.<\/p>\n
By: Gary Lai
\nDemocracy and oil wealth do not go hand in hand in the world\u00e2\u20ac\u2122s second most
\npopulous continent. Promoting democracy in Africa would ensure that,
\ndefying the resource curse, oil money will flow directly to the people
\ninstead of the ruler. In that way, economic growth will have a greater
\nchance of being sustained in Africa.<\/p>\n
Eight and a half years, Nigeria, the most populous African country with 140
\nmillion people, had its first democratic change of power since independence
\nin 1960. The world\u00e2\u20ac\u2122s eighth largest oil producer, one of its top exporters,
\nand the only African member of OPEC, Nigeria became one of only a handful
\nof established democracies in the continent.<\/p>\n
The United States supported Nigeria; the latter supplies 10% of the
\nformer\u00e2\u20ac\u2122s crude oil import, amounting to 1.1 million barrels a day. This
\nsupport is unrelated to the despotism that Olusegun Obasanjo upheld; the US
\nwas mainly concerned with securing its oil supply. The country \u00e2\u20ac\u201c riding on
\nalmost a decade of record oil revenues in the 1990s \u00e2\u20ac\u201c was peppered with
\ncrumbling infrastructure, plagued by a lack of access to the medical and
\neducational system for its citizens, and suffered from lackluster economic
\ngrowth.<\/p>\n
During Obasanjo’s eight years in government, Nigeria earned $223 billion,
\ntwo and a half times the amount earned over the previous eight years.
\nKleptocracy and rampant grafting kept the money away from its intended
\ndestinations, extending a streak of $400 billion in mismanaged funds since
\n1960. Nigerians who voted Obasanjo out of office finally asked why, despite
\ntheir country’s oil, their lives were so miserable.<\/p>\n
This is symptomatic of the resource curse. Jean Herskovits, a historian,
\nobserves that the \u00e2\u20ac\u0153real obstacle to progress is not a lack of resources; it
\nis who controls them and how they are used.\u00e2\u20ac\u009d For example, according to
\nHuman Rights Watch, oil-producing Rivers State (population 5.1 million)\u00e2\u20ac\u2122s
\nbudget in 2006 was $1.3 billion, but little development occurred there and
\nthe governor owned a private jet and invested heavily in South African real
\nestate. The EFCC, an anti-corruption agency, in 2006 investigated 31 of
\nNigeria\u00e2\u20ac\u2122s 36 governors for corruption.<\/p>\n
Equatorial Guinea is the model of what not to do for governments in oil
\nproducing states. It is an oil producer (1 billion barrels of oil in
\nreserves; 400,000 barrels produced per day since 1995) with rampant
\ncorruption, an unwieldy and unaccountable government, and chronic
\nunderdevelopment. This is sad for a country (population 700,000) with a per
\ncapita GDP greater than Japan, France, and the United Kingdom.
\nThree-quarters of Equatorial Guineans live on less than $2 per day, and it
\nseems that those connected to the country\u00e2\u20ac\u2122s president benefitted from the
\noil.<\/p>\n
Learning from Equatorial Guinea is vital for the rest of Africa. Oil is, of
\ncourse, not concentrated in a few African countries. In the next eight
\nyears, 25 billion barrels of exportable oil worth trillions of dollars will
\ncome from the East African Rift Valley and West Africa\u00e2\u20ac\u2122s Gulf of Guinea.
\nThey will bring in oil money to Ethiopia, Kenya, Malawi, Mauritius,
\nTanzania, and Uganda in East Africa \u00e2\u20ac\u201c and Gambia, Ghana, Liberia, Sao Tome
\nand Principe, Senegal, and Sierra Leone in the West. Some of the reserve
\nestimates are 0.5 billion barrels in Ethiopia, 3 billion barrels in Kenya
\nand Tanzania, and 3.5 billion barrels in Uganda. Countries that are already
\noil producers \u00e2\u20ac\u201c Angola, Chad, Gabon, Nigeria, South Sudan, and Sudan \u00e2\u20ac\u201c
\nwill
\nsee more revenue. For example, Nigeria and Equatorial Guinea have been
\nexporting as much as three million barrels of oil a day from the Gulf of
\nGuinea for over four decades. Oil and gas will form most of a third or more
\nAfrican countries\u00e2\u20ac\u2122 total exports.<\/p>\n
African oil producers, on average, are arguably more corrupt than their
\noil-less counterparts in the continent. The World Bank\u00e2\u20ac\u2122s Worldwide
\nGovernance Indicators show that oil-producing African countries rank in the
\nbottom quintile globally in their ability to control corruption, formulate
\nand implement effective policies, regulate private sector development, and
\nenforce the rule of law. The UN Development Index also ranks those
\ncountries in the bottom half in the world.<\/p>\n
Until the late 1980s, Africa’s only functioning multiparty democracies were
\nBotswana, Senegal, Gambia, and Mauritius. The first three never managed to
\nproduce a change in government. By 2000, however, a Freedom House survey
\nfound 32 of 53 African countries were either democratic or at least
\npartially so. In June 1999 Thabo Mbeki succeeded Nelson Mandela, and
\nObsanjo was elected to replace a military dictator in Nigeria. In March
\n2000, a month after Senegal\u00e2\u20ac\u2122s High Court decided to prosecute him,
\nSenegal\u00e2\u20ac\u2122s Abdou Diouf accepted defeat in a democratic election. In oil
\nproducing Benin, Thomas Yayi Boni was elected in 2006, when he declared
\nthat his cabinet would consist of technocrats from universities and
\ndevelopment banks. In Liberia, a former World Bank official, Ellen
\nJohnson-Sirleaf, was elected in 2006.<\/p>\n
Perhaps because of democratic development in the continent, poverty is
\ndeclining: \u00e2\u20ac\u0153since 1996, the average poverty rate in Sub-Saharan African
\ncountries has fallen by about one percentage point a year, and between 2005
\nand 2008, the portion of Africans in the region living on less than $1.25 a
\nday fell for the first time, from 52 percent to 48 percent. If the region\u00e2\u20ac\u2122s
\nstable countries continue growing at the average rates they have enjoyed
\nfor the last decade, most of them will reach a per capita gross national
\nincome of $1,000 by 2025, which the World Bank classifies as \u00e2\u20ac\u02dcmiddle
\nincome.\u00e2\u20ac\u2122\u00e2\u20ac\u009d<\/p>\n
For Africa to help itself, it needs to promote democracy. The intermediary
\nbenefit is to gain a stable oil supply by promoting peaceful countries with
\nstable government. With stability comes economic growth, whether it is
\nfounded on the burgeoning industries like banking, Internet communication,
\nor high-productive and transformational financial services and
\nmanufacturing industries. In any case, democracy in African oil states
\nhelps both sustain its oil supply and ensure windfall from selling it goes
\ninto economic development.<\/p>\n
Oil and the Resource Curse in Africa<\/p>\n
By: Gary Lai
\nDemocracy and oil wealth do not go hand in hand in the world\u00e2\u20ac\u2122s second most
\npopulous continent. Promoting democracy in Africa would ensure that,
\ndefying the resource curse, oil money will flow directly to the people
\ninstead of the ruler. In that way, economic growth will have a greater
\nchance of being sustained in Africa.<\/p>\n
Eight and a half years, Nigeria, the most populous African country with 140
\nmillion people, had its first democratic change of power since independence
\nin 1960. The world\u00e2\u20ac\u2122s eighth largest oil producer, one of its top exporters,
\nand the only African member of OPEC, Nigeria became one of only a handful
\nof established democracies in the continent.<\/p>\n
The United States supported Nigeria; the latter supplies 10% of the
\nformer\u00e2\u20ac\u2122s crude oil import, amounting to 1.1 million barrels a day. This
\nsupport is unrelated to the despotism that Olusegun Obasanjo upheld; the US
\nwas mainly concerned with securing its oil supply. The country \u00e2\u20ac\u201c riding on
\nalmost a decade of record oil revenues in the 1990s \u00e2\u20ac\u201c was peppered with
\ncrumbling infrastructure, plagued by a lack of access to the medical and
\neducational system for its citizens, and suffered from lackluster economic
\ngrowth.<\/p>\n
During Obasanjo’s eight years in government, Nigeria earned $223 billion,
\ntwo and a half times the amount earned over the previous eight years.
\nKleptocracy and rampant grafting kept the money away from its intended
\ndestinations, extending a streak of $400 billion in mismanaged funds since
\n1960. Nigerians who voted Obasanjo out of office finally asked why, despite
\ntheir country’s oil, their lives were so miserable.<\/p>\n
This is symptomatic of the resource curse. Jean Herskovits, a historian,
\nobserves that the \u00e2\u20ac\u0153real obstacle to progress is not a lack of resources; it
\nis who controls them and how they are used.\u00e2\u20ac\u009d For example, according to
\nHuman Rights Watch, oil-producing Rivers State (population 5.1 million)\u00e2\u20ac\u2122s
\nbudget in 2006 was $1.3 billion, but little development occurred there and
\nthe governor owned a private jet and invested heavily in South African real
\nestate. The EFCC, an anti-corruption agency, in 2006 investigated 31 of
\nNigeria\u00e2\u20ac\u2122s 36 governors for corruption.<\/p>\n
Equatorial Guinea is the model of what not to do for governments in oil
\nproducing states. It is an oil producer (1 billion barrels of oil in
\nreserves; 400,000 barrels produced per day since 1995) with rampant
\ncorruption, an unwieldy and unaccountable government, and chronic
\nunderdevelopment. This is sad for a country (population 700,000) with a per
\ncapita GDP greater than Japan, France, and the United Kingdom.
\nThree-quarters of Equatorial Guineans live on less than $2 per day, and it
\nseems that those connected to the country\u00e2\u20ac\u2122s president benefitted from the
\noil.<\/p>\n
Learning from Equatorial Guinea is vital for the rest of Africa. Oil is, of
\ncourse, not concentrated in a few African countries. In the next eight
\nyears, 25 billion barrels of exportable oil worth trillions of dollars will
\ncome from the East African Rift Valley and West Africa\u00e2\u20ac\u2122s Gulf of Guinea.
\nThey will bring in oil money to Ethiopia, Kenya, Malawi, Mauritius,
\nTanzania, and Uganda in East Africa \u00e2\u20ac\u201c and Gambia, Ghana, Liberia, Sao Tome
\nand Principe, Senegal, and Sierra Leone in the West. Some of the reserve
\nestimates are 0.5 billion barrels in Ethiopia, 3 billion barrels in Kenya
\nand Tanzania, and 3.5 billion barrels in Uganda. Countries that are already
\noil producers \u00e2\u20ac\u201c Angola, Chad, Gabon, Nigeria, South Sudan, and Sudan \u00e2\u20ac\u201c
\nwill
\nsee more revenue. For example, Nigeria and Equatorial Guinea have been
\nexporting as much as three million barrels of oil a day from the Gulf of
\nGuinea for over four decades. Oil and gas will form most of a third or more
\nAfrican countries\u00e2\u20ac\u2122 total exports.<\/p>\n
African oil producers, on average, are arguably more corrupt than their
\noil-less counterparts in the continent. The World Bank\u00e2\u20ac\u2122s Worldwide
\nGovernance Indicators show that oil-producing African countries rank in the
\nbottom quintile globally in their ability to control corruption, formulate
\nand implement effective policies, regulate private sector development, and
\nenforce the rule of law. The UN Development Index also ranks those
\ncountries in the bottom half in the world.<\/p>\n
Until the late 1980s, Africa’s only functioning multiparty democracies were
\nBotswana, Senegal, Gambia, and Mauritius. The first three never managed to
\nproduce a change in government. By 2000, however, a Freedom House survey
\nfound 32 of 53 African countries were either democratic or at least
\npartially so. In June 1999 Thabo Mbeki succeeded Nelson Mandela, and
\nObsanjo was elected to replace a military dictator in Nigeria. In March
\n2000, a month after Senegal\u00e2\u20ac\u2122s High Court decided to prosecute him,
\nSenegal\u00e2\u20ac\u2122s Abdou Diouf accepted defeat in a democratic election. In oil
\nproducing Benin, Thomas Yayi Boni was elected in 2006, when he declared
\nthat his cabinet would consist of technocrats from universities and
\ndevelopment banks. In Liberia, a former World Bank official, Ellen
\nJohnson-Sirleaf, was elected in 2006.<\/p>\n
Perhaps because of democratic development in the continent, poverty is
\ndeclining: \u00e2\u20ac\u0153since 1996, the average poverty rate in Sub-Saharan African
\ncountries has fallen by about one percentage point a year, and between 2005
\nand 2008, the portion of Africans in the region living on less than $1.25 a
\nday fell for the first time, from 52 percent to 48 percent. If the region\u00e2\u20ac\u2122s
\nstable countries continue growing at the average rates they have enjoyed
\nfor the last decade, most of them will reach a per capita gross national
\nincome of $1,000 by 2025, which the World Bank classifies as \u00e2\u20ac\u02dcmiddle
\nincome.\u00e2\u20ac\u2122\u00e2\u20ac\u009d<\/p>\n
For Africa to help itself, it needs to promote democracy. The intermediary
\nbenefit is to gain a stable oil supply by promoting peaceful countries with
\nstable government. With stability comes economic growth, whether it is
\nfounded on the burgeoning industries like banking, Internet communication,
\nor high-productive and transformational financial services and
\nmanufacturing industries. In any case, democracy in African oil states
\nhelps both sustain its oil supply and ensure windfall from selling it goes
\ninto economic development.<\/p>\n","protected":false},"excerpt":{"rendered":"
. By: Gary Lai Democracy and oil wealth do not go hand in hand in the world\u00e2\u20ac\u2122s second most populous continent. Promoting democracy in Africa would ensure that, defying the…<\/p>\n","protected":false},"author":1,"featured_media":19262,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","footnotes":""},"categories":[7],"tags":[],"class_list":["post-44843","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-articles-opinions"],"yoast_head":"\n