Nigeria’s Oil Prosperity Not Guaranteed

Filed under: Business |
Nigerian oil facility

Crude production facility in Nigeria

The World Bank said Thursday that it expected about $31 billion in Foreign Direct Investment (FDI) inflows to Africa this year, adding that there had been strong investor-interest in the continent.

The bank, also predicted that Nigeria, which is currently the largest regional oil producer, could keep supplying at the 2011 levels for another 41 years, saying that Angola, the second largest producer in the region, had about 21 years remaining at current production levels before its known reserves would be depleted.

The multilateral institution also predicted a 4.8 per cent growth rate for Africa in 2012, but cautioned countries to be frugal in spending their resources.

The bank, which had forecast a 4.9 per cent growth rate in 2011, said the region remained on track despite setbacks in the global economy.

According to the World Bank’s new Africa’s Pulse, a bi- annual analysis of the issues shaping Africa’s economic prospects, released yesterday, growth in Africa, apart from South Africa, was forecast to rise to six per cent.

The report noted that African exports had rebounded in the first quarter of 2012, at an annualised pace of 32 per cent, up from 11 per cent 2011.

It, however, noted that African countries were not immune to the recent cases of market volatility occasioned by crisis from the Euro area as well as growth slowdown that is occurring particularly in China, which had remained an important market for Africa’s mineral exporters.

World Bank Vice-President for Africa, Mukhtar Diop, said: “A third of African countries will grow at or above six per cent with some of the fastest growing ones buoyed by new mineral exports such as iron ore in Sierra Leone, uranium and oil in Niger, and by factors such as the return to peace in Cote d’Ivoire, as well as strong growth in countries such as Ethiopia.”

The report, further noted that poverty rates in the continent had declined faster than one percentage point a year and for the first time, between 2005 and 2008, the absolute number of people living on $1.25 a day fell while Child mortality had also declined.

It further cautioned that recent spikes in food and grain prices had become worrisome given that Africa’s Sahel region was already suffering from higher food prices, high rates of malnutrition and recurring crisis and insecurity.

It stated further that unprecedented hot and dry summer in the United States, Russia and Eastern Europe had led to reduced yields on both maize and wheat production worldwide.

The report added that new discoveries of oil, gas, and other minerals in the continent would generate a wave of significant mineral wealth in the region.

World Bank’s Chief Economist for Africa, and lead author of Africa’s Pulse, Shantayanan Devarajan, said: “Resource-rich African countries have to make the conscious choice to invest in better health, education, and jobs, and less poverty for their people because it will not happen automatically when countries strike it rich.”