The phenomenon in Africa, where natural resource abundance, is associated with poor development out-comes in the communities and countries of concern has been termed, ‘Africa’s resource curse.’
The phenomenon in Africa, where natural resource abundance, is associated with poor development out-comes in the communities and countries of concern has been termed, ‘Africa’s resource curse.’
The continent is for instance, stunningly blessed with great oil reserves, but for so many years, extracting it has not proven its worth despite the effort and risk.
Consequently, high levels of poverty or even civil conflict in the oil producing countries, are the order of the day. The richer Africa is in oil reserves the desperately poor the inhabitants of the oil rich areas seem to be. Giving rise to the concept of ‘Africa’s resource curse.’
A report, ‘The Search for responses to resource curse,’ compiled by the Southern Africa Resource Watch, (SARW), a project of the Open Society Initiative for Southern Africa (OSISA), that seeks to foster accountability and transparency in resource extraction in the SADC region, asserts that there is a link between natural resource extraction and the ‘resource curse.’
"From east to west and north to south, Africa is blessed with abundant natural resources. In most cases, however, these resources have been badly exploited, and instead of contributing to growth, development and poverty eradication they have done the opposite.
The situation has been exacerbated by weak and in some cases no proper sector regulations,” reads the report written by SARW Director, Claude Kabemba.
Considering the number of barrels that are buried under the cretaceous rock of the African continent, one may quickly conclude that as discovery of oil reserves continues - African economies will come closer to a clear answer to end poverty, as they realize their developmental goals. Only the reverse has proven to be true.
Across the globe, Middle Eastern countries top the oil production statistics, with African countries like Nigeria and Algeria ranking 12th and 14th according to the top world oil production statistics of 2006.
As a matter of fact, the year 2007, saw the United States of America importing more oil from Africa than from Saudi Arabia. Skyrocketing prices of the top oil producers have forced a number of other countries like China to look to the African Continent for energy security.
The World Bank reports for instance that Sub-Saharan Africa’s natural resource export to China increased from US$3 billion in 2001 to about US$22 billion in 2006 alone.
``China’s growing demand for natural resources had been matched by Africa’s significant and often under-developed oil and mineral reserves. While Africa’s urgent need for infrastructure is matched by China’s globally competitive construction industry, ‘’ the report titled "Building Bridges:
China’s Growing Role as Infrastructure Financier for Sub-Saharan Africa.
While Middle Eastern oil producing countries are economically growing as a result of extraction of their oil reserves, oil dependent African nations still lag behind.
Take the case of Nigeria one of Africa’s most populous countries with a population of 148 million people.
Oil accounts for 95% of Nigeria’s total export revenues and the country depends heavily on the sector to achieve economic development.
The country boats a total of petroleum production at a capacity of more than 2.5 million barrels, even though civil unrest has resulted in the production of just 1.9 barrels per month as compared to Angola for instance which has produced 1.94 million barrels.
Nigeria remains poor with child malnutrition at 37.7% , low rates of adult literacy with a few Nigerians being able to enroll in primary school.
Oil production in Nigeria has had a negative impact on the citizens - a critical example being the devastating experience of the Ogoni people. There are over a 100 oil wells in the Ogoni territory.
The oil extraction threat to these people began with Shells discovery of oil in 1958, since then they have never known any rest. Suffering several negative consequences of oil discovery, which include, environmental pollution a result of oil spills, gas flares, contaminated water to respiratory problems suffered by villagers.
Another threat to local stability has been the emergence of militant groups, such as the Movement for the Emancipation of the Niger Delta, which instance has taken direct responsibility for armed attacks on oil installations and abductions of scores of expatriates – a threat again to oil price stability.
Nigeria is thus faced with an untenable situation, a source of much conflict for decades, with the organiainst the environmental hazards and mass starvations in the area.
Through this movement legendary Wiwa, protested and spearheaded a brave campaign, against Shell and the Nigerian government’s indifference towards the Ogoni people.
Recently, protests in the country have been triggered by increased global fuel prices, which rose by 50 percent since, the start of 2008, USA crude oil climbed to a record high near $147 per barrel.
Announcing strike action against the continued spiraling of oil prices, last Friday, the deputy president of the Nigerian Union of Petroleum and Natural Gas workers, said, "The high diesel price is biting very hard on Nigeria. It’s unbearable. This strike will be indefinite until the government does something tangible.”
Oil wealth also increases the risk of civil wars in various ways and this is mainly because such wealth sometimes fuels separatist sentiments, especially in poorly-governed areas.
Rebel groups may also need to finance themselves by looting or selling off natural resources, as in the case of Liberia, Sierra Leone, Sudan and the Congo Republic.
The major consequence that will arise is that governments will spend more money on the military to protect themselves, yet such money would have been used for projects develop the country curbing poverty.
Bureaucracy in many African countries only leads to long term planning for and discovery of oil wells. This increases the levels of corruption thus poverty as oil extraction money is diverted for personal use by the responsible offices.
According to the Oxfam report, when countries are dependent on oil and mineral exports, "they have difficulty diversifying their economy and promoting sectors like agriculture and manufacturing...”
As a result this becomes an obstacle to development of other productive sectors of the economy yet oil production may not answer other economic problems such as food insecurity.
Whether or not, these sectors really contribute to sustainable poverty reduction, is still a question. However economic development of an oil dependent country can be acquired through equal development of other sectors of a country.