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The curse of the black gold

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Oil-rich African countries make billions in petrodollars, but no benefit ensues for their populations, writes Suraya Dadoo

South African oil workers Dan Laarman and Robert Berrie were released after a mercifully short period as hostages in Nigeria’s oil-rich Niger Delta recently.

They, and most of the world, were probably unaware of the devastating impact the oil industry has had on Africa.

In 2001 Washington called for a major diversification of US oil supplies away from the politically volatile Persian Gulf to "friendlier" sub-Saharan Africa. West Africa already supplies about 12% of US crude oil imports, and the US National Intelligence Council predicts that this will rise to 25% by 2015. Nigeria is the largest producer and exporter of oil in west Africa.

More than $300-billion-worth of oil has been pumped from the Niger Delta since 1956. Multinational oil companies such as Shell, ExxonMobil, Total, Eni and Chevron have been pouring billions of dollars into the region for the exploration and production of crude oil. In return, the Nigerian government has been getting billions.

But Nigerians, particularly those in the Niger Delta, live in abject poverty.

In 2003 US aid agency Catholic Relief Services (CRS) released a damning report entitled Bottom of the Barrel, which chronicled the oil industry’s devastating impact on the populations of Africa’s oil-rich countries.

The report concluded that petrodollars had not helped developing countries to reduce poverty – in many cases it had exacerbated it.

Nigeria is a case in point. According to the United Nations, 70% of Nigeria’s population live on less than $1 a day. The percentage of people living in poverty has more than doubled since 1980, despite the government collecting an estimated $14-billion (about R114-billion) a year in oil revenue, according to CRS.

Many of the protest actions in the Niger Delta have been led by women, and they have had some success in forcing concessions from the oil companies.

In 2002, after women occupied several Chevron terminals, the oil company promised to build schools and hire local people. A similar occupation was held in 2003 to pressure Chevron to stop gas flaring, which has created massive air pollution in the region. Chevron called in the police and army, which attacked the protesters. Some of them were killed.

An over-valued exchange rate in Nigeria has devastated the non-oil sectors of the economy while local uprisings over control of oil revenues sparked large-scale military repression in the Niger Delta in the 1990s.

"So overwhelming is mismanagement and rent-seeking that Nigeria has become virtually synonymous with corruption," said the CRS report.

Since the report was released, little has been done to improve the situation in Nigeria, much to the frustration of the Nigerian people.

In 2006 the Movement for the Emancipation of the Niger Delta (Mend), which claims to be fighting for more local control of the poor region’s oil wealth, started blowing up oil pipelines.

The organisation has now ordered oil companies to leave the Niger Delta.

And it has warned: "This may be the beginning of a full-scale oil war."

In Gabon, too, oil has been at the centre of a string of scandals involving money laundering and government corruption. Oil financed three decades of civil war in Angola where billions of dollars are deposited in offshore accounts.

Other African oil producers with documented records of corruption, electoral fraud and financial mismanagement are Chad, Cameroon and the Democratic Republic of Congo.

The US’s willingness to tolerate serious human rights abuses and questionable practices by oil-producing governments to secure its energy interests is compounding the suffering.

Nigeria has been governed by military dictatorships for most of its post-independence existence.

In the 1990s dictator Sani Abacha presided over a regime of extreme brutality and corruption. But the advocates of oil investment had no problem with military rule in Nigeria, as long as the oil kept flowing.

Equatorial Guinea is the continent’s third-largest oil producer, behind Nigeria and Angola.

After the discovery of oil reserves off the country’s coast in 1994, the US reopened its embassy there.

The administration of US President George Bush has been developing close relations with Equatorial Guinea’s President Teodoro Obiang Nguema Mbasogo – a man the CIA’s World Factbook described as a ruthless leader.

The country was also the scene of the infamous attempted coup involving former British army officer Simon Mann and his alleged backer Mark Thatcher, the son of former British prime minister Margaret Thatcher.

South African former soldier Nick du Toit is in jail in the notorious Black Beach prison for his part in the plot.

International financier George Soros has funded several initiatives to seek greater transparency in the management of revenues from natural resources.

These initiatives include the Open Society Institute and the Revenue Watch movement.

In 2002 more than 130 civil society groups around the world endorsed the Publish What You Pay campaign. The initiative promotes mandatory disclosure of extractive industry revenues from multinational companies to host governments. The coalition also called on the G8 to promote transparency about oil, gas and mining revenues worldwide.

Former British prime minister Tony Blair launched the Extractive Industry Transparency Initiative (EITI) at the World Summit for Sustainable Development in Joburg in 2002. EITI called for the mandatory disclosure of payments made by oil, mining and gas companies to host states.

But, after pressure from oil companies, British and American authorities abandoned the mandatory approach in favour of a voluntary one.

"The purely voluntary approach will not work in the countries where it is most needed because many political and business elites have major vested interests in avoiding transparency," says Simon Taylor, director of Global Witness, which works to expose links between natural resource exploitation and human rights abuses.

In the past few years, prominent human rights and development groups such as Human Rights Watch, Oxfam America, Save the Children, the Open Society Institute and others have joined local groups in oil-producing countries in calling for the mandatory disclosure of payments.

Campaigners believe that without stronger enforcement, these initiatives will make little difference in helping African countries to benefit from their oil reserves.

As efforts to force oil companies to publicly reveal how much money they pay African governments have failed, the poverty, desperation and anger of the people of Africa’s oil-producing states escalate. It is oil industry workers like Laarman and Berrie who bear the brunt of this anger.

Suraya Dadoo is a researcher for Media Review Network, a Gauteng-based advocacy group (

Published on the web by Star on September 28, 2008.
© Star 2008. All rights reserved.


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