WASHINGTON, DC - In sub-Saharan Africa, many economies are growing briskly, thanks to the continent’s abundant natural resources and global commodities boom. Development experts say revenues from minerals, oil and gas could help many countries fund much needed roads, bridges, dams and other infrastructure. A recent report by the Africa Progress Panel, a group of influential business and political leaders, says there’s great potential in the continent’s extractive wealth – but also many challenges.
There’s plenty of room for optimism.says mining, gas and oil provide more funds than aid – about seven times as much.
Kofi Anan, the former UN Secretary General and chair of The Africa Progress Panel, put it this way:
"Imagine an African continent where leaders use mineral wealth wisely to fund better health, education, energy, and infrastructure, too," he says. "Africa has oil, gas, platinum, diamonds, cobalt, copper, and more. If we use these resources wisely, they will improve the lives of millions of Africans."
One way to improve lives would be to provide more funding for primary and secondary schools. UNESCO’s says by spending 20% of the additional revenues on education, resource-rich countries could educate over half of the 30 million children in Sub-Saharan Africa who are not in school now.
The Africa Progress Report uses figures from the IMF and World Bank to estimate the amount of revenue that could come from extractive resources. It says in Mozambique, natural gas could earn as much as US $10 billion annually. Angola is expected to produce oil at current levels for more than 20 years – bringing in up to $70 billion in export revenues.
Meanwhile, Tanzanian production of gas, gold and nickel could bring in over three billion dollars per year, while Uganda’s Lake Albert field could generate two billion dollars in revenues annually by 2020. Ghana’s Jubilee field could produce close to a billion dollars worth of oil yearly once it comes on line. Nigeria could maintain petroleum production for more than 40 years – for an overall value of about US$90 billion in export revenues. This year, the billion dollars produced from Sierra Leone’s Tonkolili deposits of iron ore are expected to nearly double the per capita gross domestic product -- which was US$366 in 2011.
But optimism is tempered by problems of diverted revenues and other forms of corruption which prevent funds from reaching national treasuries.
The executive director of Oxfam International, Winnie Byanyima, says as a result, potential resources end up by-passing the poor.
"In 2011," she says, "exports of oil and minerals from Africa, Asia, and Central and South America were over 1.4 trillion dollars. It’s more than 10 times the official development assistance provided to these same regions. We argue that if illicit capital flows could be stopped, Africa could fund its own development without need for aid."
Among the countries where revenues have been diverted by mismanagement is Nigeria. The report cites a parliamentary task force which found that nearly seven billion dollars from the transfer of fuel subsidies had been lost between 2010 and 2012. It says another investigation found that discrepancies in natural gas prices and missing payments from concessions and production-sharing deals accounted for a loss of 29 billion dollars.
The economy of Sub-Saharan Africa’s second-largest oil exporter, Angola, has been growing at a healthy 7% per year, with oil producing up to six billion dollars annually. But the Africa Progress report found that income from the oil boom has reached few of the poor, with half the country still living on $1.25 per day. Angola also has the eighth-highest mortality rate [about 116,000 deaths per year] for children under five of any country in the world.
The Africa Progress Report also cites another factor affecting the use of extractive resources for funding infrastructure and social programs: poorly negotiated business deals working to the advantage of large international companies.
"The competition among governments to attract direct investment has heated up in recent years," says Biyanyima. "The advice from the World Bank and IMF plus the competition to attract a number of companies in extractive industries has caused a race to the bottom -- in which each country [is encouraged] to open what’s called an ‘enabling [attractive] environment’ for these companies. [That includes] offering tax holidays, compromising labor standards, and violating the rights of people in terms of their land rights, and so on."