storage facilities or, for the more enterprising ones, chicken coops. I know of a gentleman who turned his once impressive SUV into a tuck shop. Unfortunately, ‘Operation Dzikisai’ (Lower the prices) has put paid to that SME (Small to Medium Enterprise).

Waiting in line for the rare commodity (fuel that is) has become such a national pastime that deserves to be declared a tourist attraction in time for the 2010 World Cup. So much time is been spent either waiting to getting your car the mandatory 20 litres or running around looking for a garage that happens to have a couple of litres available which translates to none.
(30 August 2007)