Global Policy Forum

The Mixed Blessings of Oil Boom for African Countries


By Cesar Chelala

Gulf Times
May 16, 2007

The recent kidnappings of more than 30 foreigners in Nigeria by local armed groups underscore the dangers that accompany the exploitation of oil in Africa's oil producing countries. Because this exploitation in many cases ignore the basic needs of the people in the region, what is happening in Nigeria has the potential to spread to other countries. Unless those needs are properly addressed, oil riches will continue to encourage corruption, and provoke environmental destruction, human rights violations and continuing conflict.

Since the middle 1990s, several countries in Sub-Saharan Africa such as Nigeria, Angola, Gabon, and Equatorial Guinea have experienced strong revenue growth from the petroleum industry. The new riches, however, come with a heavy toll. Rather than being directed to the countries' economic development and improvement of living standards for their citizens, it has been used almost exclusively for the enrichment of the countries' leaders.

As a consequence, most of the population remains poor and unprotected, as I was able to see in several visits to that continent. With over 4mn barrels of oil produced daily, Sub-Saharan Africa's production surpasses that of Iran, Venezuela and Mexico put together, and the region has the potential to become as important a crude oil resource as Russia or the Caspian Sea. The region has the additional advantage of being more politically stable than the Middle East, at least at this time. According to estimates from the National Intelligence Council in the United States, Sub-Saharan Africa could fill up to 25% of US fossil fuel needs in 2015, compared to 16% now.

In addition, the Gulf of Guinea, which extends from Nigeria to Angola, could become the first producer of deep water offshore oil in the world. One of the most significant discoveries of oil reserves has been in Equatorial Guinea, a former Spanish colony in West Africa. When oil was found in the country in 1996, Equatorial Guinea was one of the poorest countries in the world. Today, this small and sparsely populated country of 465,000 inhabitants has an offshore production of 350,000 barrels a day, making it the third largest Sub-Saharan producer of oil, behind Nigeria and Angola. According to the African Development Bank, a year after oil was found in the country the GDP went up 76%. What is most remarkable, however, is not the size of the increase in revenues, but how little of it has been shared by the population, either directly or in improved health and social services. At the same time, while oil production has continually increased, production of traditional exports such as coffee and cacao has declined dramatically.

In my work as an international public health consultant, I first visited Equatorial Guinea in 1993, before the oil boom started. When I visited it again, more than a decade later, I was unable to see any significant improvements in the living standards of ordinary people. Malaria is still rampant and is the main cause of death among children under five years of age, and child morbidity and mortality rates have not experienced any significant change in the last several years. Over 70% of the population lives below the poverty line, and the majority of those living in the largest cities lack access to safe drinking water and sanitation services. The immunisation rate for the most prevalent diseases is relatively low, making children prone to diseases that could be easily preventable by vaccination. Almost one in five children under-5 are malnourished, and just shy of one in 20 are severely so. At the same time, maternal mortality rates, which are a good measure of health coverage and the quality of health services, remain very high. Most of the country's primary and secondary schools don't support basic conditions for children's education. Over 60% of schools in the country don't have potable water, and 50% don't have toilette facilities, especially for girls. As a result, there is a high rate of school drop outs and of class repetition. In some schools, there are up to 96 students per room. A similar situation is occurring in Angola. According to two non-governmental organisations, Human Rights Watch and Global Witness, between 1997 and 2002 over $4bn have disappeared from the State budget. At the same time, Angola's president, José Eduardo dos Santos, has become one of the world's 50 richest people while most of Angola's population lives in misery and wide sectors of the population are ravaged by the HIV/Aids pandemic.

In Nigeria, despite its tremendous oil wealth (it pumps 2.4mn barrels a day of crude,) most people subsist on less than $1 a day. Several military dictatorships have been accused of embezzling $400bn in oil revenues. Nigerian general Muhammadu Buhari has stated: "Corruption has eaten away at our industries and society generally." In 2002, a world coalition of 130 non-governmental organisations launched a campaign called 'Publish What You Pay'. This initiative demands that international companies involved in oil, gas or mines' exploration make public all their payments to the governments involved, an important and necessary step.

The main responsibility in managing oil resources well lies with African leaders. But other important actors are foreign oil companies, the World Bank and the International Monetary Fund, and the US and other governments. They could more forcefully demand increased transparency from African governments.

Oil revenues have the potential of transforming for the better the lives of millions of Africans condemned otherwise to live in poverty. It is estimated that oil revenues will bring to Africa 10 times the amount industrialised nations give each year in aid. That the profits are not used to improve people's lives is a severe indictment of African leaders themselves. It is mainly up to them to make of the oil boom in their countries a blessing or a curse. * Dr Cesar Chelala, an international public health consultant, is an award-winning writer on human rights issues.

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