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.
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

Koreas Mark 61st Anniversary of War Armistice

Muted observances on both sides of heavily-armed Demilitarized Zone that separates two decades-long enemies More

Judge Declares Washington DC Ban on Public Handguns Unconstitutional

Ruling overturns capital city's prohibition on carrying guns in pubic More

Pricey Hepatitis C Drug Draws Criticism

Activists are using the International AIDS Conference to criticize drug companies for charging high prices for life-saving therapies More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Students in Business for Themselvesi
X
Mike O'Sullivan
July 26, 2014 11:04 AM
They're only high school students, but they are making accessories for shoes, fabricating backpacks and doing product photography - all through their own businesses. It's the result of a partnership between a non-profit organization that teaches entrepreneurship and their schools. VOA's Mike O'Sullivan and Deyane Moses met the budding entrepreneurs near Los Angeles.
Video

Video Students in Business for Themselves

They're only high school students, but they are making accessories for shoes, fabricating backpacks and doing product photography - all through their own businesses. It's the result of a partnership between a non-profit organization that teaches entrepreneurship and their schools. VOA's Mike O'Sullivan and Deyane Moses met the budding entrepreneurs near Los Angeles.
Video

Video Astronauts Train in Underwater Lab

In the world’s only underwater laboratory, four U.S. astronauts train for a planned visit to an asteroid. The lab - called Aquarius- is located five kilometers off Key Largo, in southern Florida. Living in close quarters and making excursions only into the surrounding ocean, they try to simulate the daily routine of a crew that will someday travel to collect samples of a rock orbiting far away from earth. VOA’s George Putic has more.
Video

Video Not Even Monks Spared From Thailand’s Junta-Backed Morality Push

With Thailand’s military government firmly in control after May’s bloodless coup, authorities are carrying out plans they say are aimed at restoring discipline, morality and patriotism to all Thais. The measures include a crackdown on illegal gambling, education reforms to promote students’ moral development, and a new 24-hour phone hotline for citizens to report misbehaving monks. Steve Sandford reports from Bangkok.
Video

Video Virtual Program Teaches Farming Skills

In a fast-changing world beset by unpredictable climate conditions, farmers cannot afford to ignore new technology. Researchers in Australia are developing an online virtual world program to share information about climate change and more sustainable farming techniques for sugar cane growers. As VOA's Zlatica Hoke reports, the idea is to create a wider support network for farmers.
Video

Video Airline Expert: Missile will Show Signature on Debris

The debris field from Malaysia Airlines Flight 17 is spread over a 21-kilometer radius in eastern Ukraine. It is expected to take investigators months to sort through the airplane pieces to learn about the missile that brought down the jetliner and who fired it. VOAs Carolyn Presutti explains how this work will be done.
Video

Video Treatment for Childhood Epilepsy Heats up Medical Marijuana Debate

In the United States, marijuana is classed as an illegal drug by the federal government. But nearly half the states have legalized it, to some degree. Proponents say some strains of marijuana might have exceptional health benefits, for treating pain or inflammation in chronic conditions such as cancer, multiple sclerosis and epilepsy. Shelley Schlender reports on a strain of medical marijuana developed in Colorado that is reputed to reduce seizures in childhood epilepsy
Video

Video Airbus Adds Metal 3D Printed Parts to New Jets

By the end of this year, European aircraft manufacturing consortium Airbus plans to deliver the first of its new, extra-wide-body passenger jets, the A350-XWB. Among other technological innovations, the new plane will also incorporate metal parts made in a 3-D printer. VOA's George Putic has more.
Video

Video AIDS Conference Welcomes Exciting Developments in HIV Treatment, Prevention

Significant strides have been made in recent years toward the treatment and prevention of HIV, the virus that causes AIDS. This year, at the International AIDS Conference, the AIDS community welcomed progress on a new pill that may prevent transmission of the deadly virus. VOA’s Anita Powell reports from Melbourne, Australia.
Video

Video IAEA: Iran Turns its Enriched Uranium Into Less Harmful Form

Iran has converted its stockpiles of enriched uranium into a less dangerous form that is more difficult to use for nuclear weapons, according to the United Nations’ Atomic Energy Agency. The move complies with an interim deal reached with Western powers on Iran's nuclear program last year, in exchange for easing of sanctions. Henry Ridgwell reports for VOA from London.

AppleAndroid