News / Africa

Can New Oil States in Africa Avoid the 'Resource Curse?'

An unidentified Shell worker pictured aboard the Bonga offshore oil vessel off the coast of Nigeria, Dec. 26, 2011. An unidentified Shell worker pictured aboard the Bonga offshore oil vessel off the coast of Nigeria, Dec. 26, 2011.
x
An unidentified Shell worker pictured aboard the Bonga offshore oil vessel off the coast of Nigeria, Dec. 26, 2011.
An unidentified Shell worker pictured aboard the Bonga offshore oil vessel off the coast of Nigeria, Dec. 26, 2011.
TEXT SIZE - +
Gabe Joselow
NAIROBI - When Equatorial Guinea discovered oil in the 1990s, the country was transformed forever from a sleepy former Spanish colony into an oil state.

The country's Gross Domestic Product growth was a staggering 71 percent in 1997, according to the International Monetary Fund, almost entirely on the back of oil revenues.  By 2009, the country was earning more than $8 billion a year from the commodity.

But the wealth has only further enriched and entrenched Equatorial Guinea's authoritarian president Teodoro Obiang Nguema Mbasogo, who's held power for more than 30 years, while doing little to improve the lives of 685,000 citizens.

Equatorial Guinea's oil resources
Equatorial Guinea's oil resources
The country ranked 136 out of 187 countries last year on the United Nations Human Development Index.  Other oil-producing countries, including Angola, Sudan and the Democratic Republic of Congo,  rank even lower.

The head of the Africa Program at Chatham House in London, Alex Vines, says citizens lose out when African governments misuse oil revenues for consumption, rather than development.

"Prestige buildings, luxury goods, these have been really the kind of caricature of how countries have used this,” he says.  “Gabon, for example, had the highest consumption of champagne in the world for a while, all funded by oil."

Managing expectations

A growing gap between rich and poor, rampant corruption and the tightening grip of authoritarian leadership are all symptoms of the so-called "resource curse," when a discovery that should benefit the population ends up doing more harm than good.

"The thing about oil and minerals is that very quickly, huge, fast flows of money come from these natural resources and the ability to manage that in a way that benefits citizens isn't always in place," says Brendan O'Donnell of the natural resources monitoring group Global Witness.

New oil finds in Kenya and the Ivory Coast and natural gas off the coast of Tanzania have generated a lot of excitement in recent months, with countries touting the discoveries as a point of pride.

“I think it's a bit like in the old days when each country wanted its own airlines,” says Vines of Chatham House.  “Certainly reading some of the Kenyan press, some of the euphoria about Kenya now having oil was a bit worrying I think.”

Even countries that are relatively new to the oil game have shown some disconcerting behavior.

Uganda discovered oil in 2006 and is due to begin production in three to five years.  But a lack of transparency in oil contracts is raising concerns the government is not acting in the people's best interests.

"There was a lot of talk and expectations last time, and the information available on the oil sector is not enough,” says Lawrence Bategeka, senior researcher at the Economic Policy Research Center in Kampala.  “Not enough information is being released to the public."

Uganda's parliament has been seeking to force the government to disclose the details of oil contracts signed with international companies.

Bategeka says citizens are unhappy with the government's reluctance to cooperate.

"But of course government has an explanation,” he says.  “When asked 'Why conceal information?'  They allude to security concerns, but the public out there does not accept that as a good explanation."

Window of opportunity

Discovering oil is not like winning the lottery.  The industry is sensitive to the whims of the international markets and demand from Europe, Asia and North America.

Chief economist and Vice President of the African Development Bank Mthuli Ncube says with current oil prices relatively high, oil-producing countries in Africa have done well in recent years, and recovered from losses suffered during the global financial crisis three years ago.

“But going forward,” he says, “with the softening of oil price, maybe even the slowdown of economic growth in China, that obviously could affect the growth prospects of the countries.”

In Angola, where the oil industry accounts for 90 percent of economic output, the government accumulated some $9 billion in contractor arrears during the peak of the financial crisis in 2009.

Ncube's first word of advice is to diversify.

He says economies must not become reliant on one commodity, noting progress in Nigeria, Africa's biggest oil exporter.

“[Nigeria's] been diversifying slowly but surely,” he says. “In the IT sector, services sector and agricultural sector, they're competing with the oil sector in terms of size and contribution.”

O'Donnell with Global Witness says resources management safeguards are not just about promoting social benefits, but also about making the most of an economic opportunity.

"These resources have a lifespan, they will run out at some point,” he says.  “If your country misses the opportunity of benefiting from the resources, you can't get that back.  You've lost that moment."

You May Like

Video Pope Francis Hopes Dual Canonizations Will Reconcile Church

John the XXIII and John Paul II will be made saints in a ceremony at St. Peter’s Square on April 27 More

Thailand Reacts to Plots Targeting Israelis

Authorities hope arrest of two Lebanese suspects will disrupt plot to attack young Israeli tourists More

Video In Capturing Nature's Majesty, Film Makes Case for Its Survival

'Once Upon a Forest' takes viewers deep into heart of tropical rainforest More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Pope Francis Hopes Dual Canonizations Will Reconcile Churchi
|| 0:00:00
...
 
🔇
X
Jerome Socolovsky
April 22, 2014 4:14 PM
On April 27, two popes - John the XXIII and John Paul II - will be made saints in a ceremony at St. Peter’s Square. VOA religion correspondent Jerome Socolovsky says the dual canonization is part of the current pope’s program to reconcile liberals and conservatives in the Roman Catholic Church.
Video

Video Pope Francis Hopes Dual Canonizations Will Reconcile Church

On April 27, two popes - John the XXIII and John Paul II - will be made saints in a ceremony at St. Peter’s Square. VOA religion correspondent Jerome Socolovsky says the dual canonization is part of the current pope’s program to reconcile liberals and conservatives in the Roman Catholic Church.
Video

Video In Capturing Nature's Majesty, Film Makes Case for Its Survival

French filmmaker Luc Jacquet won worldwide acclaim for his 2005 Academy Award-winning documentary "March of the Penguins". Now Jacquet is back with a new film that takes movie-goers deep into the heart of a tropical rainforest - not only to celebrate its grandeur, but to make the case for its survival. VOA's Rosanne Skirble reports.
Video

Video Boston Marathon Bittersweet for Many Runners

Monday's running of the Boston Marathon was bittersweet for many of the 36,000 participants as they finished the run that was interrupted by a double bombing last year. Many gathered along the route paid respect to the four people killed as a result of two bombings near the finish line. VOA's Carolyn Presutti returned to Boston this year to follow two runners, forever changed because of the crimes.
Video

Video Pacific Rim Trade Deal Proves Elusive

With the U.S.-led war in Iraq ended and American military involvement in Afghanistan winding down, President Barack Obama has sought to pivot the country's foreign policy focus towards Asia. One aspect of that pivot is the negotiation of a free-trade agreement among 12 Pacific Rim nations. But as Obama leaves this week on a trip to four Asian countries he has found it very difficult to complete the trade pact. VOA's Ken Bredemeier has more from Washington.
Video

Video Robotic Mission Kicks Up Lunar Dust

A robotic mission to the moon was deliberately crashed onto the lunar surface late last week, but not before scientists had collected data gathered by the spacecraft which was designed to self-destruct. VOA's Rosanne Skirble reports on the preliminary findings of the craft, called LADEE - an acronym for Lunar Atmosphere and Dust Environment Explorer.
Video

Video Boko Haram Claims Responsibility for Bombing in Nigerian Capital

The Nigerian militant group known as Boko Haram has claimed responsibility for a bombing in the capital on April 14th that killed 75 people. In the video message, Abubakar Shekau, the man who says he ordered the bombing, says nothing about the mass abduction of more than 100 teenage girls, most of whom are still missing. Heather Murdock has more for VOA from Abuja.
Video

Video Ukraine Developments Hang Over Obama Trip to Asia

President Barack Obama's trip to Asia this week comes as concerns over Beijing's territorial ambitions are growing in the region. Those concerns have been compounded by Russia's recent actions in Ukraine and the possibility that Chinese strategists might be looking to Crimea as a model for its territorial disputes with its neighbors. VOA's Bill Ide has more from Beijing.
Video

Video Autistic Adults Face Housing, Job Challenges

Many parents of children with disabilities fear for the future of their adult child. It can be difficult to find services to help adults with disabilities - physical, mental or emotional - find work or live on their own. The mother of an autistic boy set up a foundation to advocate for the estimated 1.2 million American adults with autism, a developmental disorder that causes communication difficulties and often social difficulties. VOA's Faiza Elmasry reports.
AppleAndroid