WITH oil prices soaring, it is bonanza for oil exporting countries in Africa. But it is a curse for its people. The black-gold is hurting economic and social growth. It is a paradox that despite huge inflows of petrodollars, the people live in poverty.
Africa produces nearly 11.4 per cent of the world's need of oil and holds 9.4 per cent of the world's reserves. Since 1990 there has been a 40 per cent jump in production to 10 million barrels per day (bpd). Fuelling the income growth is the rise in demand from oil importing Asian economic giants, China and India, besides traditional markets.
Nigeria is the continent's largest oil producer and exporter. The others are Gabon, Republic of Congo, Cameroon, Chad, Equatorial Guinea, Sudan, São Tomé and Mauritania. Their experience with surging oil money shows that for economic and social growth, the key factor is not petrodollars, but good governance and strong civic institutions.
Despite high oil earnings, they have failed to improve the living standards of millions of poor Africans. What upsets development economists and angers social activists is the negative implications of the gushing oil wealth. It has failed to add momentum to economic development.
There is a noticeable parallel growth in corruption. The unwieldy and bloated bureaucracy has become unresponsive to people's aspirations, and is in cohorts with corrupt politicians. A prime example is Nigeria -- Africa's most populous country and largest oil exporter with 2.5 million bpd. Economists point out that oil wealth has in fact pulled down its human development indices.
The UN Human Development Report shows between 2004 and 2005, Nigeria lost seven places in the ranking, sliding from 151st to 158th out of 177 countries that were monitored for social indicators. The economic and social deterioration took place despite Nigeria earning $300 billion in the past three decades.
More than 70 per cent of Nigeria's 130 million people survive on less than a dollar a day, indicating they live below poverty line. In its oil-rich south, social unrest is wreaking havoc. There is a clear indication of failure to use oil wealth for sustainable development.
Like Nigeria, Chad, which has been earning oil revenue from exports since 2003, has also slumped in its human development indicators. Since it began oil exports, the quality of governance has worsened, accelerating the drop in its human development.
The Sub-Saharan Africa earns nearly $30 billion per year from oil exports and is set to earn $200 billion in the next decade. If the present trend continues, Africans would continue to live in poverty. The International Monetary Fund has described it as a paradox of plenty. The reasons for the oil curse are weak governance and endemic corruption. They provide the fertile ground for instability, conflict and authoritarian repression.
Courtesy : Gulf Today