Africans are not wrong when they talk of a “resource curse”. The continent’s political elite have squandered or stolen much of the bounty, often aided by unscrupulous private firms. Avoiding this curse is crucial to Africa’s future
is studded with buried treasure. Half the world’s diamonds are mined there. The largest producers of cobalt, manganese and uranium are all African countries. Since 2000 more big petroleum discoveries have been made in sub-Saharan Africa than in any other region. Yet Africans are not wrong when they talk of a “resource curse”. The continent’s political elite have squandered or stolen much of the bounty, often aided by unscrupulous private firms.
Several stand out. Botswana has long offered secure property rights and a stable, clear tax regime. Today De Beers reckons that Botswana keeps four-fifths of the revenues from Debswana, their joint mining venture, through taxes, royalties and dividends. Elsewhere in Africa firms are reluctant to invest huge sums when mines can be seized or tax rates are volatile.
Like many African countries, Botswana has struggled to diversify its exports and foster manufacturing. Both unemployment and income inequality are high. Diamonds still make up more than 80% of export revenues. Yet whereas petrostates such as Nigeria and Angola have ploughed money into industrial white elephants, Botswana has invested in future sources of wealth, including education and infrastructure.
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