Paul Collier: Africa profiting from commodity boom, but good governance key to long-term success

Sub-Saharan Africa is benefiting from the massive commodity boom that has come to dominate world markets. The continent is profiting from its immense wealth in oil, minerals, agricultural products, wood and other commodities. But the past has shown that these booms are shortlived and most often don't benefit the poor - 'the bottom billion' - at all. The teeth of the 'natural resource curse' often bite after a few years of high commodity prices, and devour all the gains that were made earlier.

An age old question is how Africa can escape this curse. How can we, the highly developed world, help to make sure that the massive amounts of cash that are flowing in, benefit the African economies at large and permanently? Our international aid to African countries is dwarfed by what they are currently receiving from selling their commodities. So maybe we must focus far more on how the profits from this trade are used and distributed, instead of merely giving aid. This is exactly what professor Paul Collier urges us to do.

Collier is a renowned development economist known for his courageous attempts at bridging the gap between advocates of aid and those who prefer trade as a development paradigm. In his latest work, which he recently presented in a TED-talk, Collier focuses on how we can build international structures and simple rules that strengthen governance in resource rich developing countries. It is these rules and the good governance they promote, which are key to ensure that profits from commodities are invested in a responsible manner.

Biomass and biofuels have become such internationally traded commodities. And the potential for their production is greatest, indeed, in developing countries, most notably in Central Africa and Latin America. Millions of farmers there are already benefiting from the increased prices for agricultural products. And their future looks ever brighter, as oil prices keep increasing. But these current and future gains must be reinvested in rural and social development in these countries, else biofuels just become part of the larger natural resource curse. This is why all those involved in thinking about the biofuels industry's massive potential for poverty alleviation in the South, must take note of Collier's message.
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