Can we help you find something?

Content type
Categories
Country
Organization Type

Dear Kobina,

Thanks for your question.I mentioned Ghana in the context of comparing her to Nigeria, her close door neigbour.Actually, it was an error to state that Oil revenue has not imparcted positively on Ghana as she  only recently dicovered oil in commercial quantity of recent, so that period is too short to make such a proclamation unlike her west African neighbour.

Ghana has the advantage of learning from the history of her neighbour and avoiding her mistakes as she starts receiving royalties from her oil exploration and importation.So for Ghana, in the years to come, I am sure we will be able to access and see if this argument is a yes or no.I believe Ghana is poised to plan wisely to avoid the mistakes of Nigeria.This does not mean that Nigeria cannot spring a surprise as the government has plans and policies do so, but will only need to put her heart where her mouth is.The error on classifying  Ghana with other countries  is regreted.

Thank you.

Dr.Fasanmi

@ Dr. Fasanmi - You mentioned Ghana as another example where oil revenue has not had positive impact. Can you elaborate a bit?

@Ahmed - That's an interesting point about the refiniries. Perhaps you should start a new discussion threat on it.

Y'all continue to beat this dead horse by bringing back the issue of the so-called 'African Resource Curse."  People have made careers of exploring the problems of Africa. What is now needed is for you smart young people to come up with smart solutions for Africa's seemingly perpectual problems of resource mismanagement. President Museveni of Uganda just recently commented at the African Union meeting in Addis Ababa, Ethiopia that oil companies do not want Uganda to build refineries for processing its crude oil when the pumping starts because, according the President, other countries in the region already have refineries so there will not be adequate demand to justify Uganda's refineries. One would expect some robust discusions of this issue on this forum but the silence is deafining. Where have  all the young Goxian intellectuals gone to?

As a reminder to the young Goxians, how a country manages its resources is function of its political economy; in order words it depends on how the country is governed and the efficiency of its institutions.

No resource endowment should ever be a curse for any country, except of course in Africa.

Dear Semkae & Stefania,

Thanks for the wonderful writeup and comment,

The topic being discussed is topical especially from the perspective of  extractive countries.The discovery of minerals(e.g. crude oil) has it impacted positively in the life and economy of these nations?Take Nigeria for example, It's been its been over 40 years of mismanagement of oil revenues.For instance before Crude oil was discovered in commercial quantity other sectors of the economy were vibrant like the Agricultural sector(The groundnut pyramids in the north is an example), i grew as a child to read about them, but did not live to meet  them).Agriculture , Power and other sectors have been neglected.Crude oil has not impacted positively on the socioeconomic development of the most popular oil rich nation in Africa.Corruption is rife and it has now assumed frightening proportions where crude oil is being stolen from off shore rigs and through illegal oil exploration.The recent subsidy probe by Nigeria's National assembly has exposed a can of worms of illegal payments under the guise of subsidy where Nigeria was swindled of billions of naira.The questions being asked  here are:

1.Have these God given wealth(black gold) impacted positively on the ordinary lives of these extractive countries?

My response to this is No!This God given wealth has resulted in a life time of wasteful mismanagement by governments of these countries with the false belief that these resources will continue forever.

2.These countries have deliberately refused to make judicious use of these resources and have failed to make good use of opportunities of International oil price surges to the benefit of their economics.

3.Some sections of the  populations in these countries have lost the will to work as "free money" is available in their soil so why should they  work? Just sell alittle crude and money is available.I believe we need a mental reorientation here.

I have some thoughts though, is there a way that foreign countries can recognise and backlist stolen oil in the international market so as to provide a disincentive to stealing crude oil?

Can oil producing nations/governments be tutored on how to plan and make judicious use of their wealths to the benefit of their nations.Nigeria for example still depends mainly on imported fuel to run her economy.Her refineries are all in a failed state and she cannot refine over 50 % of what she consumes.

Gas is still being flared in the Niger Delta in this day and age in Nigeria.Most of the cooking gas used in country is still being imported.

In conclusion, it is my calculated opinion thatThe oil revenue does not impact positively in the health and economic indices of Nigeria.The case study of two west African countries(Nigeria and Ghana) is an evidence to this.Thanks.

Dr.Akinlolu Fasanmi

Abuja,Nigeria

I had a quick look to the report. I found quite interesting how the IMF has not learnt anything from the previous years (or previous literature). The fact that natural resources harm economic growth directly is a myth. And we can show this easily. GDP is a function of (among other things) exports. If a country exports natural resources an increase in the exports of these resources would increase GDP (let's use economic terms - ceteris paribus). I guess what I just want to say is that there is not any "curse".

The problem is the management of these resources. And this is nothing new (I wish it were, so I could get some publications!). And it is here where I get amazed about IMF conclusions. Let's have a look to some of these conclusions:

 "Natural resource revenues contribute significantly to national budgets in 10 sub-Saharan African countries, with that number also expected to rise in the coming years. The share of resource exports that accrue to national budgets varies widely across countries, with oil producers being the most successful in terms of revenue extraction".

As I said. This has been the problem in many oil exporters. When there is a boom (either for a discovery or for an increase in oil prices) national budgets increase and so government consumption (and bad investments). This is a first signal of a possible "resource curse".

"The present value of budget revenues likely to be collected from natural resource wealth is large in relation to nonresource GDP in many countries, notably in major oil exporters".

This is one of the symptoms of the "Dutch disease": The concentration in the boom sector while other trading sectors lag behind.

"Natural resource exporters have experienced faster economic growth than other sub-Saharan African economies during 2000–12, but the improvement in social indicators is not noticeably faster. Improving service-delivery capacity may be part of the answer to connecting economic growth and improved living standards in resource exporting countries".

This is really worrying! an increase in economic growth is not translated into an increase of living standards. This point should be more investigated. Are these countries saving this money? are they investing in capital goods? are they using it for current expenditure?

"Countries that obtain considerable fiscal revenue from natural resources have experienced significantly higher volatility in exports, revenue, and nonresource GDP growth than other sub-Saharan African economies. Some countries have developed effective macroeconomic policy frameworks to manage this volatility, but more-structured policy frameworks are needed in several countries. Fiscal policy in these economies has become less procyclical over the past decade, although the boom-bust cycle has not been eliminated".

 

As said before, these countries are narrowing down their trading sector to only the booming-resource sector. This is not positive in general, because increases the  likelihood of the country to be exposed to external shocks. One of the policy choices should be a greater diversification that can be obtained with more investments in other trading sectors of the economy. I do not think this is happening in many countries.

 

Then of course the IMF offers some policy advices, that however do not look at any characteristic of the area but just parrot-repeat things that have been said over and over again.

Do I think this is the end of "resource curse" in Africa? I do not know. I am not an expert in this area (I am specialised in Latin America), but I would not put my hand on fire about this. 2000s has been a decade of positive commodity booms so, it seems natural that commodity producer see their exports increasing, however, the real challenge appears when the windfalls of these resources dissapear and the country has to deal with low prices of ther export-commodities. And we can observe already that not all these countries are creating basis with deal with the future problems (check unemployment rates in other sectors of the economy, internal prices, and current living standards).

 

But of course, this is only my opinion and people tend to think I am quite pessimistic (even if I prefer to say realistic).

 

Stefania P.