NGOs warn Africa is squandering oil windfall

There's plenty of oil in Africa, but the population is not feeling the benefits Keystone

The extent to which corruption and bad governance are preventing Africa's oil boom from lifting millions out of poverty has been laid bare at a conference in Geneva.

This content was published on November 2, 2006 - 21:59

Campaigners say new international rules are needed to guarantee transparent management of oil revenues and job opportunities so that the poorest can benefit from the financial windfall.

Caroline Morel, executive director of Swissaid, which hosted the event, said the issue of how the continent's oil revenues were dispersed was of "global importance".

"[We need] to find new ways of ensuring that existing opportunities or those that are opening up for African nations with oil are really translated into better living conditions for the people and contribute to the sustainable development of the country," she added.

According to Conrad Gerber, director of Geneva-based Petro-Logistics, the failure of African oil-producers to rival those in the Middle East is not due to a lack of resources.

He noted that Bahrain, Dubai, Qatar and Oman each produced significantly less than Angola's 1.2 million barrel a day.

"My point is you do not need enormous economic resources to generate economic development, you do not need to be a Saudi Arabia," he said.

Black gold

Gerber, whose firm collects and analyses data on the world's oil supplies, described Africa as an Eldorado for "black gold" prospectors.

But just what is happening to the estimated $250 million (SFr311 million) a day generated by oil and gas production in Africa?

Gerber conceded that a large chunk was probably disappearing into the pockets of government officials. "The problem is acute and it needs to be addressed," he admitted

Elizabeth Tinoco, a senior official at the Geneva-based International Labour Organization (ILO), warned that the failure to use these oil revenues to tackle chronic unemployment and poverty was a "wasted opportunity".

She said unemployment rates in Africa showed no signs of improvement, especially among young people.

According to the ILO, the youth unemployment rate in sub-Saharan Africa stands at 18 per cent and eight million new jobs a year are needed to keep pace with the growth of the labour force.

"Unfortunately the opportunities for equitable and sustainable development built around the oil industry are too often wasted in some cases," she pointed out.

Poverty reduction

The example of Chad was highlighted – a country where Swissaid has been active for a number of years, supporting civil society in its struggle to ensure that part of the country's oil revenues is set aside for poverty-reduction measures.

The NGO's efforts culminated in a pioneering agreement between the World Bank and Chad in 2000, under which the government committed itself to greater transparency and sound management in the use of its oil revenues.

But according to Gilbert Maoundonodji, coordinator of another NGO in Chad monitoring the impact of oil production, this has now unravelled.

He said that earlier this year the state had passed new legislation granting it a large slice of the funds destined for health and education projects.

"The situation is very complicated in Chad," admitted Swissaid spokeswoman Catherine Morand. "As for the oil dossier, there have been a large number of setbacks."

swissinfo, Adam Beaumont and Frédéric Burnand in Geneva

In brief

The theme for Thursday's Swissaid conference was: Oil is not necessarily a curse for Africa – How sub-Saharan Africa can make the most of its oil resources.

The event was supported by the Swiss Agency for Development and Cooperation, the Geneva-based Business and Society Research Centre and the International Labour Organization.

The event brought together representatives from oil-producing countries, international organisations and NGOs, as well as specialists in oil production in Africa.

According to the organisers, oil companies declined an offer to participate.

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Key facts

According to Geneva-based Petro-Logistics:
African oil production is concentrated in Gulf of Guinea countries and North Africa.
Emerging oil producers include Uganda and Madagascar.
Africa produces around ten million barrels of oil a day, or 12% of global production – around 85 million barrels per day.
There are 250 oil companies involved in exploration and production in Africa and number is growing.

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