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Has Africa benefited from the oil revenue?

Africa is a rich  resource continent  but yet  one of the poorest  in the world. Name any mineral and it could be found in an African country.High grade minerals such as gold, diamond  platinum you name them have been mined and exported and yet have not benefited the countries in which these minerals were mined.

Many developing countries, rich in natural resources, including oil still score low on international development performance indices and are caught in the so-called “resource curse” because these countries have not wisely use the mineral wealth to generate or enhance development.

According to World Bank reports, African countries have sizeable reserves and annual production figures in some major minerals.In 2010, Guinea alone represented over eight  per cent of total world bauxite production; Zambia and the Democratic Republic Congo have a combined share of 6.7 per cent of the total world copper production; and Ghana and Mali together account for 5.8 per cent of the total world gold production.

Africa has added to its rich mineral resource  and reserve through the oil find.It is estimated that  about  22 African nations  have oil or are very close to getting it in commercial quantities.Oil discoveries and exploration in Ghana, Uganda and Kenya in recent years have raised hopes that these countries can follow the lead of several other African nations and become major oil producers.

PRODUCTION FIGURES

According toVentures Africa the five major African oil producing countries  are Nigeria, Algeria, Libya, Angola, and Egypt.Other oil producing countries that are fast catching up with their production figures are Gabon, Congo, Cameroon, Tunisia, Equatorial Guinea, the Democratic Republic of the Congo, Ghana and Cote d’Ivoire.

Nigeria produces about 2.2 million gallons of oil per day.It is also Africa’s biggest producer of oil and in the top 15 producers in the world.The country is again the world’s 4th biggest exporter, exporting 2.1 million barrels each day.

Algeria produces 2.1 million barrels of oil daily.According to the 2011 BP Statistical Energy Survey, Algeria had proved oil reserves of 12.2 billion barrels at the end of 2010, equivalent to 18.4 years of current production and 0.88 per cent of the world’s reserves.Angola produces 1.9 million barrels of oil daily, and exports 1.8 million barrels, placing   them seventh on the world’s list of exporters.

Libya produces 1.7 million barrels of oil per day, while exporting 1.2 million barrels daily while Egypt produces about  680,000 barrels of oil per day, and is the fifth largest producer on the continent.

Ghana a new entrant into the game of oil production currently puts its daily  figures at around 110,000 barrels  per day with the hope of hitting the 120,000 targets by close of the year

However, the citizens  in oil producing countries on the  continent are yet to benefit fully from the oil find, exploration and exportation taking into consideration the level of benefit that Africans have had from mineral production.Oil has been a headache for most African countries.Poor governance, constant corruption, oil revenue going  into private accounts outside their respective countries, coupled with major environmental damage and rampant poverty have all caused fractures in  these countries.

ECONOMIC DEVELOPMENT

The World Bank’s Chief Economist for Africa  Dr Shantayanan Devarajan, in a recent statement called on mineral resource-rich African countries to make the conscious choice to invest in better health, education, and jobs, and other social intervention towards building  a sustainable poverty reduction strategies with the oil revenue since oil has a life span.

Dr  Devarajan, who is also the  lead author of Africa’s Pulse stressed that, if African countries that produce mineral resources do not put in good policies and ensure judicious spending of the resources monies, the abundance of these resources could turn into a curse  on their economy.

Using the Gabon instances, for example, with a per-capita income of US$10,000 the country has one of the lowest child immunisation rates in Africa.

Oil economies tend to be rife with stories of corruption and an elite making all the money. But none in Africa come close to the rather disgusting situation in this tiny West African nation.Equatorial Guinea pumps out over 322,000 barrels per  day.Oil makes up 90 per cent of government revenues and 98 per cent of exports – matched only by South Sudan.The GDP per person is worth around US$19,300, yet over 60 per cent of its citizens survive on a dollar a day.

As the third-biggest oil producer on the continent, Angola has been experiencing massive boom times since its civil war. The economy is growing at a double-digit rate and in 2010 the country briefly became Africa’s biggest oil exporter. With reserves of 9.5 billion barrels, this boom could last a while – Angola pumps around 1.9 million barrels a day.

Unfortunately this wealth is having problems reaching the people on the street. Luanda is infamously the most expensive city in the world for expatriates – and it is not much cheaper for ordinary citizens.

When South Sudan became independent in June last year, it took over 75 per cent of the region’s oil fields with it.Sudan, in turn, maintains the pipeline that delivers this crude to the rest of the world.On paper they should get along.In reality they are constantly butting heads and have come very close to all-out war.

South Sudan pumps out roughly 500,000 barrels a day, though production is currently slow due to a lack of skilled labour and infrastructure while skirmishes with ethnic rebels also make the situation more difficult. It is extremely reliant on oil, which makes up 98 per cent of its GDP.

Gabon  sits on modest reserves of around  two billion barrels, which it has been exploiting since the 90s at a rate of 277,000 barrels a day. As such, Gabon is not as reliant on oil as some of the other countries on the continent and boasts a more diversified GDP, of which oil makes up 46 per cent.

But 81 per cent of its exports are also through oil products and the low oil prices of the 90s has left Gabon with substantial debt. Not that black gold will be a problem for much longer – it is estimated that Gabon’s wells will run dry by 2025.

Not to be confused with its larger neighbour, the DRC, this smaller country sandwiched between Gabon and the DRC has access to a modest 1.6 billion barrels of oil. It produces around 300,000 barrels a day, a step up from its lowest point of 227,000 in 2007. But there might be more to be found – offshore exploration has discovered several large oil fields.

From the above one could see clearly that the continent is yet to really benefit from any of these natural resources that have been mined over the years. Natural resources are not renewable and if  these resources are not well invested to keep the wheel of development running, the continent stands the chance of falling back in the area of economic growth and development.

The ongoing increase in export volumes from several countries that have discovered mineral deposits including oil  in recent years (Ghana, Kenya, Mozambique, Niger, Sierra Leone, Tanzania, and Uganda) should be able to  boost growth prospects.

GROWTH RATE

Overall, the  World Bank has  projected the Africa  to grow at its pre-crisis average rate of five  per cent over the 2013-15 period (4.9 percent in 2013, gradually strengthening to 5.2 per cent in 2015). Excluding, South Africa, the region’s growth will average six per cent over the 2013-15 period.

Writing in the  Finance and Development, a publication of the World Bank in  Volume 37 edition of December 2000, Kathryn McPhail said  for countries to benefit from oil  production  governments, private companies, and local communities or the nongovernmental organisations (NGOs) that represent them must be committed to working together as partners. Although each has different responsibilities, the partners must have mutually agreed objectives, shared responsibility for outcomes, clear accountability, and reciprocal obligations.

The ongoing political crisis in some Africa countries boils down to the use of natural resources  and until the right things are done the turmoil on the continent will continue to exist.

Source:  Daily Graphic

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Reporting Oil and Gas project was launched on 4th June 2009atTakoradi, Western Region, Ghana by Penplusbytes (PPB – www.penplusbytes.org) with the vision of providing a one stop online information and knowledge about Ghana’s oil and gas sector
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