Will Guinea escape the natural resource curse?

A nice article by  Simon Zadek of International Institute of Sustainable Development.

He says Guinea could escape the natural resource curse:

Geopolitical insight is often gained through real-life experience, rather than big-picture thinking. Arriving at Charles de Gaulle airport in Paris from Conakry, Guinea, is a case in point: Conakry’s airport, located in one of the world’s poorest countries, outperforms France’s prestigious global hub in terms of cleanliness, service, and pride.

By amplifying such exemplars into a national project, Guinea could join the small group of commodity-rich countries that have bucked the curse of corruption and economic decay that often accompanies large natural-resource endowment.

Only a few have escaped the curse. But future is getting brighter:

History demonstrates the difficulty of avoiding the so-called “resource curse” – and that it does not plague only less-developed countries like Nigeria, as many assume. In the 1980’s, the United Kingdom’s North Sea-driven oil and gas boom undermined the country’s broad-based economic competitiveness, while Prime Minister Margaret Thatcher’s government wasted much of the revenue on handouts that encouraged excessive consumption.

While a handful of commodity-rich countries have managed to buck the curse, including Botswana, Chile, and Norway, they have, nevertheless, failed to diversify their economies, remaining dependent on natural resource-based exports. But history is not destined to repeat itself, and leaders of commodity-rich countries are seeking alternative futures.

He points to some examples in Africa where  things are indeed brightening.

Countries across Africa – including Ghana, Liberia, Mozambique, Rwanda, and Uganda – are showing early signs of success. Zambia recently issued a $750 million inaugural ten-year bond at an annual interest rate of 5.375%. Oversubscribed by 24 times, the issue will allow Zambia to borrow more cheaply than many European countries can.

Such developments reflect growing confidence in Africa’s economic prospects and, thus, in its ability to escape the resource curse. But these countries still face significant obstacles to development.

There are some challenges though like financing, balancing short term and long term goals. The critical aspect is political institutions:

Bucking the resource curse requires, first and foremost, strong, legitimate domestic political leadership, underpinned by effective institutional arrangements. But it also requires a global investment community – public, private, and mixed – that can move beyond short-term thinking, ideological bias, ignorance, and cynicism. After all, bets on leadership, vision, and earnings potential should not be limited to investments in California-based technology start-ups.

Guinea, which is making progress despite annual per capita income of roughly $450, exemplifies the potential of the world’s poorest countries to surpass expectations. Investors should take note.

Well some African economies have raised hopes in the past as well…Let’s see whether this time it is a true call..