The Economic Effect of Natural Resources in Sub—Saharan Africa

钱仪

Abstract：Sub-Saharan Africa has affluent natural resources with high availability， it is still the most impoverished region in the world. Increasing specialization of employment to natural resources left unfinished infrastructure project and large scale unemployment. Reliance on natural resources exportation makes inland economy susceptible to shocks and undulations. In view of present situation， low levels of political centralization， pervasive corruption， distempered governance， turbulent society， fragmentary enforcement of legislation， overexploitation and inefficient technology transfer make boosting economy a Herculean task. Moreover， irreversible impact of slave trade and colonial plunder have ongoing effects even today which exacerbates the severe circumstance to some extent.

Key words：sub-saharan Africa； Africa； Natural resources；Economic impact

中圖分类号：F062 文献标识码：A 文章编号：1671-2064（2018）07-0234-02

In the first place， it is noticeable that agriculture constitutes 21% of GDP of Sub-Saharan Africa and in some cases 60% to 90% of the labor force are employed in it. Dependence on cash-crop export elevates inability of domestic industry to compete internationally and low price determined by household based agrarian economies gives rise to capital loss. On a deeper analysis， concentration on resources export and mineral extraction engender defects in economic entity and is detrimental to long-standing interest as a whole. Consequently， there is limited degree to which Harrod-Domar Model can achieve owing to disproportionate short-term benefits could not uphold sustainable development.

Simultaneously， considerable foreign directive investment is such a potent force that it pushed native people out of work and occupied substantial income. Multinational corporations avail themselves of righteous justification to utilize tax loopholes. Superficially， foreign directive investment is lucrative for host country. In reality， it is heavily one-sided. It would be fair to say that MEDC take advantage of them to procure exorbitant profits. Unceasing inequality even aroused anti-globalization movement which is directly opposed to the unregulated power of transnational firms to maximize their profits by exploiting the resources and labor in poor countries.

Statistics from World Bank classified 42.7% of population in Sub-Saharan Africa to the scope of poverty. Astonishingly， 50% of people populated in Africa live on less than 1 dollar a day. Recently， International Monetary Fund （IMF） diminished its positive anticipation of Africas economy prospect， even credit rating agencies decreased predicted credit level of many mass commodity export countries in Sub-Saharan Africa. Optimistically， there are internal unanimous cooperation and external assistance. For instance， The New Partnership for Africas Development （NEPAD） is an integrated， continent-wide strategy which has been passed in 2001. It was funded by African Development Bank （AFDB） and the EU-Africa Infrastructure Trust Fund to cope with widespread issues on African Continent. Thankfully， US president Barack Obama has announced a US $7 billion plan to further develop infrastructure and work more intensively with African heads of the state in July 2013. He also announced a new program named Trade Africa， designed to boost trade within the continent as well as between Africa and the US. And From 2003 to 2012， BRIC countries investment into Africas primary sector， manufacture and service industry occupied 25%， 43%， and 32% respectively

There are several solutions which worth Sub-Saharan Africas consideration：

（1）Apropos to Paul Colliers theory， fiscal income gained form natural resources should be wisely invested in aspects like education or medical care to promote human capital and productive capacity instead of exploiting natural resources further. As a country who has consummated economic transformation， Malaysia suggests Sub-Saharan Africa to give hortation to alternative domestic industries or grant low interest loan to homeland enterprises empoldering new commodity. Positively， diversification of market， greater employment and competitiveness will give rise to less vulnerability to fluctuations in the price of natural resources. Malaysia believes this category of investment will exert further accelerator effect to assist Sub-Saharan Africa to tackle with tough issues and proceed towards multi-sector economy.

（2）Malaysia appeals African Union to reach consensus and make an agreement on restricting resource production in order to avoid plummet of price kindled by overexploitation. To get rid of demand pull inflation，“Tragedy of commons” and the “Natural Resource Curse”， it is advisable to enable coordination and the unification of resource policies and ensure the stabilization of export market. Referring to Prebisch-Singer hypothesis， if primary sector preponderate tertiary sector， there will be scads of risks and uncertainties concealed in economic system. To wrestle with that condition， labor incentive economy should be transformed to capital incentive economy and processed merchandize should take the place of primary goods， for manufacturing is more profitable.

（3）For multinational companies， governmental agencies in Sub-Saharan Africa should endeavor to stipulating relative regulations， strengthen tax administration and perfect supervision system. When transnational corporations are required to report payments to administrative department， there will be more transparency of foreign directive investment and decreased likelihood of tax evasion. In that way， municipal revenue could increase in significant measure. In the meantime， to obtain enhanced employment multiplier effect and comparative trade advantage in actualizing long-term economic growth， multinational enterprises ought to be forced to employ local people.

（4）Because a majority of resources are non-renewable and the extraction is using quasi-sustainable method to exploit resources extravagantly， it is imperative to adopt environmental-friendly approach to fulfill preservation and dispose of negative externalities brought by pollution. Sub-Saharan Africa nations ought to put environmental concerns onto national agendas and implement political ecologism because resource and development are inextricably linked. They should use resources rationally to meet need without inflicting unrecoverable damage on ecosystem. When they take immediate interest into account， they should also be foresighted.

（5）In order to increase income of mining and avoid interest marginalization， some Sub-Saharan Africa countries abrogated rigorous inspection of foreign contracts. Since 2004， African mining production decrease 5% by the standard of Minelens Productivity Index （MPI）. In this respect， utilization of merger and acquisition to realize economic scale and modification of the configuration of resources and labor are indispensable. Looking further ahead， SSA could stimulate collaboration between private and public sector to actualize Africapitlism in advance.

（6）To eradicate corruption， Sub-Saharan Africa should consider expand the dimension of anti-corruption agencies to prosecute malfeasance. Drawing lessons from Convention of corruption and Palemo Protocols （Convention against Transnational Organized Crime and its Protocols）， African governments could cite the provision that international criminalization of the financing of any illegal operation to strengthen the containment of modus-operandi of superpowers. In the meantime， to avert appreciation in exchange rate， it is feasible to readjust interest rate artificially or manipulate tariffs and barriers properly to reduce demand for currency. And for embargo and sanctions in some Sub-Saharan African countries， conciliating international relationship is overarching. Alarmingly， Africas population is projected to double by 2050 reaching 2.4 billion. Thus， attaching importance to density of population and resource transportation is fateful to realize economic transition.

Apropos to the status quo， Coordinating relationship between population， resources and environment is of vital importance for Sub-Saharan Africa. To accomplish independence of economy and production during proceeding of industrialization and modernization， SSA must take tentative measures to adapt to globalization and put out long-term policy to guarantee the stability and prosperity of the society. Take everything into consideration， to get rid of resources predicament and countless problems that are up in the air Sub-Saharan Africas effectuation should be integrated theory with practice， otherwise it will be a castle in the sky.