Archive for July 11th, 2007

Oil in Africa: Hypocrisy and Responsibility

On Monday, the Wisconsin State Journal ran the headline “Africa’s Golden Chance: Can the continent play the increasing interest of China, India and the U.S. to its advantage?” above a piece by Edward Harris of the AP. As I walked by a newsstand and saw the bold print, I cocked my head in confusion – something about it didn’t sit quite right.

Later I sat down to read the entire article and was even more dismayed by the narrative’s simplistic conclusion that foreign oil investors are going to be the economic saviors of the continent , if only the African leadership could get it together [HT to Chicago Daily Herald, as WSJ does not archive AP articles]:

Nigeria’s oil industry, like those of many other African countries, is primarily run by Western energy concerns. The companies who operate crude-pumping operations and share the proceeds with Nigeria’s federal government include Anglo-Dutch Royal Dutch Shell, France’s Total SA, Eni SpA from Italy, and US-based Chevron Corp.

But increasingly, China and India have been moving in, too. Chinese and Indian companies won big in a recent round of bids for exploration licenses, for example, and have become big consumers […]

Peter Pham, a professor of international relations at James Madison University in Harrisonburg, Va., said: “Africa can no longer be safely ignored … that era of benign or not-so-benign neglect is over.”

It all adds up to a rare moment of potential influence for Africa, he says, but only if African leaders can end their own self-enrichment at the expense of their people.

“It’s a question of whether African leaders rise to the occasion,” said Pham, “or if it just becomes another moment to support themselves.” [Read Full]

Now, Pham has a point here – in the past many African leaders have simply shaved off hefty shares of the oil money, essentially pocketing what is rightfully owed to their people. However, putting all of the responsibility on African leaders and dubbing the burgeoning oil industry Africa’s “Golden Chance” overlooks several aspects of the reality.

Foreign investors, like China, owe it to the nations in which they invest to do so responsibly. I’m not talking about World Bank-style structural adjustment programs, but something even more basic. For example, China could perhaps stop selling arms to Sudan.

What is also overlooked here is that, from an employment aspect, oil doesn’t do much for the economy – the oil industry alone creates limited job opportunities, and it seems the trend for foreign investors is to bring workers from home anyway. If states were to set up a way of evenly distributing oil revenues it may flush the economy with more eager consumers; however, that scenario seems unlikely.

I cannot pretend to be an expert, but I will argue that oil on the continent will not be the saving grace for Africa. Historically, the extraction of natural resources for consumption abroad has brought little good to the African people, why would the rules change now? Foreign and local investment into infrastructure – into roads, utilities, hospitals, banks, business, etc. – along with education, is likely the only way the continent will pull itself up by its bootstraps.

(Revised 07/12/2007)


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