The ‘oil curse’ in Africa
Inge Amundsen
Chr. Michelsen Institute
Olje for Utvikling i Nord og i Sør UiTø, Tromsø, 5 December 2007
The Resource Curse
• The Resource Curse
– The Paradox of Plenty – The Dutch Disease
• What is it?
– Economic explanations – Political explanations
• Examples
– Angola – Nigeria – Cameroon
• Political consequences
The blessed and the cursed
• Norway
• Australia
• Canada
• Chile
• Brazil
• Peru
• Malaysia
• Botswana
• …
• Nigeria
• Angola
• DR Congo
• the Sudan
• Sierra Leone
• Liberia
• Zambia
• Colombia
• Azerbaijan
• …
• Rich in
– Natural resources
• oil and gas
• diamonds
• other minerals
• timber
• fish
• foreign aid
• Poor in
– Economic development
• contraction and concentration – Redistribution
• increasing inequalities
• increasing poverty – Democracy
• authoritarianism
• weak governance
Economic explanations
• The Dutch Disease
– Relative price effect
• Higher currency value
• Imports
• Competition difficult
– Crowding out productive sectors
• Over-investment in extractive industries
• Under-investments in manufacture, agriculture
• De-industrialisation
– Volatility
• Uncertainty for businesses
• Low investments in alternative production
• Government waste and debt
• Capital flight
Political explanations
• The Rentier state model
– Rents increases the stakes/prize of controlling the state
• Off-shore, foreign, High-Tec
• Government business, government take
• Consumption, enrichment, corruption, embezzlement
• Can lead to conflict, violence, civil war
– Rents increases state autonomy
• Natural resources: “un-earned”, easy
• Little taxation of domestic economic activity
• No “social contract”
• Little influence of business interests, middle class
• Little influence of civil society, interest organisations
Political explanations
• The Rentier state model
– Rents increases the powers of the state
• Means to manipulate institutions
– Parliament, judiciary – Special institutions – Elections
• Means to buy (off) rivals
– Patronage, clientelism, favouritism, nepotism
• Means to buy instruments of coercion
– Military hardware – Security companies – Suppression
Example: Nigeria
• 40 years of oil production
– Africa’s leading oil producer – Total income $ 300 bn 25 years
• Poverty
– People in extreme poverty: 27 to 66%
– Economy as poor as before oil
• Corruption
– No 147 of 179 on TI index
– Abacha embezzeled 2-5 bn US$ 93-98
• Authoritarianism
– Biafra War 67-70 – Coups d’état 83, 93 – “Niger delta syndrome”
– Sharia states
– Freedom House ranking 4 (PF) – Federal government + some states
Example: Angola
• Oil
– Comparable to Norway
• Surpassing in 2010 – 90% of exports
• 90% of government revenues
• Diamonds
• Poverty
– Gini coefficient: > 0,60 – Poverty line: < 60%
– No 162 of 177 on HDI
– Internally displaced, landmines
• Corruption
– No 147 of 179 on TI index
– Dos Santos largest landowner in California? (“200 families”)
– New airport, “New Luanda”
• Authoritarianism
– Civil war 75-91, 92-94 – No elections since 1992
– Freedom House ranking 6 (NF) – Non-transparent social spending
Example: Cameroon
• Oil
– 6 in sub-Saharan Africa – 30 years of oil income
• 3-5 % of GDP – Peak in 1986
– Chad-Cameroon pipeline
• Poverty
– No 144 of 177 on HDI
• Corruption
– No 138 of 179 on TI index
• Authoritarianism
– Paul Biya since 1982
– Freedom House ranking 6 (NF)
Political consequences
• Democratisation
– Institutions matter – Good governance
• Service delivery
• Basic human rights
– From below
• Support from the outside
– Transparency (PWYP/EITI) – Legal standards
– Support to civil society
• Drivers of change
• Democracy first!
– Political science theory: no democratisation of oil-rich regimes
Some literature
Summary
“Without improving their democratic
institutions and administrative capacity, it is unlikely that African oil exporters will be able to use petrodollars to fuel poverty reduction; instead oil monies are more likely to make matters worse for the poor”
Catholic Relief Services (2003):
Bottom of the Barrel. Africa’s Oil Boom and the Poor
