Download Daniel Sherrell

Daniel Sherrell
Highland Park High School
Angola
UNCTAD-Development of African
Oil Resources
The discovery of vast oil resources in Africa within the last 20 years has presented
the ailing continent with one of its first real hopes for a bright future. Amidst the
constant trials of war, famine, disease and poverty many African nations have risen to
become some of the largest oil producers in the world. Many large, oil-hungry nations
are increasingly turning to Africa for much of their fuel imports. This large-scale
increase in oil revenue for multiple African countries should have spelled increased
economic prosperity and stable infrastructure for Africa but if anything this oil has acted
as a curse against the continent. The African states producing the oil have completely
failed in turning revenues into sustainable economic growth. For example, Nigeria has
enjoyed more than 30 years of oil “wealth” yet its per capita GDP remains at
approximately $1000, making it only 209th in the world.6 The main cause of this
discrepancy between vast resources and negligible wealth in Africa is the fact that
corruption is rampant in both the international oil companies and the individual African
governments. The large foreign oil companies make unfavorable contracts with African
nations while many corrupt African officials line there own pockets with oil money that
should be going to national infrastructure. The United Nations Conference on Trade and
Development must find a way to ensure that the money for Africa’s vast oil resources
actually helps Africa with its numerous social, political and humanitarian difficulties, and
doesn’t line the pockets of foreign businessmen or disappear in endless corruption. The
Conference must take action soon because as it deliberates, the continent of Africa is
being robbed.
The nation of Angola lies at the very heart of this African oil issue along with
many other nations like Nigeria, Libya, Algeria and Egypt. The country could help
spearhead the initiative to effectively develop Africa’s oil resources and act as a model in
its implementation because it is one of the only countries that faces so many challenges
and yet has so many hopeful possibilities for dealing with these problems. For the past
two decades Angola has been destroyed by a brutal civil war that just recently ended in
2002.2 As it stands now 70% of the Angolan population lives below the poverty line,
roads in the countryside are ruined, the railway system had been demolished and the
agricultural base of the country is in tatters. Even so many economists see Angola as a
country ripe for change. It has quickly become sub-Saharan Africa’s second-largest
producer of oil (trailing only Nigeria) with oil production expected to reach 2 million
barrels per day by 2008.5 Angola also has a relatively small population (roughly 13
million) which that the oil wealth per person is much higher than in Nigeria and other
countries.2 Unprecedented amounts of oil money are flowing into Angolan government
coffers but one non-governmental group, London-based Global Witness, says that $8.4
billion in public oil money from 1997 to 2001 remains unaccounted for.3 But Angola
serves as a symbol for the rest of the oil-producing African nations in that so far none of
this oil revenue has actually benefited the Angolan people. This is why Angola is so
deeply invested in helping to find a solution to the problem for all of Africa, a solution
that very well may be the continent’s ticket out of perpetual poverty.
The main problem that needs to be dealt with is this situation is the corruption that
takes place on many levels. Probably most detrimental to the cause of helping to develop
Africa through its oil are the international oil conglomerates who have been consistently
implementing exploitative business policies that help themselves and hurt Africa. Instead
of constantly conflicting ideals, there needs to be a symbiotic relationship between these
companies and the African countries they are dealing with. Companies like Shell, BP,
Chevron, and Mobil among many others have thrown money at the countries for their oil
instead of cooperating in a more meaningful, development-oriented way.5 Many of these
large companies have underbid local African firms; have refused to hire many African
workers; and have undermined local efforts to increase transparency and good
governance by paying bribes and attaching no conditions or oversight to aid money.
Local ethnic groups are often offended by the “invasion” of these oil companies and their
drilling machines onto their land and some have retaliated, as in Nigeria recently where
the Movement for the Emancipation of the Niger Delta have kidnapped foreign oil
workers, sabotaged pipelines and even attacked offshore oil rigs. They also have low
environmental standards and little oversight and are thus destroying some of the world’s
most unique ecosystems.6 The other main source of the corruption is within the African
governments themselves where oil money is often allocated to supporting oppressive
military regimes instead of supporting the African people.
Angola proposes a multi-faceted solution to this problem that will hopefully free
African oil from the clutches of corruption and help the continent to start supporting itself
effectively. First of all Angola believes that it should be UNCTAD’s duty and
responsibility to set down a set of international laws that would hold international oil
companies up to certain standards and ensure they weren’t practicing exploitative
business. These laws should include that all oil companies contracting with one or many
African countries for their oil resources must 1) publish a completely transparent report
of all their dealings with African states or local communities, 2) provide a certain
percentage of their jobs to local African workers, 3) establish mutual partnerships with
otherwise combative ethnic groups to provide their communities with schools, clean
water, jobs etc. in return for drilling on their land, and 4) live up to set environmental
standards. These laws should be enforced by annual U.N. audits. Similar audits have
worked recently in Nigeria where they revealed hundred-million dollar discrepancies
between the amounts of taxes the foreign oil companies say they paid and what the
Nigerian government says it received.1
Another way to attack this problem is by implementing a wide array of programs
similar to China’s aid-for-oil programs. These measures, similar in concept for a debtfor-nature swap, let the company or country involved increase their production in African
oil fields in return for the construction of schools, hospitals, roads and for the forgiveness
of debt. Angola believes that any country or company interested or already contracting
with African countries for their oil resources should be required, with said country’s
permission, to implement an agreement similar to the Chinese aid-for-oil programs in
which the developed country provides the African country with long-lasting
infrastructure in the form of large-scale debt relief or broad public works projects, not
just sporadic, under-funded hospital facilities as an inadequate gesture of spurious good
will. UNCTAD should encourage some of these programs to include the creation of
country-wide systems of small, cheap medical facilities in the rural areas of these
countries which need medical care the most and yet get the least.
China has recently become a major factor in this debate since its number of oil
partnerships with African countries has been growing exponentially. China’s influence
has been both good and bad for Africa. The country has, in its insatiable thirst for oil to
fuel its rapidly growing economy, has partnered with multiple African countries,
including Angola, in the creation of roads, bridges, dams, schools, and hospitals. It has
also contributed 1, 500 troops to the peacekeeping force in Africa, sent doctors over to
help fight disease, and cancelled $1o billion in bilateral debt from African countries. On
the other hand Chinese companies have been some of the most accused for corrupt
business practices that are detrimental to development.7 Angola believes that success of
UNCTAD in effectively helping to develop African oil resources will depend greatly on
how well it works with China which will soon become the biggest foreign influence in
the continent. The Conference has to hold China and its companies to the same healthy
business standards as everyone else while continuing to support their immensely helpful
public aid projects.
To find an inspiration and model on how to manage a wealth of natural resources
successfully, one need look no further than to Angola’s close neighbor, Botswana.
Botswana has been blessed with a wealth of diamonds beneath its soil. The country has
been immensely successful in using the revenue from the exportation of this precious
stone to become one of the fastest-growing countries in the world and the richest in subSaharan Africa.4 The country has achieved this by adhering to sound macroeconomic
policies, implementing economic liberalization policies, tackling its corruption problems
and making a concerted effort to diversify its economy. If other countries follow
Botswana’s example and apply it to their oil resources, there is hope that the future of
Africa will see steady, long-term, sustainable economic growth.
Bibliography
1.
“Audit Shows Lost Nigeria Oil Taxes” April 12, 2006. BBC News. Online.
Internet. Available: http://news.bbc.co.uk/2/hi/business/4902474.stm
2.
“Background-Angola” African Oil Politics. Online. Internet. Available:
http://africanoilpolitics.blogspot.com/
3.
Donnelly, John. “Oil Wealth Helping Few of Angola’s Poor” December 11,
2005. Boston Globe. Online. Internet. Available:
www.boston.com/news/world/africa/articles/2005/12/11/oil_wealth_helping_few_of_ang
olas_poor/
4.
“Economic Success Story” WITFOR 2005. Online. Internet. Available:
http://www.witfor.org.bw/about_botswana/economic_success.htm
5.
Gary, Ian and Terry Karl. “Bottom of the Barrel-Africa’s Oil Boom and the
Poor” June 2003. Catholic Relief Services. Online. Internet. Available:
http://www.crs.org/get_involved/advocacy/policy_and_strategic_issues/oil_report_one.cf
m
6.
Miller, Andrew. “Oil and Development in Africa” Harvard Political Review.
Online. Internet. Available: http://hprsite.squarespace.com/oil-and-development-inafrica/
7.
Pan, Esther. “China, Africa, and Oil” January 26, 2007. Council on Foreign
Relations. Online. Internet. Available: http://www.cfr.org/publication/9557/