03.10.2012 Feature Article

Africa’s Dutch Disease: the way forward

Africa’s Dutch Disease: the way forward
03.10.2012 LISTEN

“The resources are there. It is for us to marshal them in the active service of our people. Unless we do this by our concerted efforts, within the framework of our combined planning, we shall not progress at the tempo demanded by today's events and the mood of our people. The symptoms of our troubles will grow, and the troubles themselves become chronic. It will then be too late even for Pan African Unity to secure for us stability and tranquility in our labours for a continent of social justice and material well-being”
(Dr. Kwame Nkrumah-first president of Ghana)

Africa is the world's second largest and second most populous continent, after Asia. At about 30.2 million km² (11.7 million sq. mi) including adjacent islands, it covers 6% of the Earth's total surface area and 20.4% of the total land area. With 1.0 billion people (as of 2009) in 65 territories (including 54 recognized states), it accounts for about 14.72% of the world's human population. The continent is surrounded by the Mediterranean Sea to the north, both the Suez Canal and the Red Sea along the Sinai Peninsula to the northeast, the Indian Ocean to the southeast, and the Atlantic Ocean to the west. The continent includes Madagascar and has 54 sovereign states and two states with limited recognition. Either by fault or design, the entire continent has for the last fifty years been suffering from a condition famously labeled as the Dutch-disease.

This disease according to the Economists is a concept that explains the apparent relationship between the increase in exploitation of natural resources and a decline in the manufacturing sector. The term was first coined in 1977 by The Economist to describe the decline of the manufacturing sector in the Netherlands after the discovery of a large natural gas field in 1959. In recent times, the term refers to countries, which have abundant resources but are in deplorable states in terms of economic development.

Expectations Arising From the Existence of Resources

Africa is the richest continent in terms of natural endowments. Some of these resources include gold, diamond, crude oil, cocoa, and timber, in fabled quantities, vast expanse of land inter alia. Almost all African countries are endowed with natural resources but notable among them are; South Africa, Ghana, DR. Congo, Sierra Leone, Nigeria, Angola, Rwanda etc. With these resources, one would have expected that Africa should have the best health care delivery systems in the world, good education for its people, better infrastructure, vibrant industrial sector, more employment avenues, an enviable per capita income, higher standards of living etc. Elsewhere, where a quarter of these resources do not even exist, efforts are being made by the people to develop their countries and some countries have actually made the transition into developed nations. Mention can be made of Germany, Netherlands and the so-called 'Asian Tigers'. Japan and South Korea for instance do not posses as much natural resources as Ghana and Congo but development wise is light years ahead of the latter. In Japan, only 16% of the land is cultivable as most parts of it are mountainous, yet, she is able to produce enough to feed her people. Sadly, it cannot be said of most African countries. Japan also happens to be among the seven (7) most industrialized countries in the world despite these resource constraints. What is then the excuse for the continent's abysmal performance in the sphere of economic development?

The Reality
Before one attempts answering such a question, one needs to examine the facts on the ground. Despite all the aforementioned resources, out of 24 nations in 2009 that were identified as having "Low Human Development" according to the United Nations' Human Development Index, 22 were actually located in Sub-Saharan Africa (SSA). This lends credence to the fact that resource abundance does not necessarily mean development will naturally take place. Development will be stagnant if these resources are not put into effective and efficient use.

The evidence on the ground shows that in most countries with huge natural resources, these endowments have proved a curse rather than a blessing. For instance, most people in Yenagoa-a village in Nigeria's oil rich Delta region live in mud huts without basic amenities such as potable water, schools, electricity and in-door toilets. Interestingly, these villagers reside only a few meters from the oil wells drilled by giant cooperations such as Chevron, Exxon and so forth. (African Agenda, 2006, page 5). It is needless to also pinpoint the environmental hazards and especially the frequent oil spills that wreck havoc to farmlands and properties rendering the people not only homeless but prone to diseases.

There have been violent clashes between natives of the oil regions and the companies that produce oil in Nigeria for decades now. A fortnight ago, the government of Nigeria removed oil subsidies stating that several billions of dollars will be saved in order to develop infrastructure of the country. This move by the government led to mass protests on the streets of many cities especially the national capital, Abuja. Most Nigerians are of the opinion that as the leading producer of oil in Africa, the only benefit they derive from the country's oil is the 50% subsidies, which they enjoyed but which has now being removed.

The Nigerian case is not the only situation. The Democratic Republic of Congo (DRC) arguably is one of the most endowed countries in the world owing to the abundance of every natural resource. You name it; from rare minerals for manufacturing computer chips to vast forest resources the DRC has it. Experts have estimated that the Congo basin alone can produce enough food crops to satisfy the nutrition requirements of nearly half the population of the whole world (Obeng, 1997, vol.5, page 34).This potential wealth however, contrasts sharply with the extreme poverty of the people of this country. According to some statistics, an average Congolese earns an annual income of less than US$100. State revenue represents less than US$ 1billion for a country whose population is about 60million with a land area of 2, 243,000 square kilometers (African Agenda, 2006,, page 12). From this, it is clear that the natural resources of this country benefit neither the state nor the local communities. On the contrary, they seem even to become a sort of curse because of the repeated war situations they engender and the political and economic instability they create for this country (African Agenda, 2006, vol.9, no.3, page 12).

Equally mind blogging is the case of Sierra Leone. Many people especially vulnerable groups like women and children lost their lives needlessly owing to greed over the exploitation of blood diamond. Nowadays, the heavily burdened Sierra Leonean Government makes a lot of money from the diamond mines but this is yet to reflect in the lives of the people.

Ghana in a less dramatic fashion is no different. The production of cocoa has given way to mineral production. The regular blasting activities of Newmont Ahafo have resulted in cracks in a number of houses at Dormaa in Kenyasi No. 2 and Habitat in Kenyasi No. 1. It is now difficult for students to acquire scholarships from the Ghana Cocoa Marketing Board (GCMB) since the cocoa farms which were evidence to acquire scholarships are no more as the land is now being used for mining activities. This has given rise to poverty in the area (African Agenda, 2006, vol.9, no.3, page 14). Furthermore, the recent discovery of oil in Ghana in commercial quantities does not excite some people judging from the examples of other countries. Others have made it clear that, if the discovery of oil in Ghana will become a curse on the people then, it should be allowed to stay on the ground.

In his address to the Parliament of Ghana in 2009, President Obama remarked “the African continent is rich in natural resources and that there is bountiful wind and solar power; geothermal energy and bio-fuels. From the Rift valley to the North African deserts; from the Western coasts to South Africa's crops-Africa's boundless gifts can generate its own power, while exporting profitable, clean energy abroad. He reminded Ghanaians in particular about the fact that oil brings great opportunities, and that, Ghanaians have been responsible in preparing for new revenue but that, oil simply cannot become the new cocoa” (Daily Graphic, 13th July, 2009). This is because, “dependence on commodities-or a single export has a tendency to concentrate wealth in the hands of the few, and leaves people too vulnerable to downturns”.

Why the Current state of underdevelopment?
Most people have always blamed Africa's problems on colonialism. The British, the Portuguese, the French, Germans, Belgians, had colonies in Africa and took away resources of their colonies which they used to develop their countries. They also introduced the slave trade in Africa, where the best brains and the labor force of Africa were sent mostly to the Americas to develop plantation farms owned by the colonial masters. This many believe till date is the main cause of the underdevelopment of Africa.

However, in the 21st century, this argument does no longer hold water when assigning reasons to Africa's underdevelopment. This argument has been described as a staggering one and a deliberate attempt to look away from the real causes. Even though some external factors play a role of a sort such as imbalance terms of trade and the fact that African countries still depend on loans and grants from foreign countries especially their colonial masters, which dependence is accompanied by unfavorable conditions, a chunk of the problems of Africa emanate from within.

First, many have decried the attitude of African leaders beginning from the post-colonial independence to the contemporary era as reasons for Africa's poor state. Many African leaders have reserved the national resources to themselves and cronies in the form of money mostly in foreign banks. Mention can be made of Mobutu Seseku, Gen. Saani Abacha, Iddi Amin, Murmur Gadhafi among others who were richer than their respective countries. The former Egyptian strongman, Hosni Mubarak is currently standing trial in his country not only for responsible for the recent upheavals in that country which led to loss of lives, but for allegedly stealing several millions of dollars belonging to the Egyptian tax payer. Indeed, corruption and bad leadership has become so pervasive in Africa that, an African philosopher, Prof. Kwesi Wiredu describes it as 'a moral pollution'. It has become part of the African daily life and even more serious in government institutions. To overcome this, we need what he (Prof. Wiredu) calls 'a conceptual moral revolution' (Gyekye, 2004).

Poor work ethics is another factor militating against Africa's development. People generally do not give out their best in their respective work places especially in the public sector. Therefore, the resources can be there, but once the people' attitude to work is negative, development will remain stagnated. Also, the concept of 'African time' is retarding the progress of development in Africa. It is a common practice in government institutions across the continent where some workers often go to work late, go for break before time and close from work earlier than the time given. It is not uncommon for people to go for a programme scheduled for 10am at 12pm believing in the concept of 'African Time'. How do we expect our productivity to increase when we do not respect time? Time management is very important in every sector of our economy and that explains why we have planning officers in every unit or department/agency to plan our projects and programmes according to a stipulated time period.

In Africa, there is no rule of law but reality of the law, where the reality of the law refers to the fact that all persons are equal but some are more equal than others. It is often as though the law is made for some people and this has led to the culture of impunity. We have cases where governments in power massage their constitutions to stay in power forever and examples can be found in Niger, Senegal, Zimbabwe etc. These have led to conflicts in many parts of the continent. According to President Obama, “no person wants to live in a society where the rule of law gives way to the rule of brutality and bribery. That is not democracy that is tyranny” (Daily Graphic, 13th July, 2009, page 9).

The way forward for Africa
Education is the secret of the developed world and Africa has regrettably only begun to realize this. Without education, regardless of a nation's natural resources, its people will remain steeped in poverty without till the end of civilization. It is therefore imperative for our leaders to invest in the education of the youth. In most African countries, our educational systems are not only 'confused' but do not equip students for industry. In Ghana for example, the politicians keep on reforming the educational system year after year but end up sending their children to the best schools in Europe and elsewhere.

Additionally, generous investment into technology, industry and scientific research and development should be made if African nations are to compete in the technologically driven world of tomorrow. This will not only help to alleviate poverty and improve the economic well being but quintessentially, provide the vital human capital which can conveniently innovate as well as utilize these technologies to withstand the imminent surprises of the next decade.

Development depends on good governance and that is the ingredient that has been missing in Africa for many years. “Each nation gives life to democracy in its own way, and in line with its own tradition. Governments that respect the will of their own people are more prosperous and successful than those that do not…. No country is going to create wealth if its leaders exploit the economy to enrich themselves-or if the police can be bought off by drug traffickers” (Daily Graphic, 13th July, 2009, page 9). The hour is upon us to put an end to the numerous wars and conflicts in Africa. African children are crying for development and Africa can only come out of poverty if we put an end to the wars and conflicts. Researchers at the International Rescue Committee, a US-based aid agency that has chartered the impact of DR. Congo's war, say 1,000 people continue to die every day, mostly from hunger and disease, on-top of the 4million that have died since the last war began in 1998 ( BBC Focus on Africa, 2006, vol.17, no.2, page 15).

Most resource rich nations of Africa are politically volatile with several local disputes ensuing over the control or distribution of wealth which has for long remained the sole source of national revenue. Poverty and lack of visionary – cum transparent leadership has rendered these nations backward, thereby inflicting much dint in its human capital development. Urgent measures need to be put in place to reduce if not completely eradicate these conflicts. Furthermore, public fora should be organized on regular basis. At such fora, the way forward as to how to manage the resources of each country will be discussed to reduce unnecessary suspicion from the people thereby minimizing the tendency for various forms of confrontations between the government and the duty-bearers.

State institutions must also be strengthened to work so that those who break the laws will be punished severely by the appropriate bodies mandated by law. In the words of Obama, Africa needs strong institutions and not strongmen. Many argue that stiffer laws should be introduced but this might not be the remedy to the problem. The answer lies in a higher commitment to the implementation of the existing laws, which do not have teeth to bite especially the powerful in society.

All in all, as Dr. Kwame Nkrumah summarily captures it “our people supported us in our fight for independence because they believed that African Governments could cure the ills of the past in a way which could never be accomplished under colonial rule. If, therefore, now we are independent we allow the same conditions to exist that existed in the colonial days, all the resentment which overthrew colonialism will be mobilized against us”.

Francis Xavier Tuokuu is a Freelance Journalist and a Postgraduate Student in Corporate Social Responsibility and Energy (MSc) at Robert Gordon University, Aberdeen, Scotland. He can be reached via [email protected] or Room 5 A, Dieview, Stonehaven Road, Aberdeen.

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