Friday, September 18, 2009

Paul Collier: Defending Africa from plunder

The wealth of Africa has halved over the past 30 years, according to Oxford economist Paul Collier, and nothing remains to hand over to future generations. Africa has been plundered on a grand scale, said the author of The Bottom Billion, and western commercial organisations have been complicit in the process.

Speaking at the annual conference in Washington of the Task Force on Financial Integrity and Economic Development, Professor Collier outlined the economic consequences of this plunder, which in addition to shifting about one-third of the Continent's capital stock to offshore private holdings, has also undermined the integrity of entire economic and political systems. "Plunder is a crime of economic consequences for development" he said, "and the numbers involved are really big."

Citing the example of copper rich Zambia, he noted that despite soaring prices during the mid-decade, the massive increase in copper production has not been reflected in additional revenue flows into the Zambian treasury. As a result the country has been unable to capture the value of its natural resources and invest in developing its social and physical capital stocks. Bankers and mining companies have been complicit in the plunder of Zambia's potential for development, Collier noted, with the result that future generations of Africans will have no legacy of past capital accumulation and investment on which to build.

There are no easy solutions to tackling this problem. Successful exploitation of mineral resources requires a complex set of political, legal, social and economic pre-conditions, including transparency throughout the production and revenue chains. Recent experience in Nigeria, where anti-corruption commissioner Nuhu Ribadu achieved a dramatic shift in attitudes before being ousted from his post in 2008, suggests that rigorous application of laws, standards and codes are far more potent than aid in giving assistance to the poor.

Without a strong culture of transparency and democracy, the corrosive effect of natural resource extraction rots the fish from the head. Advising strongly against adopting the Norwegian policy of investing its mineral wealth outside the domestic economy, Collier argued in favour of investing resource incomes in developing domestic stocks of human and physical capital. But this will only be effective if African peoples can be defended from plunder by a combination of transparency and prosecution.


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