Sustainable development in Africa
diversification, the economy is also left susceptible to external shocks, hindering economic growth.
Sierra Leone is known for its abundance of diamonds but is also a prime example of a country suffering from the resource curse. Despite its wealth in diamonds, it has faced economic and political problems, including the civil war, which was mainly fuelled by the lack of governance and inability to control their diamonds (Humphreys 2007). The Kimberley Process aims to prevent conflict diamonds (defined as rough diamonds used by rebel movements or their allies to finance conflicts against legitimate governments) from entering the global market. While this has helped to improve transparency in Sierra Leone’s diamond industry , revenue from the sale of non-conflict diamonds has not been used effectively for development (Gberie 2005). At the same time, because of over-reliance on diamond revenue, other sectors have been neglected, slowing economic development and growth in the country. This scenario also highlights the importance of strong governance and effective resource management in order to avoid the dangers of the resource curse.
In conclusion, the experiences of both Nigeria and Sierra Leone illustrate the fact that resource wealth cannot on their own guarantee economic development and prosperity. Without strong institutions or economic diversification, both countries risk being consumed by the resource curse.
To achieve sustainable development, these resource-endowed countries need to use certain strategies. Firstly, they need to strengthen their governance and institutions. A strong government will ensure that the revenue generated from these resources is appropriately invested in long-term development instead of seeking short-term gains (Acemoglu 2012). Botswana, a country located in southern Africa, was successful in managing its diamond wealth by building strong institutions; their rule of law also acts as an example for other countries to follow (Collier 2010). Secondly, diversifying the economy is important in order to ensure there is less dependence on single-resource revenue and to create a more
stable, resilient economy. Nigeria has diversified its economy recently by investing in agriculture and technology and even improving its service sector (Ross 2012). By doing so, it can reduce its vulnerability to price fluctuations regarding oil and create new sources of income, boost the economy and the quality of life in Nigeria. Figure 2 shows how an economy can diversify by allocating resources to produce different types of goods and services. 3 Moving along the curve illustrates how countries like Nigeria can reduce their oil dependence by focusing on other sectors like manufacturing etc.
Thirdly, transparency in resource management is also vital. The EITI (Extractive Industries Transparency Initiative) boosts transparency by making it a requirement for governments and companies to disclose their earnings from natural resources (Humphreys 2007) . Sierra Leone’s involvement in the EITI has drastically improved transparency in its diamond extraction but challenges still occur regarding accountability.
3 PPF Curves – Production Possibility Frontiers (AS/A LEVELS/IB/IAL) – The Tutor Academy.
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