Role Of Mineral Resources In African Conflicts Economics Essay

Mineral resources plays very significant role in the economic development of any nation , but however, these same resources have contributed in various conflicts that have engulfed some mineral – rich African States over the last decade, both in encouraging and magnifying conflicts. Revenues realised from the exploitation of mineral resources are not only used for sustaining conflicts, but are also used for personal enrichment and building political support. [] 

This paper attempts to explain the connection between mineral resources and conflict with references to DRC, Sierra Leone and Angola. This chapter provides a background of the research focus, details of the objective of the study and outlines of the hypotheses in the study.

1.2 Background

Mineral resources are not the main source of conflict in Africa, but they make conflict inevitable. However, the availability of abundant resources in low-income African countries increased the risks of conflict, prolonged and difficult to resolve. [] However, revenues realised from the exploitation of these resources have financed various conflicts in many countries across Africa regions. When conflict begins , it does not only destroys years of developmental efforts but also creates costs and consequences in the form of economic, social and political that go on for a very long time. Also where countries manages to avoid conflict, large rents from mineral resources can weaken various structures and cause governments unaccountable, thereby leading to emergence of rebellions and civil wars. [] 

The struggle for control and exploitation of mineral resources has been a very important element in all the conflicts in Africa. [] In other words, many conflicts arise over mineral resources, which are getting scarce across the globe, but if these resources are properly managed, conflicts will reduce considerable in Africa. [] 

The relationship between mineral resources and conflicts is a very difficult issue; however, mineral resources are becoming increasing important with reference to the understanding of conflicts. Resource scarcity and abundance play a role in the origins and dynamics of conflicts. [] 

We can also state that the mineral industry has been engulfed in conflicts more than any other industry in Africa. The resources are usually located in remote areas of every region in most countries, forming an island of wealth in the midst of abject poverty. [] 

Research Question

The research questions to be addressed in this paper are the following;

Are there any link between mineral resources and conflicts in Africa?

If yes, to what extent ?

How do these resources connect to these conflicts?

Research Objectives

The objective of this paper will aim to address the research question above and also examine the role of these resources in some selected African States of DRC, Sierra Leone and Angola. Providing a case study of three countries allows the paper to explore whether there is a link between mineral resources and conflict.

Research Methodology

This paper will use secondary data collection strategies. We would apply an inductive and qualitative approach to gradually structure the research findings and establish a theoretical link between mineral resources and conflicts in African states.

Research Hypothesis

Six hypotheses were postulated to help in examining the role play by mineral resources in the conflict of some African states. They are as follows;

H1: Mineral resources increase the likelihood of a conflict in some mineral rich African countries by enabling militants to raise money either by extracting and selling the resources directly or by extorting money from others who do.

H2: Mineral resource wealth increases the likelihood of conflict in some mineral – rich African countries by causing grievances over insufficiently compensated land expropriation, environmental degradation, lack of employment opportunities and labour force migration.

H3: Mineral resource wealth increases the likelihood of conflict in some mineral – rich African countries by giving residents in resource- rich areas an incentive to form a separate state.

H4: Mineral resource wealth is likely to increase/decrease the duration of conflicts when it provides finances to the weaker (stronger) side.

H5: Mineral resource wealth increases the likelihood of conflict by increasing the chances of foreign intervention to support rebel movement.

H6: Mineral resource wealth increases the likelihood of conflict by enabling the militants to sell future exploitation rights to minerals they hope to capture.

1.7 Layout of the Remaining Parts of the Paper

To enable us make an effective connection between mineral resources and conflicts in African states, the remaining parts of the study are set out as follows,

Chapter two provides a review of the related literature by looking at the theoretical framework and examining mineral resources and conflict, mineral resource dependence and governance and finally mineral resource and secessionist movement.

Chapter three expands on the analysis in chapter two, with particular attention to the trade in conflict diamond, by considering country by country analysis.

Chapter four outlines and examines various possible hypotheses that connect mineral resources and conflict in Africa States.

Chapter five presents conclusion and policy recommendation on ways of averting future conflict.

1.8 Conclusion

This chapter has outlined the key hypotheses and focus of the paper, and presented a framework for the study that will allow a theoretical establishment of the link between mineral resources and conflict in African states. This theoretical framework is however developed through a review of literature presented in chapter 2.

CHAPTER TWO

LITERATURE REVIEW

2.1 Introduction

In this chapter, we will review related literatures on the mineral resources and conflict, mineral resource dependency and economic performance, mineral resource dependency and governance and finally mineral resource abundance and secessionist.

2.2 Theoretical Framework

The links between mineral resources and conflict was divided into three categories namely; the resource curse, resource conflicts and conflict resources. While it is difficult to draw a borderline, each of them points to different dynamics. [] 

The Resource Curse: these points at the negative effects of resource wealth at the national level such as negative economic growth, embezzlement of funds , dictatorial rule, and unstable domestic politics. [] The neglect of other sector of the economy due to the overvaluation of the currency and rent seeking prevent the growth of a middle class. The dominance of the mineral sector renders the economy vulnerable to the volatility of its prices on the world market, which makes planning difficult and further exposes mineral resource rich country to boom and bust cycles. This vulnerability can create potential ground for conflict. [] 

In other words, countries that are most vulnerable to conflict as a result of mineral resources are low per capita income, declining economic growth rate, weak state capacity and political regimes that are always in transition. [] 

At a lower level, in the mineral resource-dependent countries, citizens have few economic opportunities outside of the mineral sector; they often rely on the public sector that is corrupt and look for avenues to express their concerns because of the situation in their state, all these leads to conflicts. [] 

Resource Conflicts: arises as a result of efforts to take control of the finite pool of mineral resources. Such mineral resource conflicts are made up of livelihood conflicts that is mostly connected to renewable resources and natural resources security mostly connected to non-renewable such as strategic minerals. [] Therefore, resource conflicts arise as a result of the importance of the minerals in question whether it is renewable or non-renewable, and also because of the various actors’ claims on these resources. [] 

Conflict Resources: Under this scenario resources are link to conflict because they present an opportunity for individual enrichments and profit for organization. The higher the value of the resources, the more attraction it is to agents with economic agenda, who are willing to take up arms and/or to instigate or force others to do so, to enable them have access to the resources and the profits, arising from extracting and selling of the resources. [] 

2.3 Mineral Resources and Conflicts

Mineral resources play a very important part in causing, prolonging and financing conflicts. [] One of the major cause of conflict is as a result of the way the resources are extracted, the revenues from the sector are distributed and also how the local people where the resources is domiciled are involved in decisions making regarding the development of their area. [] 

Table 1: Conflicts Connected to Mineral Resources (1991-2001)

Resources

Duration

States

Diamonds

1976–2002

Angola

Gems, Opium

1977–2001

Afghanistan

Gold

1983

Colombia

Timber, Gems

1978–1997

Cambodia

Cobalt Copper, Coltan, Diamonds, Gold

1997–1998

Democratic Republic of Congo(DRC)

Gold, Copper

1968–

Indonesia

Diamonds, Timber, Iron

1988–1996

Liberia

Tin,Gems,Opium, Timber

1948–

Myanmar

Gold, Copper

1987–

Papua New Guinea

Diamonds

1990–2001

Sierra Leone

Source: Ross, M.(2008): “The Natural Resource Curse: How wealth can make you poor” See http://wwwwds.worldbank.org/serviet/WDSContentServer/WDSP/IB/../

(Last visited on 2nd January, 2010)

There are different ways through which mineral resources lead to conflict, their impact on economies, their impact on governments, their impact on citizens living in resource – rich countries and also their impact on the militants. They are examined in details as follows;

2.3.1 Mineral Resources Dependence and Economic

Performance

Mineral resource dependence makes countries more vulnerable to conflict through two economic impacts, a decline in growth and a rise in poverty.

Economic Growth: The abundance of mineral resources is more likely to cause economic concerns. It was found that mineral resource dependent countries grow more slowly than mineral resource poor countries. [] The economic performance of various countries that have very large deposit of minerals have GDP per capital declined at an average of 3.1 percent a year, compared to countries with medium size mineral resource GDP per capital reduced at an average of 1.1 percent a year. [] This is a very bad record on economic front alone, but it also has impact for the vulnerability of these countries to conflict. [] When a country’s growth rate is negative, there is the tendency that conflict will be unavoidable. [] For example, three years leading to the conflict in Democratic Republic of Congo (DRC), the GDP growth averaged -6.56 percent, Congo Republic’s conflict growth rate was -2.94 percent, and on the eve of Liberia conflict growth rate -1.25 percent. [] This goes to proof that mineral resources of a country are affected in period of conflict, thereby making the economic growth of that country to decline.

Poverty: The total reliance of non fuel mineral exports by any country leads to a high rate of poverty. This is due to the fact that, mineral resources -rich countries find it very difficult to provide education and health care for its citizens. [] In other words, there is a strong link between total reliance on mineral exports and child mortality rates. This is very worrisome, and has the consequences for a country vulnerability to conflict. Therefore, the higher the poverty rate of a country, the more likely it is to conflict. [] Subsequently, it would not be surprise that citizen is more likely to revolt against the state, when the economic growth is negative. [] 

It is easier to recruit new members into the rebel groups when poverty and unemployment are high, since the prospect of fighting and looting seems more attractive. [] 

The table below lists the world’s 20 (twenty) most mineral resources dependent countries.

Table 2: Mineral Resources – Dependent Countries:

Rank

Country

Dependence (%)

1

Botswana

36

2

Sierra Leone

29

3

Zambia

27

4

United Arab Emirates

19

5

Mauritania

19

6

Bahrain

17

7

Papua New Guinea

15

8

Liberia

13

9

Niger

13

10

Chile

12

11

Guinea

12

12

DRC

8

13

Jordan

7

14

Bolivia

6

15

Togo

6

16

Central African Republic

5

17

Peru

5

18

Ghana

5

19

Bulgaria

4.5

20

Angola

4

Source: Source: Ross, M. (2008): “The Natural Resource Curse: How wealth can make you poor”. See http:/www/wds.worldbank.org/serviette/WDSContentServer/WDSP/IB/..

(Last visited on 2nd January, 2010)

Incidentally, 12 of the 20 countries are classified as highly indebted poor states, the most troubled countries despite the fact that they earned a large amount of foreign exchange from the sales of their mineral. From 1991, seven countries of the twenty (20) countries have had several conflicts. [] 

2.3.2 Mineral Resource Dependence and Governance

The dependence on mineral resources has an effect on governance. An effective state government ought to tackle the various economic and social problems as a result of dependence on mineral resource. Instead, mineral resource influences governments, making it impossible for them to resolve conflicts and also more likely to escalate them. Occurrences of these are in three ways, corruption, state weakness, and reduced accountability. [] 

Corruption: When a state receives more of its revenue from minerals and timber, they are most likely to be corrupt. One of the causes is due to the volume of mineral resource revenues government can absorb and effectively track is limited. The revenue from mineral resource flood government with more money than they could handle very well. Another cause of this corruption arises from the uncertainty of the mineral resources; the sudden increase and decrease in the flows of revenues distort the normal budgeting processes and weaken state institution. [] 

However, there are many examples especially in African countries; resources are linked to corruption, where billions of dollars are reportedly disappeared from the state accounts. [] 

Weak Government: The wealth from mineral resource unfortunately weakens governments- making them incapable of settling conflict and providing health care and education to the citizen. This occurs in two ways, the first is by weakening the government’s territorial control. In other words, if a state owns a resource that is valuable and easy to mine such as alluvial gemstones and minerals like coltan and tanzanite- then the government will find it very difficult to secure the extractive region. Subsequently, this gives room for criminal activities to increase and eventually challenged the government. [] 

The second way is by weakening the government’s bureaucracy. This occurs when the state increase their revenues from minerals instead of taxes, they subsequently fail to establish a form of bureaucracy that can intervene effectively in conflicts. The result of this, will lead to a conflict. [] 

Unaccountable Government: Most state government that get their revenue from mineral resources are often undemocratic and unaccountable, compared to other state government that usually rely on other sources of revenue like taxation. This is due to the fact that, government with abundance of revenue from mineral resources most likely use them to stop dissident, both by distributing the money as patronage and building up its own domestic security forces. Various studies have shown that, mineral resource rich states spend unusually large sums of money on their military forces.

Another reason is corruption earlier mentioned, instead of serving and ruling the citizens equally, corrupt state government only favour the wealthy since the poor cannot afford to pay patronages. The third reason is through involvement of the military. In some states, the military manages or control the mineral resource industries, therefore having greater influence over the civilian government. [] 

The problem that mineral resource dependence does to democracy is a very sad one; this is because it always makes the country vulnerable to conflict. State that are not democratic will not be able to resolve the grievances of their citizens and hence very prone to potential conflict. [] When state governments are unstable, corruption persist or flourish, then governments cannot manage their economies well. Countries that fall into these categories, the outcome eventually leads to conflict – for example, DRC, Sierra Leone and Angola. [] 

2.3.3 Mineral Resource Abundance and Secessionist

Movements

Mineral resource wealth is most likely to promote conflicts by granting citizens that reside in mineral resource-rich areas an economic incentive to form a separate state.

Table 3: Secessionist Movements and Mineral Resources

(1950 to Date)

Country

Region

Duration

Resources

DRC

Katanga/Shaba

1960 – 65

Copper

Indonesia

West Papua

1969-

Copper, Gold

Myanmar

Hill tribes

1949-

Tin, Germs

Papua New Guinea

Bougainville

1988-

Copper, Gold

Morocco

West Sahara

1975-88

Phosphates

Source: Source: Ross, M. (2008): “The Natural Resource Curse: How wealth can make you poor”. See http:/www/wds.worldbank.org/serviette/WDSContentServer/WDSP/IB/..

(Last visited on 2nd January, 2010)

The table 3 above shows five secessionist conflict in region that has a large deposit of mineral resources. [] These mineral resource-control agitators have common elements. First, before the exploitation of the mineral resource, people in those areas had a special features – be it ethnics linguistic, or religious that bring them out from the majority of the population. Secondly, there is also the belief that the government at the centre was not treating them very well in respect of the sharing of resource wealth that belongs to them, and that they would be richer if they have a separate state. [] Finally, the cost of the extraction process due to land expropriation, environmental damage and the immigration of labour force from other parts of the country are bore by the local people. [] 

2.4 Conclusion

This chapter has presented an in-depth review of literatures on the role mineral resources play in conflict. It was found that mineral resource dependence promote conflict through four types of effects; by damaging a country’s economic performance, by weakening the government, increase in corruption and less accountability, also by giving people who reside in mineral resource rich area an incentive to agitate for an independent state; and by assisting in financing militants. The literature was then revisited by further examining the trade in conflict diamonds in Chapter 3.

CHAPTER THREE

TRADE IN CONFLICT DIAMONDS

3.1 Introduction

Diamonds have provided funding for various conflicts in Africa, leading to deaths and displacement of millions of people. Conflict diamonds are diamonds that comes from areas controlled by forces opposed to the central government, and are used to sponsor military action in opposition to that government. [] “Blood diamonds” have had serious impacts and been blamed for various conflicts in DRC, Sierra Leone and Angola. [] Each of these conflicts and their approaches at cutting the finance of the militant groups will be examined in this chapter.

3.2 Case by Case Analysis

In this section, we will examine various analysis aimed at stopping the finances provided to militants through the illicit diamond trade, in each of the conflicts in the Democratic Republic of Congo (DRC), Sierra Leone and Angola.

3.2.1 The Democratic Republic of Congo (DRC)

Exploitation of mineral resources in DRC has been a common phenomenon over a century. [] The plundering of these resources has been in the hands of the country’s neighbours. Seven African countries of Rwanda, Uganda, Zimbabwe, Angola, Namibia, Chad and Sudan sent troops into DRC in 1998, and despite the signing of the Lusaka ceasefire agreement in 1999 by the warring states, the DRC remains divided into three parts, with both the government and rebels continuing to enjoy military support from its neighbours. [] And one of the major reasons why the foreign troops remained in the country was because of diamonds. [] 

Therefore it was concluded that the conflict has become mainly about access, control and trade of five key mineral resources: coltan, diamonds, copper, cobalt and gold. Illegal exploitation of minerals is always at an alarming rate in DRC. [] Statistics revealed that, even though Uganda, Rwanda and Burundi are not diamond producers, they are all exporting diamonds. [] The UN recommendation of an embargo to be placed on diamond exports from these countries was not heeded. [] 

The DRC is the third largest producer of diamonds in the world after Australia and Botswana, and also the largest producer of alluvial diamonds. During its 5 year war, diamonds provided financing for warring factions as well as an incentive to prolong the instability. [] However, it is believed that rebel group still retain control of some of DRC’s diamond rich areas. The implementation of Kimberly Process Certification Scheme (KPCS) combined with a liberalization of the diamond sector corresponded with and contributed to an official end to the war in 2002. [] 

3.2.2 Sierra Leone

Diamonds are important source of foreign exchange and tax revenue to the country during the 1970s, but the country was caught with internal conflict throughout 1990s. The official exports of diamonds during this period was USD1.3 million in 1999 which is a tiny fraction of an industry estimated output of USD80million, while the rest is lost to illicit trade and criminal activity. [] 

The Revolutionary United Front (RUF) in this country sponsored rebellion between 1992 and 2000 mainly with smuggled diamonds. During this period, many people were killed while half of the country was displaced. Diamonds provided the resources to rebels with which to purchase arms from Europe and neighbouring countries like Liberia. [] 

However, in 1999 the RUF and the government signed a Lome Peace Accord, committing themselves to an end to hostility, granting of RUF full amnesty and legalized control of diamond resources. [] The export of diamond from Sierra Leone contributed to the high incidence of conflict. [] This is because they are seen as loot able resource because it can be mined easily and low transportation costs, compared with total value. Diamonds helps the rebels to buy arms, make friends and external support, and serve as store for wealth. [] 

3.2.3 Angola

The conflict in Angola was on and off for more than thirty (30) years. The militant group controlled about 70 percent of the country and prosecute most of its activities through the resources from diamond trade. It was estimated that the group generated USD4.7 billion between 1991 and 2000 almost 10 percent of global production of rough diamonds by value. [] 

The world first officially recognized the part played by diamonds in

escalating conflicts in Angola, when the UNSC resolution in 1998 provided

for an embargo against UNITA diamonds by banning all diamonds from

Angola that were not controlled by the legitimate government. [] The

government aimed at gaining greater control over the diamond industry by

initiating that, the country gave up all marketing rights of diamond to

AsCorp as an official diamond monopoly. [] The government also signed a

structural cooperation agreement with Belgium’s High Council, introducing

import confirmation certificates and agreeing to exchange of data, technical

assistance and research about the characteristics of Angolan Diamonds.

The aims of these initiatives was to eliminate the chaos of the domestic

diamond market and channel it through an official, transparent outlet and

increase the revenue for the state. [] Since then, the government has initiated a

number of efforts aimed at eliminating the illicit trade in diamonds. Among

these are policing of buyers, gathering of intelligence on smuggling rings,

stopping of smugglers at the airport and the expulsion of more than 300,000

illegal foreign nationals from the diamond regions.

3.3 Conclusion

This chapter has reviewed the activities that have characterise trading

in conflict diamond in Africa with a case by case study of DRC, Sierra

Leone and Angola. In the next chapter, we shall examine the hypotheses

already postulated about the role of mineral resources and the conflict

in Africa.

CHAPTER FOUR

ANALYSIS OF HYPOTHESES

4.1 Introduction

In this chapter we described the six (6) testable hypotheses about the mechanisms that connect mineral resources and conflict in some mineral rich – African Countries.

4.2 Hypotheses Analysis

The six (6) hypotheses below account for mineral resource – based conflicts. Certain types of mineral resources can indeed influence the onset and duration of conflicts.

4.2.1 Hypothesis 1

H1: Mineral resources increase the likelihood of a conflict in some mineral rich African countries by enabling militant to raise money either by extracting and selling the resources directly or by extorting money from others who do.

The most important financing opportunities for militants come from exportable mineral resources, if they can extract and sell resources or extort money from those who do, and then they are likely to launch a conflict. [] It is also observed that mineral resources offer militants unusual financing opportunities; because resources produce rents and are location-specific. Countries that rely on mineral resources face likelihood of a higher risk of conflict. [] 

Therefore we accept this hypothesis, by concluding that the militant raise money, prior to the start of the conflict through the extraction and sale of mineral resources and from the extortion of mineral resource companies. [] 

4.2.2 Hypothesis 2

H2: Mineral resource wealth increase the likelihood of conflict in some mineral rich-African countries by causing grievances over uncompensated land expropriation, environmental degradation, lack of employment opportunities and labour force migration.

Mineral resources extraction causes grievances among the local citizens, because of land expropriation, environmental degradation, lack of employment opportunities and social dislocations caused by labour force migration, all of these leads to conflict. [] It was also found that, resource conflicts are caused to some extent by mining companies that are destroying the environment and chasing off the local indigenes of the area and depriving them their benefits from the appropriation of their traditional lands. [] 

4.2.3 Hypothesis 3

H3: Mineral resource wealth increase the likelihood of conflict in some

mineral – rich African countries by giving residents in resource- rich

areas an incentive to form a separate state.

The mineral resource wealth located in a remote area of ethnic minority

population, will give the local residents a financial incentive to establish a

separate state, hence raising the risk of a conflict. [] 

4.2.4 Hypothesis 4

H4: Mineral resource wealth is likely to increase/decrease the duration of conflicts when it provides finances to the weaker (stronger) side.

If the weaker side (say militants) in a conflict get additional funding, the conflict will be prolonged, and on the other hand if the stronger side (say the government) gains additional resources, the conflict will be shortened. [] 

In other words, there is evidence that one of the sides raised money from the resource sector either through looting, extortion or other means. But if both side raised money from the resource sectors simultaneously, the net impact will be to lengthen the conflict. [] Rebel groups in Angola, Sierra Leone, DRC and other places in mineral rich African countries amass wealth through the sale and exchange of diamonds. Economic interest does not only shape the conflict, but if it outweighs peace, then the conflict will be perpetual. [] 

4.2.5 Hypothesis 5

H5: Mineral resource wealth increases the likelihood of conflict by

Increasing the chances of foreign intervention to support rebel movement.

In Sierra Leone, Liberia under the leadership of Charles Taylor supported the 1992 RUF invasion, so as to gain control of the Sierra Leone’s diamond fields. [] Similarly, the governments of Rwandan Ugandan also organize and fight on the side of the rebels in DRC, because of the country’s resource wealth. [] Inside the DRC, the army of Rwanda set up well disciplined methods for extracting Congolese mineral resource and using the revenue to fund the military effort [] .

4.2.6 Hypothesis 6

H6: Mineral resource wealth increase the likelihood of conflict by enabling

the militants to sell future exploitation rights to minerals they hope to

capture.

The government of Sierra Leone save itself from defeat twice by selling off the exploitation right of diamond fields they are yet to control, and transferred it to Branch Energy, South African Company. The government used the proceeds to hire a South African mercenary firm. The outcome was to beat back the RUF offensive and recaptured the mortgaged diamond fields. [] 

4.3 Conclusion

This chapter has highlighted several hypotheses about how mineral resources may influence a conflict. Therefore this is however a good evidence that mineral resource wealth is linked to conflict in mineral rich-African countries.

CHAPTER FIVE

CONCLUSION AND RECOMMENDATION

5.1 Introduction

This chapter documents the conclusion drawn from the study and recommend strategies for averting future conflicts in mineral rich – African countries.

5.2 General Conclusion

Mineral resource wealth and armed conflict especially in African countries gained prominence a decade ago with so many conflicts that was resource- related in countries like -Sierra Leone, Liberia, DRC, Cote d’Ivoire and Angola, this was as a result of militants ambition and greed and also lopsided policy developments aimed at isolating the militants groups that was involved in the resource trade. [] 

An emergent conclusion is therefore that mineral resource play a very important role in most of the violent conflict in Africa.

5.3 Policy Recommendation

The following recommendation should be adopted to avert further resource related conflict, they are as follows;

Curbing Conflict Financing: Effort should be made to stop financing conflict.

War Economies: Good jobs and income generating activities for the citizenry should be established, with special re-integration and rehabilitation of the militants.

Fiscal Transparency: The disclosure of mineral resource revenues by the government and companies must be a condition for the stoppage of resource related conflict.

Conflict-Sensitivity Business: The companies in the mineral industry should undertake the impact of conflict assessments of their activities prior to starting and throughout the period of their operation.

They should also adopt a continuous conducive engagement and dialogue with local communities and also with stakeholders such as NGOs, UN agencies and government representative to reduce the chance that their activities will provoke local tensions.

Prior conflict impact assessments should also be made a requirement for all the financing of extractive projects in conflict areas.