The Virtuous Path to African Development

A source of great frustration to those concerned with world poverty is the relative stagnation of much of the African continent. It is frustrating because we know that widespread poverty is a function of human limitations, not the availability of natural resources. This fact renders less helpful than it might be the guidelines recently released under the title, Natural Resource Charter. Designed by an independent group of economists, lawyers and political scientists to help developing countries manage their natural resources in ways that create real economic growth, the Charter provides helpful insights. Unfortunately, it does not emphasize enough the crucial role of social mores beyond economics and political governance.

The African Development Bank (AfDB) Group’s Chief Economist, Louis Kasekende, says that the Natural Resource Charter will help governments and societies rich in natural resources to manage such assets in a way that generates economic growth and promotes the people’s welfare. Kasekende expressed these views on May 13 in Dakar, in reference to a presentation on the Natural Resource Charter during the AfDB’s annual meeting.

Unlike many other development initiatives in Africa, the Resource Charter reminds us that additional actors are necessary for long-term sustainable growth, including “international companies, intergovernmental organizations, civil society groups, and the governments of resource-importing states.” These “all have roles which affect the ability of societies to harness their endowments.” Yet the focus rightly remains on “ the governments of resource-rich countries themselves, since they have both the sovereign right, and the moral responsibility, to use the country’s natural wealth for the benefit of their people.”

The first principle of the Resource Charter is that “the development of natural resources should be designed to secure the maximum benefit for the citizens of the host country within the framework of its long-term development goals.” The Charter provides 11 other precepts ranging from increased entrepreneurial competition to public spending priorities.

Even with a few questionable directives for government, the Charter is far superior to the economically naive Millennium Development Goals proffered by the World Bank and the United Nations, which contain no plans to create wealth in order to “end poverty.” The Charter is also superior to the approach of the International Monetary Fund (IMF), which would also rather “reduce” poverty than create sustainable, wealth-generating economies in Africa. The IMF continues to operate under the misguided assumption that “greater progress toward meeting global poverty goals in Africa by 2015 will require further increases in government spending on critical public services.”

What many of these organizations are now only beginning to understand is that many countries in Africa will escape poverty only if quality leaders are elected to positions of service. Entrepreneurial opportunities, the enforcement of property rights, the adjudication of conflicts, controlling violence, and terminating corruption are necessary aspects of an environment that will allow many African countries to develop out of poverty and remain vibrant. More importantly, these pillars of reform require certain moral values to truly flourish; in virtue’s absence the same system can serve to create new moral dilemmas. The recognition of human limitations in structural reform matter.

For example, even though Nigeria is a democracy with many free-market principles, corruption rules the day and drags everyone else down with it. Halliburton, a U.S. construction firm, was said to have given $180 million in bribes to top Nigerian politicians and government officials, including those of the Nigerian National Petroleum Corporation (NNPC), to win the contract for the construction of a liquefied natural gas plant.

In February, Halliburton agreed to pay $579 million to settle charges with the Securities and Exchange Commission and the Department of Justice over bribes KBR, a former Halliburton subsidiary, paid to win $6 billion in oil contracts from Nigerian officials. The bribe, in which three former Nigerian presidents were also said to have benefited, allegedly spanned the period from 1995, when the contract was awarded, to 2004 and possibly beyond. What is needed, then, are markets and governance that also value character and integrity.

The National Resource Charter could find a stronger voice on personal morality. But it is a definite step in the right direction, and one that many developing economies and international aid organizations should consider in the process of rethinking what is culturally and economically sustainable.

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  • DWC

    These are difficult issues, and can not be generalized I know. But development in the “developing” countries must start with things like: laws for and upholding personal property, then extend to banking and credit opportunities (even though we are horrified by them now!). The corruptions must stop. Give people the means to obtain capital and personal property and saftey … and they will find ways to lift themselves out of despair.