Exchange to Change January 2018 E2C January 2018 web | Page 16


A positive note on natural resources and development in Sub-Saharan Africa : exploring Botswana ’ s case

The 2017 edition of Debating Development - an annual series of debates organized by IOB and USOS - addressed the question The global resource grab ?, with a focus on the problems related to the exploitation of natural resources , whether natural resources actually benefit the well-being of people and how the exploitation of these resources can be made more sustainable . In this short piece and as a sign of hope , we present a success story of natural resources being used to foster economic growth and reduce poverty .
Botswana is often cited as a success story of escaping the resource curse . Thanks to natural resources ( diamonds , copper / nickel , coal , wildlife , soils , forests , veld products , and ecosystems ), the country has one of the most successful economies in Africa and its revenue from mineral exports , especially diamonds , has enabled the implementation of different poverty-reduction policies .
A reminder of the natural resource curse
The natural resource curse refers to Sachs and Warner ’ s ( 1995 ) influential empirical observation that being a natural resource or mineral exporter reduces a country ’ s development prospects . However , once endogeneity is accounted for , this negative relationship no longer holds . Put differently , resources are not necessarily a curse and countries with mineral endowments , that fail to develop are often the ones that remain resource dependent ( Brunnschweiler and Bulte , 2008 ). The main reasons for natural resources to become a burden on development are Dutch disease , volatility curse and governance curse .
Dutch disease ( Corden and Neary , 1982 ): productive resources move from non-mineral traded goods ( the output of which declines ), to the booming mineral sector and the non-traded goods ( the output of which increases ), thereby causing a progressive “ deindustrialization ” contributing to poor long-run performance .
For example , since the start of its oil exports , Nigeria has seen its agricultural sector collapse and has become dependent on imported food ( Otaha , 2012 ).
The Volatility Curse ( Hausmann and Rigobon , 2003 ): volatility in the price of mineral prices translates into exchange rate fluctuations and inefficient “ stop-go ” provision of government services and infrastructure projects because of low predictability of public revenue . The higher dependence on mineral

“... we intend to conserve our resources wisely and not destroy them . Those of us who happen to live in Botswana in the 20th century are no more important than our descendants in centuries to come .” Hon . Sir QKI Masire , former President of Botswana

Exchange to change January 2018