False Economy - Alan Beattie [64]
Botswana is not, however, an economic paradise, and not just because of its stratospheric HIV infection rate. While it has avoided the political Dutch disease and developed some degree of supply-chain integration for diamonds, the rest of the economy remains unimpressive. Unemployment and economic inequality are both high. It has not developed much else than diamonds—it has just exploited diamonds very well. Still, that is enough to give the average Botswanan an income more than six times higher than that of the neighboring Zambians. Not every country can emulate Botswana, because not every country has diamonds. But if every African country with a mineral resource exploited it as well as has Botswana, the continent would be vastly better off.
Two problems arise in trying to replicate Botswana's success. One, most governments simply refuse to bind themselves to the mast. Two, particularly in a continent like Africa with recent memories of domination by colonial powers, it is close to impossible for an outsider to come in and force them to do so.
To know what the right policies are does not mean it is straightforward to ensure they are implemented. During the 1990s and into the new millennium, a new consensus and a new campaign grew rapidly to try to obviate the resource curse in developing countries. It focused on both the payers and payees of mineral royalties, taxes, and extraction fees.
The first step was transparency—trying to determine what size the pie was and to prevent slices of it being handed out secretly in bribes. On the payer side, a campaign run by nongovernmental organizations (NGOs) called Publish What You Pay was aimed at making oil and mining companies disclose their royalty and fee payments to governments. On the payee side there was a new drive led by official aid donors such as the UK and known as the Extractive Industries Transparency Initiative, to encourage governments to act less like Angola and more like Botswana. The second step was to institute a broad framework governing how mineral resources should be spent, preferably involving a national fund based on the principles described above. An important part of the process was that the fund should be carefully monitored by local NGOs and, where necessary, by outsiders like the World Bank.
But many countries simply refused to accept the guidelines. They were, after all, sovereign countries that can determine their own fates. And, of course, mineral wealth gives them more power to do so, which is how we got here in the first place. Even for countries over whom the outside world had more leverage, it was still the case, as it often is, that trying to buy or force reform from outside frequently fails. In one flagship project financed partially by the World Bank, an oil pipeline was built hundreds of miles across the remote deserts of the West African country of Chad to an oil terminal on the coast, in neighboring Cameroon. A certain portion of revenue from the oil sales was to be put into a transparently administered "future generations" fund in Chad, and most of the rest was earmarked for health and education spending.
Chad, though, has shown few signs of emulating Botswana. Well-meaning World Bank officials are often no match for a determined government, particularly one not constrained by the presence of meaningful political opposition or scrutiny from domestic NGOs. After the pipeline opened, Chad's government repeatedly bypassed the provisions of the revenue agreement, shifting funds into military and security categories. The president simply declared a state of emergency, which allowed him to spend the oil revenues as he wished. Eventually, in 2008, the World Bank threw its hands up and withdrew from the project.
It was to examine such tricky