1. Giles
Thompson
-­‐
‘To
what
extent
should
the
current
African
commodity
boom
be
viewed
in
a
positive
light?’
The
Politics
of
Sub-­‐Saharan
Africa
-­‐
Word
count:
1993
1
The
commodity
boom
has
expedited
Africa’s
4.9%
GDP
rise
between
2000-­‐2008
(MGI,
2010:
2),
and
has
provoked
recent
claims
that
‘celebrations
are
in
order
on
the
poorest
continent’
(The
Economist,
2013).
These
claims
are
too
positive;
they
overlook
the
extensive
costs
that
commodity
exportation
incurs.
The
African
commodity
boom,
which
I
define
as
the
incremental
increase
in
market
price
of
both
oil
and
minerals
in
the
first
decade
of
this
millennium,
must
be
viewed
in
a
predominantly
negative
light.
The
surge
in
price
of
Sub-­‐Saharan
African
(hereafter
SSA)
commodities,
incentivises
increased
extraction
and
export
of
these
natural
commodities.
This
short-­‐term
incentive
does
not
account
for
the
incrementally
negative
effect
that
increased
resource
extraction-­‐specialisation
has
on
long-­‐term
economic
growth
and
the
resulting
economic
divergence
between
SSA
(as
extraction-­‐economies)
and
the
developed
world
(as
centres
of
manufacturing).
The
short-­‐term
economic
growth
that’s
fuelled
by
extraction
is
also
a
misleading
indicator
of
success,
diverting
attention
from
this
concerning
trend
of
divergence.
Despite
this
reality,
if
one
accepts
that
the
boom’s
impact
is
so
substantial
that
the
overall
impact
of
the
boom
is
inexorably
negative,
one
can
still
cautiously
identify
qualified
positives.
Increased
government
tax
revenue
from
boom
has
resulted
in
qualified
positive
impacts
for
SSA,
because
it
provides
opportunities.
However,
in
SSA,
substantial
structural
obstacles
have
pervasively
prevented
these
positive
opportunities
from
being
materially
realised.
Even
so,
these
opportunities
are
sometimes
materially
realised,
despite
structural
obstacles,
when
agency
triumphs
over
structure.
Examples
of
this
agency
are:
forward-­‐thinking
government
policymaking
and
the
‘benevolent’
infrastructural
positive-­‐externalities
of
Chinese
foreign
investment
in
SSA.
In
addition,
qualified
positive
opportunities
that
the
commodity
boom
presents
are:
opportunity
for
increased
public
spending
on
public
services
in
order
to
benefit
the
poor,
and
opportunity
to
pursue
diversification
(and
subsequent
reduction
in
exposure
to
fluctuations
in
the
market
price
of
commodities).
The
first
qualified
positive
is
the
opportunity
for
increased
public
spending
on
public
services
in
order
to
benefit
the
poor.
Most
countries
in
SSA
have
tax
bases
that
are
‘built
overwhelmingly
on
[commodity]
exports’
(Leonard
and
Straus
2003:
12).
The
boom
raises
additional
tax
revenue
that
could
potentially
benefit
the
poor
through
immediate
spending
on
vital
services
such
as
hospital
and
schools.
Importantly,
this
extra
revenue
also
gives
opportunity
for
more
government
investment
for
the
future,
as
in
‘resource-­‐rich
societies,
investment
is
particularly
important
since
this
is
how
resource
surplus
can
be
transformed
into
sustained
increases
in
income’
(Collier,
2007:
44).
These
opportunities
have
been
largely
squandered
in
SSA
due
to
the
structural
obstacle
of
‘neo-­‐
patrimonialism’.
In
neo-­‐patrimonialism,
power
is
exercised
‘through
the
informal
sector’
in
a
system
of
‘political
reciprocity
which
link[s]
patrons
with
their
clients
along
vertical
social
lines’
(Chabal,
2002:
450).
In
this
system,
government
tax
revenue
is
misappropriated
and
used
as
political
patronage
by
public
officials,
to
gain
political
loyalty
from
‘clients’.
The
extra
revenue
generated
by
the
boom
is
particularly
hard
to
trace
account
for,
and
this
helps
engender
informal
misappropriation
of
government
funds.
This
misappropriation
occurred
in
Nigeria
for
instance.
Nigeria
borrowed
heavily
during
the
boom
in
the
1980s
and
undertook
‘massively
wasteful
projects
saturated
with
corruption’
to
facilitate
patronage,
and
consequently,
Nigerian
living
standards
‘approximately
halved’

2. Giles
Thompson
-­‐
‘To
what
extent
should
the
current
African
commodity
boom
be
viewed
in
a
positive
light?’
The
Politics
of
Sub-­‐Saharan
Africa
-­‐
Word
count:
1993
2
(Collier,
2007:
40-­‐41).
This
is
statistic
is
striking,
highlighting
evident
deprivation
of
‘resources
that
might
otherwise
be
spent
on
public
goods’
(Kelsall
et
al.,
2013:
13)
by
neo-­‐patrimonialism.
Governments
across
SSA
instigate
these
‘white-­‐elephant’
(Collier,
2007:
44)
contracts,
which
embody
the
blurring
of
the
state’s
boundaries
between
‘public
and
private’
(Kelsall
et
al.,
2013:
13)
that
is
a
central
characteristic
of
neo-­‐patrimonialism.
Neo-­‐patrimonialism
hinders
‘planning
for
the
common
good
[and
instead
systematically
promotes
purveyance]
for
private
accumulation’
(Leonard
And
Straus
2003:
4).
The
obstacle
of
neo-­‐patrimonialism
is
hard
to
overcome
as
it’s
not
straightforward
embezzlement,
it’s
more
subtle
and
pervasive,
‘corruption
is
rarely
centralized’
it
is
‘instead
an
interminable
series
of
negotiations
with
an
endless
number
of
petty
officials’
(Chabal
and
Daloz,
1999:
102).
However,
while
neo-­‐patrimonialism
is
a
significant
obstacle,
it
is
not
insurmountable
and
extra
government
revenue
from
the
boom
still
represents
a
qualified
positive.
Botswana
has
overcome
this
obstacle
with
effective
government
policy-­‐making
agency.
They
have
created
‘effective
checks
and
balances
on
power’
(Collier,
2007:
46)
and
promoted
a
genuine
degree
of
transparency
in
government
expenditure
despite
‘anti-­‐corruption
discourse
[which
is]
primarily
rhetorical’
in
SSA
(Chabal
and
Daloz
1999:
104).
This
has
been
implemented
through
a
mandatory
‘minimum
rate
of
return
for
all
public
projects’
(Collier,
2007:
46-­‐50).
Cautionary
evidence
that
Botswana
is
‘saved
from
patronage
politics’
can
be
found
in
the
very
large
amount
of
surplus
funds
that
government
has
accumulated
in
foreign
assets
(Collier,
2007:
50).
The
second
qualified
positive
of
the
boom
is
the
opportunity
that
extra
tax
revenue
presents
to
pursue
diversification
and
a
subsequent
reduction
in
exposure
to
fluctuations
in
the
market
price
of
commodities.
This
opportunity
is
salient
because,
commodities’
increased
‘boom’
price
is
not
indefinite,
as
The
Economist
(2013)
reports,
‘one
third
of
Africa’s
GDP
growth
comes
from
commodities
…
this
will
not
last’.
Exposure
to
price
fluctuations
come
about
as
a
result
of
a
substantial
proportion
of
growth
being
reliant
on
the
price
of
one
commodity,
which
in
turn
makes
forecasting
a
sustainable
level
of
government
borrowing
difficult
and
perilous.
This
difficulty
is
exemplified
by
erroneous
projections
made
by
many
SSA
governments
as
a
result
of
inflated
expectations
in
the
context
of
the
‘doubling
of
oil
prices
from
1979
to
1981’
(Jackson,
1985),
immediately
before
the
onset
of
the
debt
crisis
in
the
1980s.
Given
the
risks
of
a
non-­‐diversified
economy,
a
structural
obstacle
is
necessary
to
explain
why
in
SSA
there
is
‘little
diversification’
(World
Bank,
2000:
1)
and
countries
remain
largely
dependent
on
‘a
narrow
range
of
commodities’
(ACET,
2014:
2).
This
explanatory
structural
obstacle
is
know
as
the
‘Dutch
disease’,
it
is,
in
essence,
where,
a
‘sharp
inflow
of
foreign
currency
[due
to
the
export
of
commodities]
…
leads
to
currency
appreciation,
making
the
country's
other’
exports
less
competitive
(FT,
2015).
The
Dutch
disease
in
coordination
with
a
commodity
boom
makes
diversification
more
challenging
because
as
government
receives
extra
revenue,
which
it
can
invest
in
infant
industries,
the
competitiveness
and
commercial
viability
of
those
industries
is
simultaneously
reduced.
However,
whilst
the
structural
obstacle
of
the
Dutch
disease
mostly
triumphs
over
the
opportunity
for
diversification,
the
Dutch
disease
is
not
insuperable
and
the
extra
tax
revenue

3. Giles
Thompson
-­‐
‘To
what
extent
should
the
current
African
commodity
boom
be
viewed
in
a
positive
light?’
The
Politics
of
Sub-­‐Saharan
Africa
-­‐
Word
count:
1993
3
still
represents
a
qualified
positive.
The
obstacle
has
been
overcome
in
some
cases,
through
forward-­‐thinking
government
agency
in
policy-­‐making
and
also
through
the
‘benevolent’
infrastructural
positive-­‐externalities
of
Chinese
foreign
investment
in
SSA.
Forward-­‐thinking
government
policy-­‐making
agency
can
capture
the
opportunity
of
the
boom.
The
exemplary
case
is
again
Botswana,
while
‘lucky
to
have
rich
diamond
mines’
Botswana’s
government,
unlike
‘other
poor
countries’
has
not
squandered
its
natural
resources
(Easterly
2007:
25).
The
Botswana
government
enlisted
‘De
Beers’
diamond
mining
and
marketing
expertise’
(Easterly
2007:
315)
and
with
income
it
raised
from
this,
it
committed
to
diversifying
its
economy
beyond
the
diamond
industry
(Easterly,
2007:
315).
Diversification
is
far
from
complete
in
Botswana,
but
positive
steps
were
taken
towards
diversification
in
2008,
immediately
after
the
commodity
boom.
The
government
published
and
has
to
a
large
extent
implemented
a
‘Strategy
for
Economic
Diversification
and
Sustainable
Growth’
with
the
aim
of
‘‘diversify[ing]
the
economy
to
ensure
that
Botswana
continues
to
enjoy
the
fruits
of
sustained
economic
growth
[regardless
of
the
market-­‐price
of
minerals
and]
post
depletion
of
minerals’
(GICO,
2008:
3).
The
second
form
of
agency
I
will
explore
is
the
‘benevolent’
infrastructural
positive-­‐externalities
of
Chinese
foreign
investment
in
SSA.
The
commodity
boom
has
coincided
with,
and
has
partially
been
triggered
by
increased
Chinese
imports
from
SSA
of
fuel
and
minerals.
‘China’s
major
interest
in
Africa
is
oil
and
minerals,
which
constitute
60
percent
of
its
imports
from
Africa’
(Gordon
and
Gordon,
2012:
426).
Chinese
investors
have
been
highly
criticized
for
human
rights
abuses
in
their
SSA
investments.
An
extreme
example
of
this,
is
the
2005
‘explosion
at
a
Chinese-­‐owned
explosives
manufacturing
plant
in
Chambishi
[which]
killed
46
Zambian
workers’
and
the
subsequent
riot
‘over
work
conditions
[that]
culminated
in
the
shooting
of
at
least
five
miners’
(HRW,
2011).
Despite
these
abhorrent
abuses,
thinking
purely
in
terms
of
diversification,
Chinese
investors
have
been
‘benevolent’.
For
instance,
the
Chinese
have
invested
$3.8bn
in
and
begun
to
implement
the
refurbishment
and
extension
of
the
380-­‐mile
‘New
East
Africa
Railway’,
which
is
predicted
to
cut
the
cost
of
sending
a
tonne
of
freight
one
kilometre
from
$0.20
to
$0.08
in
Kenya
(BBC,
2014).
Increased
involvement
of
Chinese
foreign
investors
has
resulted
in
a
fairly
comprehensive
‘Chinese-­‐built
infrastructure
boom
across
the
continent
[comprising
of]
roads
and
railways,
dams,
telecoms,
hospitals,
schools,
power
plants,
and
even
new
towns’
(Gordon
and
Gordon
2012:
426).
This
infrastructural
boom
provides
a
route
to
circumnavigate
the
obstacle
of
the
Dutch
disease.
Improved
infrastructure
has
reduced
business
costs,
has
improved
efficiency
and
in
theory
has
made
a
contribution
to
SSA
businesses’
competitiveness.
Thus,
the
agency
of
the
‘benevolent’
infrastructural
positive-­‐
externalities
of
Chinese
foreign
investment
in
SSA
has
also,
in
additional
to
government
agency,
presented
an
opportunity
for
agency
to
triumph
over
the
structural
obstacle
of
the
Dutch
disease
in
order
to
realise
a
material
qualified-­‐
positive.
On
a
different
but
crucial
note,
it
is
important
to
remember
that
the
vital

4. Giles
Thompson
-­‐
‘To
what
extent
should
the
current
African
commodity
boom
be
viewed
in
a
positive
light?’
The
Politics
of
Sub-­‐Saharan
Africa
-­‐
Word
count:
1993
4
qualification
for
these
positives
is
that
the
balance
sheet
of
the
commodity
boom
is
predominantly
negative.
The
incentivisation
of
increased
extraction
of
natural
commodities
from
SSA
for
sale
to
the
developed
world
is
incontrovertibly
detrimental.
The
primary
reason
for
this
is
observed
by
the
‘Prebsich-­‐Singer
hypothesis’
(Toye,
2003).
‘Prebisch-­‐Singer’
highlights
that
over
time
the
market
value
of
primary
products
depreciates
exponentially
and
irretrievably
when
compared
to
that
of
(manufactured)
goods.
Therefore
the
incentivisation
of
specialisation
in
primary
commodities
is
abhorrent
because
it
commits
SSA
extraction-­‐economies
countries
to
a
trend
of
persistent
economic
divergence,
where
the
price
that
they
can
fetch
for
their
factors
of
production
depreciates
compared
to
the
price
that
developed
countries
can
achieve
for
manufactured
goods.
SSA
countries,
by
exporting
their
primary
commodities,
incur
the
‘opportunity
cost’
of
not
being
able
to
use
the
commodities
they
sell
to
undertake
manufacturing
and
thus
benefit
from
the
additional
‘value
added’
(GDP)
that
is
gained
from
manufacturing
goods.
The
boom
has
also
been
negative
because
it
has
shrouded
this
predominant
negative
in
confusion
by
providing
a
‘misleading
indicator’
of
economic
success
(GDP
growth).
Apart
from
the
fact
that
the
increased
GDP
growth
rates
‘come
on
a
very
low
base’
(Gordon
and
Gordon
2012:
419),
the
celebration
of
this
growth
by
financial
periodicals
and
international
agencies
has
distracted
from
this
‘globalized
double
standard
–
of
market
fundamentalism
for
the
non-­‐west
and
an
enduring
unorthodoxy,
protectionism
and
even
mercantilism
in
the
west’
(Harrison,
2010:
23)
which
serves
‘the
interests
of
the
more
advanced
economies…
rather
than
those
of
the
developing
world’
(Stiglitz,
2002:
214).
This
globalised
‘double
standard’
has
been
best
embodied
in
the
IMF
SAPs,
and
despite
the
SAPs
being
replaced
by
the
PRSP
in
1999,
‘in
a
basic
empirical
sense
the
PRSP
maintains
the
same’
flawed
fundamentals
of
‘macroeconomic
liberalism’
(Harrison,
2010:
42).
The
commodity
boom
should
be
viewed
in
an
inexorably
negative
light
overall
because
it
causes
SSA
countries
to
advance
in
their
adoption
of
their
extraction-­‐
economy
role,
which
triggers
increased
economic
divergence
between
SSA
and
the
developed
world
as
observed
by
the
‘Prebisch-­‐Singer
hypothesis’.
However,
conciliatory
qualified
positives
of
the
commodity
boom
can
cast
cracks
of
positive
light
on
one’s
view
of
the
commodity
boom.
These
cracks
of
positivity
are
limited,
because
the
agency
on
which
these
qualified
positives
are
totally
reliant
on,
in
order
to
be
prevalently
and
tangibly
realised,
is
predominantly
blocked
by
the
substantial
structural
obstacles
of
‘Dutch
disease’
and
‘Neo-­‐
Patrimonialism’.
To
summarise
the
qualified
positives
of
the
commodity
boom,
I
draw
on
the
analogy
that
President
Sirleaf
makes
between
Liberia
and
SSA,
‘Liberia
is
not
a
poor
country,
but
rather
a
rich
country
that
has
been
poorly
managed.
The
same
is
true
for
much
of
SSA’
(Radelet
and
Sirleaf,
2010:
5).

5. Giles
Thompson
-­‐
‘To
what
extent
should
the
current
African
commodity
boom
be
viewed
in
a
positive
light?’
The
Politics
of
Sub-­‐Saharan
Africa
-­‐
Word
count:
1993
5
Bibliography:
Books:
• Chabal,
P.,
and
Daloz,
J-­‐P.
(1999).
“Africa
Works:
Disorder
as
Political
Instrument”.
Bloomington:
International
African
Institute.
• Collier,
P.
(2007).
“The
Bottom
Billion:
Why
the
poorest
countries
are
failing
and
what
can
be
done
about
it”.
New
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