Tuesday, May 26, 2009

to build informed societies that are better able to avoid the pitfalls of the past

TO BE NOTED: From the Guardian:

Preparing for Africa's boom

This charter could help nations profit from their resources, rather than being undermined by them

'Never again" is, of course, a ­sentiment that is now ­widespread in economic policy circles. I hear it too from Africa's ­economists, but then it refers to the resource curse.

The global commodity boom that ended abruptly in September was the second since African independence. Africa has yet to diversify from dependence on primary commodity exports, so these booms were huge opportunities, pumping far more money into some governments than aid will ever do. Last year, Angola alone received from oil and diamonds more than double the entire aid inflows to Africa. The first commodity boom, in the 1970s, was in large part an opportunity missed. Indeed, far from being harnessed for sustained development, it sowed the seeds of decline. It doesn't have to be like that: Botswana succeeded in using diamond revenues to lift the society out of poverty. But for every Botswana there are several Sierra Leones. In the short term, a commodity boom always helps the economy, but the long-term impact depends on policy choices. These usually go wrong: the norm is that they undermine economies rather than build them up.

Having blown its first commodity boom, Africa had to wait 20 years for the second. It may have blown that one as well, although the jury is still out. That is what "never again" is about when voiced by people such as Louis Kasekende, the chief economist of the African Development Bank. Before the next boom, African societies must get prepared. So what does being prepared actually mean?

Transforming assets beneath the ground into sustained prosperity for ordinary citizens requires integrity and astuteness. Without integrity the assets get looted, and without astuteness they get squandered. Neither is easy to achieve, but integrity is at least easy to understand. The Extractive Industries Transparency Initiative (EITI) is an international standard to which governments can make a commitment. Introduced in 2003, it was the right place to start in the struggle to break with the past. But it would be the wrong place to stop: ­integrity is not enough.

Enter the Natural Resource Charter, an attempt by academic economists, lawyers and political scientists to distil professional knowledge into a form readily accessible to governments and societies in resource-rich countries. It is distinctive both in content and process.

The content tries to do for astuteness what the EITI has done for integrity. Its summary version is a list of 12 precepts spanning the chain of decision. It covers management of the discovery process, taxing extraction companies, investment, and how rich countries could be more supportive. Anyone, even the busy president of a resource-rich country, can spare the few minutes it takes to digest. A fuller version is designed as a citizen's guide – say, for a broadcaster on community radio wondering whether that deal her government just struck with an extraction company is likely to be a good one. The full monty version is for practitioners: the permanent secretary in the ministry of mining can find out about why auctioning off concessions is likely to generate a better deal for the country than relying solely upon negotiation.

The process of putting the charter together has been a cross between the EITI and Wikipedia. An international group of academics worked together, without official sanction or finance. We consulted with likely stakeholders, holding meetings around the world as best we could, and incorporating scores of suggestions for revision and improvement. Revision will continue. For this reason, unlike the EITI, the charter is not designed as a com­mitment. The objective is not to get governments to sign an endorsement but to build informed societies that are better able to avoid the pitfalls of the past.

Depending on your world view, for academics to provide this unsolicited advice to resource-rich societies is neo-colonial arrogance, a delusional distraction from our proper jobs, or potentially useful. Ten years ago it would not have been feasible: change always had to come from governments. Now the internet has opened up a new way of achieving better policies. Citizens get up to speed on issues previously considered too technical, and governments have little option but to follow along behind. For many low-income societies with valuable natural assets, turning "never again" from resolve into reality is the critical challenge of the next decade."


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