ESG Focus: Foreign Direct Investment in agribusiness - a new resource curse for Africa?

For decades, extractive industries have been an important part of the economies of a number of African countries. The diamonds of Botswana and the oil of Libya and Nigeria have powered national income. Untapped natural resources are now coming on-stream as prices soar to levels that make extraction economically viable, even when factoring in high local risk premia, such as the political risks prevalent in the Democratic Republic of the Congo. A key challenge for countries that begin to utilise new resource wealth is to govern this new income in a sustainable and equitable way. Nigeria has faced tremendous problems with civil unrest and corruption as competing parties struggle to gain access to the substantial short-term wealth generated from the oil industry. Other economies driven by hydrocarbons, including Libya, have experienced unrest and revolutions, their populations being dissatisfied with their governments' use of commodity-derived national budgets.