Date of Submission

Spring 2020

Academic Program

Economics

Project Advisor 1

Leanne Ussher

Abstract/Artist's Statement

The African continent is rich in resources yet still lags behind, in terms of economic development, in relation to a large portion of the world. There are mines all over the continent yet mineral ores leave the countries without a trace and nothing to show for the hard work it took to retrieve them. There are many factors that have led African countries to where they are now, but what if an improvement in; resource management, the ability to track property ownership, value added or environmental externalities at each step could help change things around. The countries would be able to avoid expropriation, theft, exploitation, degradation, slavery, war pillages etc. So how does one tackle this decades long problem, how about through something that has only surpassed a decade, blockchain technology. Blockchains are a form of distributed ledger technology (DLT) that is part of an ever growing phenomenon, a distrust of big governments, big business, big finance and big tech. This paper hopes to propose a way in which blockchain technology and resource management can go hand in hand, looking at Africa’s gem, Botswana, as a case study. Botswana is a perfect example of how resources can improve the country for the better. The mining of diamonds has been a pivotal part of the history of Botswana. Diamonds were able to transform Botswana from one of the least developed nations at its independence to being one of Africa’s few middle income countries. With the resource curse averted and with steady economic growth it is still worrying that Botswana ranks within the top 10 most unequal countries. .“In 2010, for instance, when the stated export value of diamonds is compared to the production value at mine-gate, over $438 million vanishes—an undervaluation of $19 per carat. ”(Sharife, 2016, p.81). This proposal shows how even Botswana could improve on their resource management to help the entire country progress into a more equally distributed society. This paper argues that the centralized private-public partnership of the Botswana diamond mining sector can be seen as being the root cause of the problem. While most remedies to the commodity curse have been government controls or industrial consolidation, which often lead to private or public sector monopolies, as these monopolies can withstand price volatility. They also lead to the expropriation of the surplus, lack transparency, result in bureaucratic kickbacks and corruption, are undemocratic, and most of the surplus is siphoned off into international tax havens rather than returning to the original owners of the buried treasure. Blockchain is a new technology and governance structure that gives hope for indigenous property rights, allows for decentralized coordination, offers the potential for a fairer distribution of the surplus, gives greater transparency to the process, can incorporate fines and records for environmental damage. It overall offers a way for the management of primary resources and their supply chain which has previously been left up to those in power. The centralized nature of the mining sector allows such a proposal to exist. By utilizing blockchain technology, Botswana can improve the value added on their diamonds through the transparency of blockchain, as well as the government and private sector being held accountable for any monetary loss that occurs through unmonitored agreements.

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