From: Berhane Habtemariam (Berhane.Habtemariam@gmx.de)
Date: Fri Sep 25 2009 - 11:36:30 EDT
Will Africa be cursed by oil again?
Thu, 09/25/2009 - 4:00pm
By Eurasia Group analyst Philippe de Pontet
Major new oil finds in Uganda, Ghana, and Sierra Leone could bolster
government revenue, finance social spending, and lift entire communities out
of poverty -- or not. The resource curse is about to be put to the test
again in Africa, as each of these recent discoveries have the potential to
produce upwards of a billion barrels of crude. If the past is any indication
of things to come, these countries may live to rue the discovery of black
gold. But if they study the cases of other oil-cursed African nations --
Nigeria, first and foremost -- they may learn how not to manage the
windfall.
It has been 40 years since oil was found in the Niger Delta. Four decades,
$80 billion, and 134 billion barrels later, living standards have actually
fallen, amid environmental decay, rampant corruption, and a succession of
rebel groups that seem to get more violent with each new incarnation. Many
Nigerians are now convinced that true economic and political development
will only come after the last drop of oil has been pumped, not an imminent
prospect for a country with more than 30 billion barrels in reserves.
In the meantime, instability, the threat of sabotage, and oil bunkering have
taken offline half of the country's production capacity -- which totals
nearly 3 billion barrels per day -- and multinationals such as Shell are
seriously considering leaving. Angola, which currently chairs OPEC, has
dethroned Nigeria as sub-Saharan Africa's top oil producer and China's most
dependable supplier. Nigeria's downward trend is likely to continue over the
next 18 months as the election campaign heats up, unleashing a new cycle of
rent-seeking unrest in the Delta. If oil prices continue to rise and global
inventories tighten, Nigerian supply risk could again become a driver of
price spikes and volatility as in 2007.
Of course, Nigeria is not the only resource-cursed nation on the African
continent -- it's just exhibit A. On a smaller scale, the governments of
Chad, Equatorial Guinea, Sudan, and Gabon have all squandered billions of
dollars in oil revenues, with more money ploughed into Swiss bank accounts
and Mediterranean villas than into their own economies. Gabon's recently
deceased leader Omar Bongo amassed about a dozen palaces in France during
his 40 years in power -- properties that will be inherited by Gabon's new
President Ali Bongo if they aren't confiscated by French courts.
In Chad's case, a World Bank-mandated escrow account and strict 80 percent
earmark for social spending are not enough to prevent President Idriss Deby
from turning the revenues into his own bank account and financing vehicle
for war. Less perfidious, perhaps, but just as destabilizing in its own way,
is the case of southern Sudan, where oil provides more than 95 percent of
government revenues and less than 2 percent of jobs. Oil literally sucks the
oxygen out of the economy and undermines other sectors, such as agriculture,
where most people actually work, while turning the government into a
rent-seeking enterprise.
Turning back to the newest members of the oil club, Uganda, Ghana, and to a
lesser extent Sierra Leone are for now relatively well-governed and
reform-oriented nations at peace with themselves and their neighbors. Ghana
and Uganda are among Africa's perennial donor darlings -- if any countries
have a shot to break the curse, these are good candidates. Sierra Leone has
come a long way since the 1990s when the country was practically synonymous
with the phrase "blood diamonds." Sierra Leonians voted the opposition into
power last year in free, fair, and peaceful elections (much like Ghana).
What will oil wealth do for (or to) these countries? It's hard to say, but
maybe Ghana, Uganda, and Sierra Leone can break the resource curse--at least
they have clear models not to follow across the continent.
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