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The
perils of African oil
By
Jonathan
Power
January 9, 2004
LAGOS - Already the world's sixth largest oil
producer and with large untapped, offshore oil deposits
Nigeria is expecting to increase its export capacity by
50% or more within the next few years. By 2005, according
to a U.S. National Intelligence Council forecast,
Africa's share of U.S. oil imports will climb from 15% to
25%, close to the current proportion coming from the
Middle East.
Nigeria along with Angola, Gabon, Equatorial Guinea,
Sao Tome, Cameroon and, more recently, Chad and Sudan
have become crucial players in the world's energy stakes.
Yet it is not just the environmentalists, the
anti-corruption and human rights activists that have
become vociferous critics of the oil economy. Serious
doubters can be found at the heart of government itself.
In Nigeria, Ms Nedadi Usman, minister of state for
finance, part of the all female team at the top of the
finance ministry, tells me, "If we hadn't discovered oil
we would have been better off today. Once we had oil our
agricultural sector collapsed. Oil has made us lazy. When
I was growing up I knew I had to use my brains to
succeed. The oil generation doesn't feel this. We have
become corrupted."
When I first asked Olusegun Obasanjo twenty years ago
after his first spell as president of Nigeria- he was
then a military dictator- what he had concluded about oil
he said it was "a curse". Four years ago, having just
been elected democratically, he seemed to have changed
his tune. He told me that oil was one of "God's blessings
on a poor country". But now, after a debilitating battle
with on-going corruption, an economy that has seen the
hollowing out of Nigeria's small industrial sector and,
not least, continued guerrilla and ethnic strife in the
Niger delta area where most of Africa's oil comes from, a
rather fraught, would-be reforming, president, who no
longer feels he has time on his side, exploded in public
recently, " Oil and gas have blinded us….Oil and gas
have taken us away from the values that we used to know.
Oil and gas have brutalized us. We are no longer our
brothers' keepers."
Obasanjo has a long list of accomplishments in
diluting some of the worst political problems of the oil
industry. Last year Obasanjo announced that Nigeria was
going to abide by a ruling it had sought from the
International Court of Justice that gave neighboring
Cameroon sovereignty over the oil-rich Bakassi
peninsular. (His minister of defense had instead
recommended military action.) Nigeria and Sao Tome
recently promised to publish the financial results of
their next licensing round- a step towards the much
sought after goal of demanding that oil companies
disclose the payments they make to governments. Domestic
pump prices, for decades subsidized, are now being
deregulated. Oil refineries are being privatized. And,
not least, there hasn't been a serious outbreak of
violence in the Niger delta for two years now. Moreover,
some observers, like the chief oil lobbyist for Shell,
Larry Osai, say that at last one can see that oil
revenues are being used for development- roads are being
improved, schools better financed and drinking water
supplies multiplied.
Yet even for Mr Osai Nigeria's oil is "an albatross",
albeit one, he says, "that has to be carried". It means,
he argues, that Nigeria- and Africa's other oil
economies- are being drawn firmly within the U.S.'s
political orbit, although so far not too intimately-
Nigeria took a position against the war in Iraq.
But if Washington is perhaps showing more
sophistication in dealing with its new oil partners than
it has with the ancien regimes in the Middle East the
harsh realities of being an oil economy remain. No
country which is dominated by oil has yet found the way
to convert oil into prosperity for the ordinary working
people. As Moises Naim explains in the current issue of
Foreign Policy, "An economy that relies mostly on oil
exports inevitably ends up with an exchange rate that
makes imported goods less expensive and exports more
costly…..agriculture, mining and tourism
[become]less international competitive." Only
when a country has a strong democracy, a large economy
and an effective public sector, as in Norway and the
U.S., has oil not been a seriously distorting factor. The
developing countries that have really made it, notably
those in south east Asia, have been oil poor (and often
enough generally poor in natural resources).
The trouble is, as Obasanjo has found, there is no
going back to the pristine state. Nothing but maintaining
good governance and a more sophisticated democracy can
save Nigeria. Botswana- a diamond-dependent state- has
shown what can be done. Angola, where nearly all the oil
money goes to a corrupt political class, has shown what
not to do. Nigeria, the biggest of them all, will be made
or broken by oil. Right now, with only three and a half
years to go in his final term, the odds still look
stacked against Obasanjo.
See also IHT for Jonathan Power's article, Nigeria
struggles against the curse of oil
I can be reached by phone +44
7785 351172 and e-mail: JonatPower@aol.com
Copyright © 2004 By
JONATHAN POWER
Follow this
link to read about - and order - Jonathan Power's book
written for the
40th Anniversary of
Amnesty International
"Like
Water on Stone - The Story of Amnesty
International"
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