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African Security, Commodities and Development The Royal United Services Institute Whitehall Report 4-06 African Security, Commodities and Development Contributors Robert Bates, Paul Collier, David Hale, Jeffrey Herbst, Iqbal Jhazbhay, Patrick Mazimhaka, Greg Mills, Erik Solheim and Steve Stead Edited by Terence McNamee www.rusi.org First Published 2006 © The Royal United Services Institute for Defence and Security Studies All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or other- wise, without prior permission of the Royal United Services Institute. Whitehall Report Series ISSN 1750-9432 Series Editor: Dr Terence McNamee Most Whitehall Reports are available as part of a membership package, or individually at £10.00 plus p&p (£1.00 in the UK/£2.00 overseas). Orders should be sent to the Membership Administrator, RUSI Membership Office, South Park Road, Macclesfield, SK11 6SH, United Kingdom and cheques made payable to RUSI. Orders can also be made via the website or by quoting credit card details via email to: [email protected] For more details, visit our website: www.rusi.org Printed in Great Britain by Stephen Austin & Sons Ltd. for the Royal United Services Institute, Whitehall, London, SW1A 2ET UK RUSI is a Registered Charity (No. 210639) Cover captions (L to R): Congolese miners dig at a gold mine in Montgbawalu, Ituri district, eastern Democratic Republic of Congo. REUTERS. Orapa diamond mine, Botswana. Discovered in 1967, it provided the initial mineral base for Botswana’s development. Control room operations at Orapa mine. Botswana’s Jwaneng diamond mine. This single mine is reputed to be the richest in the world. A Nigerian soldier serving with the African Union forces in Sudan. REUTERS. Oil rig awaiting servicing in Cape Town’s harbour. Photo by Mike Hutchings/REUTERS. The views expressed in this report are those of the authors and do not necessarily reflect the views of RUSI or any other institution to which the authors are associated. Comments pertaining to this report are invited and should be forwarded to: Dr Terence McNamee, Director of Publications, Royal United Services Institute, Whitehall, London, SW1A 2ET, United Kingdom, or via email to [email protected] iii iv Contents Foreword vii Robert Bates Preface ix Patrick Mazimhaka Chapter 1 1 Security, Governance and Development: The Braided Strands of Future Prosperity in Africa Patrick Mazimhaka and Iqbal Jhazbhay Chapter 2 6 African Security: What the Statistics Suggest Paul Collier Chapter 3 13 The Rise of China and India: Implications for African Growth and Security David Hale Chapter 4 22 The Petroleum Sector in Africa: Between global security, national interest and local governance? Erik Solheim Chapter 5 28 Diamonds and Development Jeffrey Herbst and Greg Mills Chapter 6 36 The Role of External Tools to Manage African Conflict Steve Stead v vi Foreword Robert H Bates* RUSI, in collaboration with the by Sierra Leone, Sudan, Congo and other Johannesburg-based Brenthurst Foundation, nations, conflicts over mineral rights and oil- have taken the important step of assembling fields mar the histories of countries blessed and publishing these excellent papers on the with natural resources. Erik Solheim high- relationship between Africa’s production of lights a second: the loss of political account- primary commodities, its security and its ability. If a group uses political power to seize development. the earnings from precious exports, then its In recent years, Africa has experienced fortunes no longer depend upon the will of an export boom. The sustained growth of those it governs. The elite can use its wealth the advanced industrial economies helps to to purchase the support of those inclined to explain the high level of demand for Africa’s oppose them or the weapons with which to imports. The rapid rise of that demand can repress them. Resource wealth does not better be accounted for by the rapid growth guarantee good governance. Indeed, history of Asian economies, and in particular the suggests that it can undermine it. massive economies of India and China. Not only does the past record caution The export boom has certainly been that resource wealth can endanger political good for economic growth in Africa. order and political liberty; ironically, the Whereas in the late twentieth century, record suggests that it can endanger econom- Africa’s economies exhibited low and some- ic welfare as well. Resource booms pose an times negative rates of economic growth, obvious threat to economic equality; those they recently have averaged 4.5 per cent or who benefit might not care to share their more. While not sufficient to ensure the wel- earnings with those poorly positioned to fare of Africa’s people, economic growth benefit from the bonanza. And even when may well be necessary. The change is certain- governments seek to spread the wealth, they ly welcome. may simply sew the seeds of further eco- Several factors will determine whether nomic challenges. Governments throughout the export booms will generate higher levels Africa treated the booms of the 1970s as if of welfare. To discern them we need only they were permanent rather than transitory. join the authors of these papers in observing Many invested in projects that could only pay how commodity exports have affected Africa off if economic conditions remained in the past. favourable; and at the end of the boom they As Patrick Mazimhaka and Iqbal were then left with a legacy of inefficient Jhazbhay note, too often ‘political power projects and loss-making firms. In addition, equals economic domination’ in Africa. From the expenditures triggered by the boom often this observation flow several points of cau- triggered the appreciation of the local cur- tion. As stressed by Paul Collier, one is that rency. The result then is the collapse of other people will fight for power in order to con- sources of exports. Thus the decline of cocoa trol the riches that now flow in. As evidenced and cotton exports from Nigeria, and maize * Robert H Bates is Eaton Professor of the Science of Government at Harvard University. vii Robert H Bates exports from Zambia. mistake to base policy-making simply on a The question posed by these papers, desire to avoid the mistakes of the past! then, is whether these mistakes will be made Another difference marks this episode again. As pointed out by Mazimhaka and from previous ones: the emergence of China. Jhazbhay, not if governments can learn. China’s development will affect the history of Botswana, South Africa and Tanzania, they the twenty-first century, and nowhere more contend, demonstrate that governments can importantly than in Africa. Its economy avoid the mistakes that tend to bedevil exhibits a voracious appetite for energy resource-rich economies. At one point David and raw materials and the terms on which Hale seems to suggest that this resource it is prepared to secure them will shape boom may be unlike those of the last centu- Africa’s economic and political development. ry. The growth in demand does not merely China’s primary competitor for these reflect the impact of short-term fluctuations resources is the United States. Once again, in the economies of the West; it results as Africa’s resource wealth has placed it amidst well from the entrance of two massive new rivalries among the great powers. The economies into the ranks of the industrial manner in which they address each other world. As their incomes and population elsewhere in the world will affect the manner grow, then, so too will the demand for in which each comports itself in Africa. Africa’s projects. If this is valid, then the big The emergence of China introduces new mistake may be to treat this boom as transi- opportunities for Africa, new challenges and tory rather than permanent; it would be a new imponderables as well. viii Preface Diamonds and Africa’s Development: A Positive Correlation Patrick Mazimhaka* Africa’s commodities, especially diamonds, unique regulatory public-private partnership: have a bad development reputation. But they the Kimberley Process. This diamond certifi- have also been given a bad rap. cation scheme cuts out all but a small frac- They are all too often judged as reasons tion of blood diamonds, just 0.2 per cent of behind and a fuel for conflict – articulated in overall African diamond trade – or $20 mil- the academic literature as the ‘greed versus lion – at last count. Now industry is again grievance’ argument. But this is a false leading the way in finding means to regulate dichotomy, misrepresenting their real value. the one million African artisanal diamond With the right ingredients of good gover- miners and ensuring a better price for their nance and careful leadership, commodities hard work through the Diamond have been a tremendous force for continental Development Initiative with the first pilot good. scheme due to be rolled out in Tanzania. Africa’s diamonds have had a positive And why should the Kimberley model impact on the economic development of key not be extended to other commodities producer countries, notably Botswana, including gold and rare metals, and particu- Namibia, South Africa and Tanzania. Yet, larly to Africa’s $200 billion yearly oil produc- anxious to find an explanation for conflicts in tion? This is not the only positive change in Liberia, Sierra Leone and, to some extent, the African diamond industry in the past the Congo, writers, film-makers and non- decade. Previously viewed as a monopoly, De governmental organizations continue to Beers is recognized today as being in compli- blame diamonds. As a result, the term ‘blood ance with the strict competition laws of the diamonds’ is now enshrined in the literature European Union and the US.
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