The Link between Extractive African Industries and Global Political Power

Economic power provides diplomatic currency among the community of nations, and especially among the top-tier of powerful nations, namely the G-8. A cycle of inclusion begins as a country gains economic power. As citizens participate in a web of investment, political leaders gain diplomatic access, altogether increasing the power of their state. In high-growth countries in Africa, however, the potential to benefit from a cycle of investment, growth and diplomatic power has been stalled. The concentrated power of economic growth in extractive industries has curtailed development throughout African countries that are otherwise showing high rates of growth. As a result, the broader population has yet to benefit from increased growth and, until this occurs, the diplomatic power of these extractive-oriented countries will remain limited.

Sub-Saharan Africa has for modern history been unable to breach the traditional gulf between economic potential and economic power. Despite a regional GDP growth rate of 6.7 percent in 2007, the majority of gains were in the extractive industries. Almost no linkages exist between the petroleum industry in Angola, for example, that enjoyed a high rate of growth, and the other sectors of the economy. Without increasing the spillover benefits of industries that produce high economic growth in the region, such as the petroleum industry, countries may not translate increased economic gains into increased international power.

Despite the advantages of Africa’s unique geographic coherence, economic power remains concentrated among a few nations in a few industries. Resource-rich and high growth countries include Angola, Chad, Equatorial Guinea, Gabon, the Republic of Congo, Nigeria, and South Africa. Yet despite these contributions to the region’s high GDP growth in Sub-Saharan Africa, 33 out of 47 nations are classified as Least Developed Countries (LDCs). This may be explained by Africa’s growing population that is not benefitting from the wealth created by extractive industries. Extractive industries are insulated from the rest of the economy and do not provide linkages for the development of other industries in the economy. Therefore, the GDP of a country selling natural resources has little correlation with the health of the economy. The agricultural industry throughout Africa employs the majority of the population but produces only a small percentage of GDP. Therefore, the vast majority of citizens are left untouched by the wealth created by the extractive industries. This creates an environment where socio-economic development is stalled. This reality is exacerbated by the reality that family size is not decreasing and populations continue to grow.

According to the Population Reference Bureau, Africa’s population just passed 1 billion, with a projected doubling by 2050. The traditional implications of a growing population on investment are clear: as a population grows, so too must investment. The delicate balance between a productive population’s ability to produce the output necessary to support a dependent population must not be offset by rapid increases in the dependent population. This imbalance—essentially a gap in investment—has for some time been a problem in Africa. The last half-century of development plans aimed to fill the gap in domestic investment, but failed to keep dependent populations from growing at a faster rate than investment could sustain. Left then, are 33 countries with growing populations whose economic power and international presence remain sidelined.

Human Development Indicators provide a sort of ladder of societal development, measuring countries’ levels of development in areas including life expectancy at birth, adult literacy rate, school enrolment ratio and GDP per capita. On the twenty-six member list of the Low Human Development index, African countries comprise all but one spot. The disconnect between GDP growth rates in recent years and the increase in socio-economic development has led to misleading interpretations of the influence of the extractive industry’s economic power on a country’s overall economic wellbeing. For example, while investment and economic growth in Angola has skyrocketed since the end of decades of civil war, the country faces enormous challenges to diffuse the benefits that have become concentrated in the petroleum industry. The country is both an LDC and...