CAN POLICY INSTRUMENTS OFFSET THE 'RESOURCE CURSE' IN SUB-SAHARAN AFRICA? A CASE STUDY OF THE EXTRACTIVE INDUSTRIES TRANSPARENCY INITIATIVE

Abstract

The groundings of the 'resource curse' phenomenon have both been theoretically and empirically tested and the results are convincing, but yet contested. In order to offset the effects of the 'resource curse' in affected resource rich economies, several policy instruments have been proposed and implemented. However, little is evident on the outcome of the policies in offsetting the 'resource curse'. The Extractive Industries Transparency Initiative (EITI) is the most recent policy attempt formulated by the international donor community to facilitate greater contributions from the extractive industries sector to social development and poverty alleviation. The theoretical groundings of the initiative are the issues of 'good governance' and 'transparency'. The initiative is promoted as a unique collaborative effort between stakeholders to improve and monitor the issues of 'transparency' and 'accountability' and ensure 'good governance' throughout governments and the extractive industries sectors via the dissemination of information concerning the payments and revenue flows between them. Political endorsement of the initiative from both government and civil society institutions is growing alongside its advocated role within natural resource-led development.This study investigates the theoretical groundings justifying the EITI as a vehicle to offset the 'resource curse' in sub-Saharan Africa. The study questions if the initiative will be effective in achieving its mission of increased governance and transparency with a view to poverty alleviation, economic growth and social development. Using a comparative case study analysis, it observes in greater detail the circumstances within an EITI signatory country and critically assesses the likely consequences of the initiative's implementation. It suggests that the EITI policy initiative uses contentious conceptual grounds on which to explain and go about attempting to resolve the poor economic and social performance that have been characteristic of the extractive industries in resource rich developing countries, especially insub-Saharan Africa. In this research, Ghana's gold mining sector is presented as a case study since goldrich Ghana is one of the EITI signatory countries and the country displays many of the features and trends prevalent in resource rich developing economies. Yet, the country suffers from an uncoordinated sector development strategy; the consequences of which are evidently affecting the economy.Through a critical analysis, the study highlights the absence of required reciprocity, trust, tracking and transparency within and between all stakeholders involved in extractive industries, especially in natural resource-rich developing countries. It finds that such issues cannot by themselves amend the failure of rule-based and systematic governance and transparency. This very logic weakens the concept that only correcting these phenomena will result in the capacity of these resource-rich economies to alleviate the impoverished situations and surroundings they are in. Evidently, these situations and surroundings are equally, if not in the main, created and maintained by conveniently ignored externalities, especially policies, put in place by the same donor agencies that now support the EITI and have been pushing for itto be enforced as a lending conditionality.The research concludes, among others, that only an initiative based on the issues of 'good governance', 'transparency' and 'accountability' within extractive industries is not more than simply supporting a sound investment climate environment for incumbent stakeholders. Therefore, it is argued that adopting strategies towards ensuring those issues over considering the very sovereignty of the natural resources sector would not contribute in offsetting the prevailing exploitative environment in host countries. On the other side, the prime movers of these issues, for example, the international financial institutions and d

Date of Award	31 Dec 2010
Original language	English
Awarding Institution	The University of Manchester
Supervisor	Mohammad Farhad Hossain (Supervisor)