Latest posts by Lynn Wamalwa (see all)
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Paradox is a statement or proposition that, despite sound reasoning from acceptable premises, leads to a conclusion that seems senseless, logically unacceptable, or self-contradictory.
The resource curse, also known as the paradox of plenty, refers to the paradox that countries and regions with an abundance of natural resources, specifically point-source non-renewable resources like minerals and fuels, tend to have less economic growth and worse development outcomes than countries with fewer natural resources.
It goes without saying that Africa has very rich natural resources but unable to effectively manage its wealth and ensure that this is reflected in the improved livelihoods of its citizens. It has been quoted for having the lowest per capita GDP (Gross Domestic Product, a primary indicator used to gauge the health of the country’s economy).
Among many other things, in Africa, average income and life expectancy is low, crime and corruption are high, health and roads are worse, and elections are less democratic. And all this points out the failure of most nations in Africa to effectively and efficiently manage and translate natural resources into wealth that in turn raises national incomes and improves the livelihood of the populace.
The people who benefit from the natural resources, at least in Africa, have not been the people native to the land on which the resources exist.
A good example is, diamond mines in South Africa or oil wells in Angola are rarely owned by native South Africans or Angolans but rather multinational conglomerates for whom the welfare of the native people is a distant concern.
To add to the problem is corrupt, inept, and dishonest governments do little to protect native people’s property rights. These are just a few reasons among many others.
This points to a couple of things: the continent needs to capitalize on its natural resources with emphasis on bio-resources in an eco-efficient manner and increase the output of products and services that are competitive on a global scale.
To achieve this Africa will need to create an administrative and regulatory environment that encourages investment in research and innovation and incentivizes the private sector to participate in innovation activities.
It is a regional initiative established in 2010 to support bio scientific research and innovation activities in the eastern African countries of Burundi, Ethiopia, Kenya, Rwanda, Tanzania and Uganda. The goal of the program is to bridge the gap between research, innovation and end users by providing specific services to support innovation processes spear-headed by public research organizations in partnership with the private sector in the eastern Africa region.
This program provides funding for scalable and impact bio scientific innovative ideas, project management backstopping, technology and business incubation, intellectual property management support, feasibility and techno-economic analysis, capacity building at both technical and business level as well as innovation policy analysis.
There is limited capacity for research organizations and academia in the region to move research output from the experimental phase to the market.
Public institutions tend to be academically oriented as they place emphasis on teaching and publication of scientific papers, and they generally lack the infrastructure to support innovation processes. The lack of an innovation culture is exacerbated by limited funding and the insufficient knowledge of intellectual asset management and research translation.
In order to successfully put research innovation in the business sector/market, a couple of things will need to be accomplished.
- Governments in the region need to formulate and implement the necessary policy, institutional and regulatory framework that supports innovation activities including channeling more funds towards research and providing incentives for the private sector to actively participate in innovation activities. Researchers should be trained on basic principles of research translation including intellectual asset management, value proposition and basic principles of business development.
- It’s important to partner researchers and already established businesses as they can and should address each others specific needs. Platforms or forums that bring together researchers and businesses to address specific technological needs should be encouraged and supported by governments and development agencies. Both academia and businesses need to reach out to each other in deliberate efforts to bring about cooperation in future projects.
- The private sector needs to better understand and acknowledge the infinite possibilities offered by the public sector when it comes to addressing the demand for technological solutions that address their challenges while on the other hand the public sector should actively reach out to the business community to demonstrate their capabilities and tap into their knowledge of the market and investments.
One of the most important lessons that Bio-Innovate has learned in implementing bio-science innovation projects is that the commercial aspect of any idea should be assessed and nurtured right from the start, and that the right partners should be identified early.
It’s important to have the right capital, human, resources and time, as, the human capacity and investments required to commercialize a scientific idea tend to increase after the experimental and testing stage.
When it comes to investments for business aspects of product development, as Africa, we have to tap into non-traditional sources of funding to support commercialization activities. Researchers may also need to be appraised on the basic principles of business in addition to the need for incubations centers and services that would be fundamental to nurture fledgling business ideas and startups.
Africa can start to look at commercializing the products of their research, they could benefit from the support of organizations with some experience in the area such as business angel networks, venture capital companies, business incubators and accelerators, startup blogs and social networks as their knowledge and network can provide the support needed for the commercialization processes.
Different economists have different views about the relative importance of the conditions and factors that make countries richer or poorer. The factors they most discuss are so-called “good institutions,” which may be defined as laws and practices that motivate people to work hard, become economically productive, and thereby enrich both themselves and their countries.
Other Solutions are…
Among the good economic institutions that motivate people to become productive are the protection of their private property rights, predictable enforcement of their contracts, opportunities to invest and retain control of their money, control of inflation, and open exchange of currency.
For instance, people are motivated to work hard if they have opportunities to invest their earnings profitably, but not if they have few such opportunities or if their earnings or profits are likely to be confiscated.
When it comes to wasted wealth, and the problems that bedevil poor countries that are rich in natural resources, especially oil, there is plenty of blame to go around. Economists have long observed that such countries tend to do badly. The non-oil sectors like agriculture and manufacturing less competitive on world markets, thus leaving oil to dominate the economy.
Experts have offered fixes for the economic aspects of this “curse of oil” for a while. Some governments have used stabilization policies: when oil prices are high, revenues are set aside; when prices fall, governments use the funds to cushion the blow.
A related idea is to park part of the proceeds from resources in offshore funds for the future. In theory, such funds would not only help spread the wealth over several generations, but also help avoid over-appreciation of the local currency. Some countries even disburse some oil revenues directly to every household, thereby ensuring that ordinary folk see tangible benefits.
These are fine ideas in principle, and in developed countries they even work to some extent. Example that Africa can borrow are;
- Officials in oil-rich Alberta and Alaska are now handing out potful’s of cash to households. But charges of wasteful government spending and cronyism abound.
- Also it has been suggested that a new Iraqi government could disburse oil bounty to its citizens too, but doing so properly in a country where the poor do not have bank accounts will be tricky.
- Norway has an offshore oil fund that is often touted as a model for developing countries. Yet even the virtuous Norwegians have been raiding it for politically popular causes.
In developing countries, such raids are the rule rather than the exception. Zambia set up a stabilization scheme to manage mineral exports; but as prices soared in the 1970s, the government dropped it and years of pain followed when prices fell again.
Michael Ross, at the University of California at Los Angeles, argues that oil-rich countries do far less to help the poor than do countries without resources. He points to evidence that oil and mineral states fare worse on child mortality and nutrition, have lower literacy and school-enrollment rates and do relatively worse on measures like the UN’s Human Development Index.
Why? Economics offers some answers. Unlike agriculture, the oil sector employs few unskilled people. The inherent volatility of commodity prices hurts the poor the most, as they are least able to hedge their risks. And because the resource is concentrated, the resulting wealth passes through only a few hands and so is more susceptible to misdirection.