OIL: Africa’s pipeline to prosperity?

Ian Gary, Senior Policy Manager for Extractive Industries at Oxfam America, joined me at Amherst College on December 8th for a screening and discussion on Africa’s oil challenges.   Gary, who co-authored, Chad’s Oil: Miracle or Mirage? in 2005, reminded us that Africa’s oil boom will provide more that $400 billion to African governments through 2019. By 2015 the U.S. will get 25% of its imported oil from Africa.

Chad’s oil, to the surprise of no-one really, has hardly worked miracles. The country is no better off than it was before oil production began. Most economic indicators are down. The people in the oil-producing region are much worse off than they were before the oil boom. Farmers for the most part, many in the Doba Basin area are no longer able to access their lands, now dotted with drill pads and crossed by pipes and high tension cables. In 2010, the World Bank admitted that “in reality, close to 50 percent of expenditures has gone to the military.”

Chad, once the “model” for oil development (although one can argue that Chad was only a “model” until oil began to flow), has now joined the ranks of examples to avoid. The resource curse strikes again.  Ghana is next, with its first oil shipping on December 15th.  Will Ghana go the way of Chad or will the country get it right this time? Although the Ghanaian government has made pledges and promises, recent news suggests that there is some cause for concern (read a few of the latest articles posted on Ghana Oil Watch to get a sense of the troubles on the horizon).

Ghana, Uganda, Chad, Cameroon, Sierra Leone, Liberia, Sudan — sometimes it seems like there’s a new oil discovery every day in Africa. And with each country the recurring question: blessing or curse, boom or bust. Even if all goes “well,” oil drilling is a dirty, risky business. So what can be done to minimize the risks and maximize the chances that oil revenues will be used wisely, benefiting the population at large?

Gary discussed the need for reform in the West. It is easy to point to corrupt African despots, but as the WikiLeaks cable from Nigeria I posted a few days ago indicates, Western companies that enable corruption are  a huge part of the problem. One encouraging development in the push for reform is the recently passed Energy Security through Transparency Act. This new law will make disclosure of payments from oil and mining companies to governments around the world a legal requirement. Oxfam was one of the members of the Publish What You Pay campaign that worked for several years in support of this legislation.

A recent article from Reuters, U.S. legislation takes aim at “resource curse”, describes the scope and potential impact of this new law.

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