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The ‘oil curse’ in Africa Inge Amundsen Chr. Michelsen Institute Olje for Utvikling i Nord og i...
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Transcript of The ‘oil curse’ in Africa Inge Amundsen Chr. Michelsen Institute Olje for Utvikling i Nord og i...
The ‘oil curse’ in Africa
Inge AmundsenChr. 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