Bottom of the Barrel:Sub-Saharan Africa is in the midst of an oil boom. Foreign energy companies are pouring billions of dollars into the region for the exploration and production of petroleum. And African governments, in turn, are receiving billions of dollars.
Africa's Oil Boom and the Poor
Africa is fast becoming a key supplier of oil to the United States, which already imports 17 percent of its petroleum from sub-Saharan Africa. In a decade, nearly a quarter will come from the region. More than $50 billion-the largest investment in African history-will be spent on African oil fields in the next seven years. Many outsiders will benefit greatly from Africa's oil boom-oil companies will make large profits and Northern governments and consumers will secure new supplies. But these benefits cannot be at the expense of millions of Africans.
Peril or Opportunity?
The new African oil boom is a moment of great opportunity and great peril for countries beset by wide-scale poverty.
The revenues available to reduce poverty are huge. Catholic Relief Services (CRS) conservatively estimates that sub-Saharan African governments will receive over $200 billion in oil revenues over the next decade, enabling them to vastly improve lives through investment in health, education and other vital necessities. The dramatic development failures that have characterized most other oil-dependent countries around the world, though, warn that petrodollars have not helped developing countries to reduce poverty; in many cases, they have actually exacerbated it.
Without improving their democratic institutions and administrative capacity, it is unlikely that Africa's oil exporters will be able to use petrodollars to fuel poverty reduction.
The Need for Transparency
A first step towards these goals is to build transparency. Oil is a natural resource owned by all Africans. Nevertheless, many aspects of the oil industry in Africa are concealed or shrouded in mystery; and key facts about oil are often treated as state secrets. Thus, it is difficult, if not impossible, to track how much money is being generated or how these revenues are spent. Transparency depends on multinational oil companies publishing what they pay, and governments revealing what they spend.
The Responsibility for Change
The primary responsibility for managing Africa's oil wealth in a transparent, fair and accountable way lies with Africa's governments. Africa's governments, though, are only one part of a web of interests and relationships in the African oil boom. Other key actors determining the outcomes of this boom are foreign oil companies, International Financial Institutions like the World Bank and the International Monetary Fund, Export Credit Agencies, and the U.S. and other Northern governments
The Need for a "Big Push"
To improve outcomes for the poor, all these actors need to make a "big push" to change some of their practices, as described in the report's recommendations, and to work together in a more concerted manner. Unless this happens, Africa's oil boom is unlikely to foster any significant poverty reduction. Instead, oil riches most probably will continue to produce corruption and mismanagement, environmental destruction, human rights violations and conflict.
CRS is a signatory to the Publish What you Pay statement of principles calling on oil, gas, and mining companies to disclose their revenue payments to national governments.