Niger Delta Blues

The nickname “black gold” has always been apt when dealing with oil. But dreams of riches and development have been masked by the murky nature of money flows connected to it. Nigeria in particular has been blessed and cursed with its abundant oil supplies. With the second largest GDP in Africa, Nigeria still has 46% of its population below the poverty line. This is despite the oil and gas sector representing 35% of the Nigerian economy, according to OPEC. The Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture has even asserted that the oil and gas sector has been distorting the Nigerian economy. Recent revelations have shown that corruption in the oil sector is still rampant. The question becomes what pressure can be brought on the industry.

Lamido Sanusi, former Nigerian central banker and whistle-blower

Recently, Lamido Sanusi, the Nigerian central bank president, was suspended and removed from his position by President Goodluck Jonathan. Sanusi’s suspension was prompted by the revelation that $20 billion in oil revenue was not accounted for by the Nigerian National Petroleum Corporation. The revelation created enough of an uproar that a forensic audit has been called for to try and account for the missing money. This is on top of the fact that a month earlier, the NNPC was selling kerosene to marketers at one-third of the international price, allowing them to mark up kerosene to Nigerian citizens 300-500%. The mark-up is the difference between 140-160 naira per liter ($.85-$.97) and 40 naira per liter ($.24).

In the past, Nigeria tried to tackle the issue of corruption and the lack of transparency in the oil sector by establishing the Nigeria Extractive Industries Transparency Initiative (NEITI) in 2007, which is the local adaptation of the Extractive Industries Transparency Initiative (EITI). NEITI is mandated to audit the extractive industries, and provide transparency and accountability. It is comprised of representatives from the government, oil industries, and civil society. While the cooperation of national governments and NGOs is a laudable achievement, the voluntary nature of the EITI has been criticized.

Shell and the Niger Delta

International NGOs, such as Oxfam and Publish What You Pay (PWYP), feel that the standard adopted by extractive industries should also be backed by a legal enforcement framework. EITI has also been criticized for the role of civil society organizations (CSOs) in the EITI framework. EITI can be considered a top-down reform, and the governments and extractive industries still have more power than the CSOs, creating pressure for the CSOs to go along with the EITI process, according to Kees Visser at the Focus on the Global South. There is also the question of which CSOs are chosen to be represented. EITI has also not been shown to reduce the Corruption Perceptions Index. In Nigeria, the NEITI has published audits, which have had no effect on laws,  because dissemination is not simple in a country with low internet access. There have also been representatives of NGOs who were actually single person self-promoters.

With the doubt cast over the EITI, the question remains on what model civil society in Nigeria should use to ensure that all Nigerians benefit from their extractive industries. While there is a local chapter of Publish What You Pay, coalitions in Ghana and Uganda could serve as templates for counterbalances to the government and industries. The Civil Society Coalition on Oil and Gas (CSCO) in Uganda and the Ghana Civil Society Platform on Oil and Gas are both large coalitions of CSOs: 40 in CSCO and 120 in Ghana compared to 19 in PWYP. Both coalitions use the expertise from individual CSOs to issue media campaigns and community interaction to pressure governments to keep oil and gas taxes and concessions transparent. In Ghana, the Civil Society Platform on Oil and Gas issues “Readiness Report Cards” and actively contributes to the Public Interest and Accountability Committee and proposed laws through the committee. The Ghana platform is funded by various international donor agencies, such as USAID and the EU, and therefore have the backing of powerful partners. Both of these countries have only recently discovered oil, so it remains to be seen how successful these coalitions will be in exerting pressure. For the most part, there’s nowhere to go but up.

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Double, Double Oil and Trouble

How will oil influence Ghana's development?
How will oil influence Ghana’s development?

In 2011, Ghanaian citizens viewed the discovery of offshore oil as a game changer for Ghana. The oil would provide an economic boost for the developing country and improve overall social welfare through increased revenues, jobs, and infrastructure projects. Yet, oil-led development is notorious for stagnating economic growth and harming overall development. This is known as the “Resource Curse”. Almost every African country attempting oil-led development falls under the curse. Take your pick of examples. There’s Angola, or Equatorial Guinea, or Nigeria. The World Bank even tried to break the curse in Chad and failed. Africa has yet to see a successful execution of oil-led development.

What factors contribute to successful use of oil as a means of development? Terry Karl attributes Norway’s success to strong governance and a diverse economy. Countries relying on oil for development need strong governance to avoid corruption and a misallocation of resources. You only have to look three countries over from Ghana to see an example of this. Nigeria is Africa’s largest exporter of oil, yet the general public sees almost none of the money. A diverse economy is necessary because of the fluctuating value of oil. If a country relies solely on oil its economy will directly fall and rise as the value of oil falls and rises. Look no further than Angola or Equatorial Guinea where oil and gas make up 98% and 95% of exports, respectively. Neither country has experienced economic stability or the developmental benefits of increased revenues.

Ghana has the politics tobreak the curse
Ghana has the politics to break the curse

The development community still remains optimistic with Ghana. Many look to Ghana as an example of effective democracy in Africa. Ghana ranked 63rd on the Corruption Perception Index, the 6th highest of all African countries. Elections run smoothly and, more often than not, citizens turn to the justice system instead of violence to resolve conflicts. Ghana extends its good governance to its use of oil revenues. It passed the Revenue Management Act in 2011 as a new approach to oil-led development. The Act promises government transparency in its use of the oil money, with 30% of revenues going to savings and 70% towards development projects. It establishes oversight, regulations, and benchmarks for revenue distribution that the government is accountable to present to the public.

Compared to its counterparts, however, Ghana is in a better economic position to benefit from oil-led development. At the time of discovery, Ghana had a relatively diverse economy. Its largest export was gold, at 46%, followed by cocoa products at more than 30%. Ghana also had trading partners throughout Asia, Africa, Europe and the Americas. Since oil production began Ghana’s exports have grown from $7.5 billion in 2008 to $13.5 billion in 2012, but only $500 million is from oil. Ghana’s economic diversity means oil is a form of extra revenue instead of the basis of the country’s economy.

Ghana's exports in 2008
Ghana’s exports in 2008

But Ghanaian citizens have yet to benefit from the oil revenues. The government made a promise to use the oil revenues for infrastructure improvements. But citizens have not seen the benefits of that investment. Is this another case of the resource curse? The government claims the reason citizens have not directly benefited is thanks to lower-than-expected revenues. Current oil production rates are half of what analysts expected but Ghana is working to improve its production capacity and could see $1 billion in revenues in the future. Perhaps this slow production rate is a blessing in disguise for Ghana. At full production Ghana’s oil will run dry in 20 years. At the current rate Ghana can instead find a way to refine its oil and use it towards other industries and create long-term economic benefits.

Ghana is still in the early stages of oil-led development but it is facing a crossroads. Will Ghana take advantage of its good political and economic standing and break the resource curse? Or will it succumb to the draw of high short-term revenues and become another cautionary tale concerning the pitfalls of oil discovery? Ghana’s success could serve as a model for future oil-led development, especially considering the recent oil discovery in Kenya and Uganda.

Is the Partnership for Growth Going to Grow?

In 2010, the Obama administration emphasized the fundamental importance of the private sector in international development in the Presidential Policy Directive on Global Development. From this directive came the Partnership for Growth (PfG), an interagency initiative that selected four countries to develop deep partnerships with the U.S. government to help them “accelerate and sustain broad-based economic growth.” U.S. agencies including the U.S. Agency for International Development (USAID) and the Millennium Challenge Corporation (MCC) are now working with the governments of El Salvador, Ghana, the Philippines, and Tanzania to analyze constraints on their growth and create development plans that leverage private investment.

In PfG partner countries, the U.S. government’s development efforts aim to create an “enabling environment for economic growth” which will attract private capital. The government is engaging with private sector partners to determine what specific factors are keeping them from investing in the PfG countries, in order to focus its resources towards addressing those issues. The PfG aims to “spur new investment by lowering the risks and costs of investment with developmental impact,” increasing non-aid flows into developing countries and creating more sustainable development. By deliberately promoting economic growth through private investment and economic growth, U.S. agencies are positioning themselves as “catalytic minority shareholders in development” helping to unleash growth with more than official aid money.

On Friday, September 13, the Center for Strategic and International Studies held an event to promote Jeri Jensen’s new paper evaluating the successes and failures of PfG, “Toward a New Paradigm of Sustainable Development: Lessons from the Partnership for Growth.” Gayle Smith, Special Assistant to the President and Senior Director of the National Security Council, keynoted the event.

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Digital Dumping: The Growing Problem of E-waste

In an era of rapidly progressing technology, there is a constant demand for the latest and greatest electronics. Be it phones, computers, televisions, or any other electronic device, it is not long before a product becomes obsolete and is replaced with a newer one. These outdated devices, known as electronic waste or e-waste, are left to be disposed in one manner or another. By a large margin, it is the fastest growing waste stream globally and is posed for significant growth in coming years.

Annually, some 53 million tons of e-waste are produced, predominately by developed nations with large amounts of disposable income. A majority of the waste is simply thrown away, but an increasing amount is being recycled.  Recent estimates have found that about 20 percent of the waste is properly recycled. What happens to the rest? Much of the waste finds its way to developing countries, particularly nations in Africa and Asia.

A child in Ghana’s capital, Accra, searching for e-waste.

Like many other services in emerging economies, it is far less costly to break down e-waste into its reusable components than it would be in the country that produced it. The problem is that with lower environmental standards and fewer safety regulations, the recycling of e-waste can cause serious health and environmental challenges. Electronic products are laced with a plethora of toxic materials such as lead, arsenic, cadmium, chromium, and mercury. To extract the reusable materials, workers typically burn the waste or dissolve it in acid, usually with little or no protection. In essence, 21st century toxics are managed by labor that uses 17th century technology.

The impact on local populations has been devastating. Frequently, the toxic materials find their way into the air, water, and soil, poisoning the workers that recycle the waste. Communities that have large e-waste recycling operations have seen significant increases in respiratory illnesses, birth defects, developmental damage, cardiovascular disease, and cancer. The problem is further complicated by the fact that much of the recycling work is done by children, leaving them at-risk for illnesses other occupations do not have. Continue reading

Food Security in Africa: Can PPPs help?

Global hunger and malnutrition are two of the greatest developmental challenges the world faces today. Currently, close to 1 billion people suffer from chronic hunger. By 2050, the world population is expected to climb to 9 billion people, requiring a 70% increase in agriculture production.

G8 Summit Working Session on Global Economic Issues

During his keynote address at the 2012 G8 Summit at Camp David, President Obama unveiled a new initiative to combat hunger in Africa. The G8 leaders, along with the leaders of Benin, Ethiopia, Tanzania and Ghana, have committed to The New Alliance for Food Security and Nutrition. This shared commitment between the G8 members, African leaders and the private sector, seeks to combat hunger, raise 50 million people out of poverty in the next 10 years, and achieve sustaine agricultural growth.

Initially, Tanzania, Ethiopia, and Ghana will take part. And more than 45 local and multinational private sector corporations have signed on to the New Alliance and have collectively pledged to invest over more than $3 billion in African agriculture over the next 10 years. This investment will go into areas such as crop protection, irrigation, infrastructure and financing. Continue reading

No Aid for You: (The Effects of) Placing Restrictions on Foreign Aid

British PM David Cameron | Source: Reuters

Headlines in the news lately have featured Britain’s International Development Secretary Andrew Mitchell and Prime Minister David Cameron declaring that the UK will no longer send aid to countries that restrict or criminalize the behavior of the gay community. Uproar over their statements is largely due to the concern that cutting aid will affect the poor who benefit from the development programs/aid relief, and will leave government officials who implement the programs unscathed.

As of now, Britain has only declared aid reductions for Malawi (a cut of £19 million so far). Last year in Malawi, two men announced their engagement; they were arrested and sentenced to 14 years of prison with hard labor. They were then released, in part from international outcry that the punishment was overly harsh (noting that the judge sought to make an example of their case to other gays). Other countries, such as Ghana and Uganda, are under scrutiny for homophobic measures as well. For African countries with large HIV/AIDS populations, such as Ghana, homophobic stigmas make HIV/AIDS treatment and awareness more difficult.  Continue reading

CGP Water Series | Fifteen Minutes: a Shower, a Coffee, an Education

In the inaugural post of the CGP Water Series, CGP described how the global water crisis has a wide range of repercussions beyond the obvious consequences of health and disease. A new study by Céline Nauges and Jon Strand highlights one such unexpected effect: the troubling relationship between water access and school enrollment.

Water hauling and girls’ school attendance: Some new evidence from Ghana” examines how changes in water collection time affect school enrollment rates in communities across Ghana. Based on a statistical analysis of data collected over the span of fifteen years, Nauges and Strand argue that as a little as a fifteen minute reduction in the time it takes to access water increases girls’ school attendance by 8-12%.

Source: World Bank and UNICEF Joint Monitoring Project

Featured by the World Bank’s Water Partnership Program, the study analyzes four rounds of Ghana’s Demographic and Health Survey.  When the first round of surveys were administered in 1993, only about 54% of Ghana’s citizens had access to an “improved” water source—ones in which water is separated from human fecal matter. When the last round of surveys were taken in 2008, that figure had increased to 83%. Much of this improvement took place in rural areas, where the proportion of the population with water access doubled from 37% to 74%.

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