The Africa Progress Report 2013 presented at the World Economic Forum on Africa created quite a media buzz. With its focus on natural resources — the extractive industries in particular — the report describes a continent “on the edge of enormous opportunity”:
Over the past decade, Africa’s economies have been riding the crest of a global commodity wave. Extractive industries have emerged as a powerful engine of economic growth. Surging demand for natural resources in China and other emerging markets has pushed export prices to new highs – and the boom shows no sign of abating. Africa’s petroleum, gas and mineral resources have become a powerful magnet for foreign investment. With new exploration revealing much larger reserves than were previously known, Africa stands to reap a natural resource windfall.
The challenge facing the region’s governments is to convert the temporary windfall into a permanent breakthrough in human development. Effective and equitable stewardship of Africa’s natural resource wealth could transform the region.
The report, Equity in Extractives, and more, are available on the Africa Progress Panel website.
I’m catching up on news and have come across another recent article about East Africa’s oil and gas development. Avoiding the Resource Curse in East Africa’s Oil and Natural Gas Boom, draws attention to a fundamental problem with oil and gas development across Africa: minimal job creation and little or no increase in power (electricity).
Can any government really call oil a “blessing” if it doesn’t bring employment and power to the population?
The author, Jill Shankleman, is a senior scholar at the Wilson Center and former senior social and environmental specialist at the World Bank. “Up to now,” she writes, “oil companies and governments in developing countries have worked on a narrow model of economic benefit. Oil companies produce oil (and gas) for export. The government gets a hefty share of the profit in the form of taxes and product. To a greater or (often) lesser degree, efforts are then made to open up employment and supply chain opportunities locally.
“Where this model applies in West Africa, it is typical to find huge, state-of-the-art oil and gas export facilities sitting alongside communities where people live in houses without electricity. People like me who are involved in community consultations always hear the same thing when we speak with locals: ‘Where are the jobs? And why are we living in darkness next to this place which is stealing our oil?’”
SweetCrude reports that an ExxonMobil spill off the coast of Nigeria is worsening:
THE oil spill near ExxonMobil oilfield off the coast of Ibeno, Akwa Ibom State, southeast of Nigeria has spread along the shore for about 15 miles, and locals said it was killing fish they depend on to live.
Mobil Producing Nigeria, a joint venture between ExxonMobil and the state oil firm, said this month it was helping clean up an oil spill near its Ibeno field in Akwa Ibom state, though it did not know the source of the oil.
I’m writing from Guangzhou, China, where I’m spending a few days working with the city’s Nigerian community. This work is not directly related to oil, although it’s not hard to make the connection. The corrosive impact of oil on the Nigerian economy (and society more generally) comes up again and again in conversations.
How many Nigerians have left their country because of its oil-generated “wealth”?
Cameroon’s oil industry doesn’t get much international attention these days, but like its neighbors the country has seen growing offshore activity over the last few years. After years of declining output, the country’s production levels are once again on the rise.
The Scottish company, Bowleven, has been drilling in Cameroon for several years now and its hits and misses usually get some coverage in the business press. Kosmos Energy, Perenco, Shell, ExxonMobil and Noble Energy, among others, are also actively drilling in the country.
Although Cameroon’s oil production levels are close to those of Ghana, there’s no talk of transparent revenue management in Cameroon. The country recently had its EITI candidacy status renewed for another 18 months. It should be noted that the country was already “close to compliant” in 2010 and hasn’t made much progress since. According to EITI rules, “If Cameroon does not achieve Compliant status by 15 August 2013, it will be de-listed.”
News today from Libya and Ghana.
Increasing the transparency of dealings regarding the ‘black gold’ that lies beneath Libya will be essential to ensuring balanced growth and employment for the Libyan people, but this will prove no mean feat. Given that pressure is unlikely to come from external governments, the incentives and pushes for reform will have to be generated domestically through civil society and a free media.
When getting rid of Gaddafi was so important for U.S./NATO, there was much talk about his abuse of the country’s oil wealth. Now that he’s out of the picture, it’s like, “who cares?” As long as the oil flows…
Nearly two weeks have passed since fishermen first spotted an oil slick offshore in the Jubilee field area. As they predicted when reporting what they had seen, the oil drifted to shore where it remained until local community members cleaned up the mess.
I’ve been trying to get more information on this spill, which according to someone at EPA, came from a tanker. There’s no way to know with any certainty that this is the case. All the information I have been able to get so far is unofficial. To date there has not been any official statement on the spill — either its source or the amount of oil spilled.
Meanwhile over in Accra, concerns are growing about the financial side of the oil business. I’m pasting an article from VOA below. The reporter writes that,”There remain serious risks the current boom will not be beneficial to most Ghanaians,” and continues with a description of ongoing problems.
Will the oil industry bring jobs to Ghana’s Western Region? And when job opportunities arise will locals be competitive?
If Ebow Haizel-Ferguson has his way, the answer to both questions will be yes. Haizel-Ferguson is one of the founders of Sigma-Base Technical Services, a job training center in Sekondi-Takoradi. My latest video dispatch from Ghana features Haizel-Ferguson and Sigma-Base students. It is online at the Pulitzer Center: http://pulitzercenter.org/video/ghana-oil-industry-jobs
Driving around Takoradi we noticed BBC banners up at busy intersections and roundabouts. “Oil: a blessing or a curse?” the banners asked. Funny, isn’t it, how we keep asking this question, when time after time oil production follows the same cue cards.
A new country gears up to join the petroleum producers’ club and the president along with a few top ministers loudly proclaim that this time, here, oil will be a blessing and not a curse. Promises are made, speeches are broadcast and then the oil ends up being a curse – at least for those at the bottom rungs of society, the people who desperately need jobs and pin all their hopes on the elusive black gold.
Oil isn’t a blessing, but it doesn’t need to be a curse, either. Seems like we need to move beyond this supernatural, good v. evil framework that really doesn’t move anything forward. Continue reading . . .
I haven’t posted anything in a while, as I’m in the midst of editing. I’ll post more material soon. In the meantime, here’s some news from the recent IMF staff mission to Chad (March 4-17):
“Economic activity remained sluggish in 2009, but inflation increased further, owing to food prices. Low rainfall, and therefore agricultural output, plus the trend decline in oil production led to a contraction in real GDP of about 2 percent. The bad harvest could imply food shortage for up to 2 million people (18 percent of the population). The need for additional food is estimated at between 80,000 to 100,000 metric tons, for which the government has requested external assistance.
“The global financial crisis affected Chad mainly through the ensuing decline in oil prices. The fiscal position deteriorated sharply in 2009 to a deficit of about 20 percent of non-oil GDP as the government maintained spending levels in the face of a fall-off in oil revenues by almost depleting its oil savings and borrowing from the central bank…Overspending on security and investment in 2009 absorbed an important part of the resources that had been lined up to finance the 2010 budget.”
Hardly looks good. Chad remains desperately poor, 18% of the population risks going hungry and the government can’t pay its bills. All this despite the benefits that oil brought to the country.
Money in, money out. I think this is what economists’ call the “resource curse”, you know, what wasn’t going to happen this time…