Shall Africa Survive The Oil Curse?

Shall Africa Survive The Oil Curse?
Africa has become the new oil frontier

AFRICANGLOBE – In 2002, during a meeting with African heads of state, US President George Bush tapped his pencil and looked bored as most of the African Presidents talked. But when Fradique de Menezes of the Democratic Republic of Sao Tomé and Principe spoke, President Bush perked up and the pencil tapping ceased. President de Menezes had come from a small, poor cocoa producing West African Island country that had just discovered over four billion barrels of oil. Bush’s attention had been drawn to the country only significant to stamp collectors because, as President Menezes said in his speech, Sao Tomé “is strategically situated on the most important petroleum area in the world,” and had been quoted by Vice President Cheney’s National Policy Report as the fastest growing source of oil and gas for the American Market.

Weeks later, Jon Lee Anderson of The New Yorker wrote an article, “OUR NEW BEST FRIEND; who needs Saudi Arabia when you’ve got Sao Tomé?” where he quoted a State Department official telling him that US does not need to rely on the Middle East for oil. That African oil is less sticky than the stuff you get in the Middle East, and much of it is in deep water far offshore, so the natives don’t notice it being taken, whereas in the Middle East it’s pumped out of the ground under the noses of Wahhabi fundamentalists.

This is an example of how big world oil consumers and old oil producing neighbours start creating a courtship of convenience when small, poor African countries discover oil in large quantities. Nicholas Shaxson says in Poisoned Wells: The Dirty Politics of Africa’s Oil that the fireworks over the oil bounty in Sao Tomé will start if Nigeria and the US cease meddling in the country’s affairs and when the country’s politicians agree on how to share the oil cash among themselves. Although there has not been any direct, noticeable involvement by the United States and other super oil consumers in Uganda’s budding oil industry, South Africa’s President Jacob Zuma early last year visited with a contingent of businessmen to scout for investment opportunities in the country’s oil sector.

President Museveni is reported to have invited Iran investors to construct an oil refinery in western Uganda but when President Mahmoud Ahmadinejad made a surprise visit, Museveni said there was no oil deal struck. Such external influence, especially if out of excitement, as well as the insatiable thirst for petrodollars by the local wielders of power, has led to daunting ripple effects that have negatively affected the lives of the natives in many African countries especially in the West.

Petro Dollars

When a country entirely depends on oil exports other than its citizen’s economic productivity, as many African oil producing countries have done, John Ghazvinian writes in Untapped, the scramble for Africa’s oil that it turns into an allocation state, a sort of sugar daddy country taken as source of free money rather than a publicly accountable body. Government feels it has no moral authority to account to the people because it does not take their money in taxes like what happened in Equatorial Guinea, Nigeria and Gabon. Politicians become Draculas, the gods of wrath on a blood (oil) sucking splurge drinking their countries dry. They no longer feel the need to tax their citizens to raise revenue and so become unresponsive to complaints about their performance.

As an upcoming oil producer, Uganda needs to avoid any temptations of becoming a rentier state-one that only depends on oil. Money from oil should be used to fuel the old money making sectors so as to get double barrelled development and avoid the oil curse. Uganda needs an institutionalised and transparent oil industry because without it, politicians personalise the oil proceeds, bank billions in offshore banks and use the rest to live a lavish life. In Gabon President Omar Bongo, out of excitement, spent $800m of the oil money to build 52 posh houses and a fleet of Rolls-Royce limousines and armoured Cadillacs for Africa heads of state attending a summit and on several paper tiger projects.

In Equatorial Guinea, where a majority of the people still struggle to survive on $1 a day, President Teodero Nguema Obiang, a canny political survivalist, can afford to own a $2m mansion with 10 bathrooms in Potomac, a Washington suburb. Obiang, who calls himself El Jefe- The boss-is said to have put all the country’s money on his personal account and to have stashed over $700m in offshore banks. Yet despite the country having the highest per capita income in Africa, the majority of the people are underfed, uneducated, and disease-ridden living squalid lives. Most African leaders have clung to power, by harassing and buying off challengers, claiming to be the only visionary leaders who saved the countries’ economies even without oil, yet it is all about oil. When they feel insecure, they fill government with relatives like President Obiang who once appointed 21 close relatives to a cabinet of 50 ministers, his son taking the important Ministry of Forestry.

When oil was discovered in Nigeria in 1956, almost everyone in the country thought that a final change in life had come. When oil money started trickling in, veteran Financial Times, and The Economist writer Nicholas Shaxson says in Poisoned Wells that the situation started going south with oil producing areas saying they should get the most populous regions, arguing that they should take precedence, while the poorest felt that they were the most deserving. Such belief made tribes/natives to clash with oil companies and government forces in many African countries demanding for equal opportunity and benefits like in Ogoni and Ijaw- places where oil is cursed- in Niger Delta.

No Change In Fortunes

Although oil drilling is done just a stone throw from the natives, they have remained poor, their livestock die of the spills from oil, the fish in River Ogoni just floats, dead from the oil spills; the trees, and the wildlife is withering. Not even the presence of Shell can be path to offering the Ijaw and Ogoni people jobs. Apart from smelling the spilled oil, looking at the huge oil pipeline passing in their courtyards and hearing the echoing sound of the oil rig, the Ogoni and Ijaw people have nothing to celebrate about oil, they curse the day it was discovered.

It is like the people of Kaiso Tonya continuing to leave in squalid mud and wattle grass thatched houses, unable to catch mukene (silver fish) and drinking contaminated water as Tullow Oil scoops millions of oil barrels from their backyard. While campaigning in western Uganda, the President told voters how the Constitution (Article 244) is clear on the sharing of the oil proceeds for everyone’s benefit. But similar arrangements did not stop the Nigerian southerners (Igbos) from launching a life taking 1967 Biafra war; a southerner’s quest for secession on the pretext that the north was benefiting more from oil, an indication that what matters is not having the laws on paper but observing them to the dot.

After the war, the stream of petrodollars became a river thanks to the OPEC oil embargo that quadrupled the price of oil from $3 to $12 and Nigeria’s annual export earnings from $1b to $26b with oil making 95 per cent of the country’s exports. But as the oil boom started, poverty levels upped from 35 per cent to 70 per cent despite the fact that Nigeria was earning more than $350b from oil. When the oil revenues reduced, corrupt government officials kept borrowing money presenting oil as collateral, only to stash the borrowed money in foreign banks, leaving Nigeria with about $30b in foreign debts, impoverished but with a club of rich kleptomaniacs.