Will Oil Bring Prosperity or Chaos to East Africa

Many in the oil industry are looking towards East Africa as the next great oil reserves.  There have been many discoveries over the last few years that seem to be commercially viable, including some in Uganda, Mozambique and Tanzania.

Of course these countries have numerous problems, but if used responsibly the billions of dollars of oil revenue have the capacity to radically improve the area.  Improvement in social services and overall infrastructure is desperately needed and oil revenue would seem an obvious solution to deliver these changes.

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It seems very straight forward, however nothing rarely is in Africa, where it has been seen that having natural wealth and resources rarely lead to economic growth and developments.  There are a host of African countries with high levels of valuable natural resources such as Nigeria, Angola and the republic of Congo – all should be relatively wealthy and well developed, however they are among the poorest in the world.  There is a single issue which reflects the problems in these countries – the inequality of wealth distribution.  The wealth all ends up in the same places and it’s never for the overall good of the country.  It could be said that the wealth brought by natural resources in some African countries actually makes things worse for the population.  Civil wars are common, usually caused by the battles to control the resources.

There are exceptions of course, which represent a real light of hope for such African economies.  Botswana for instance has engineered extensive development using it’s natural resources.    The key is to have some sort of stable governance in place to effectively and fairly utilise the resources,  unfortunately this is often missing in many African nations.    Without this, there is unlikely to be any developmental improvements from the exploitation of natural resources.

It is an issue that is often covered in the world’s media.  Last month there were several in depth documentaries on the subject, arguably the best was a short piece on the BBC current affairs programme – Newsnight.  You can access this from the BBC iPlayer application – use this method which illustrates how you can use a proxy to even watch from the USA.

It is in most people’s interests to have a stable and transparent government to help utilise any economic benefits.   The major oil producers will much prefer to exploit reserves in a stable democracy than through militias and corrupt, self serving individuals.  It is hoped that the benefits will filter down to the people of these African nations, and hopefully the East African oil boom won’t turn out to be a more of a curse to the nations.

Jeremy Holdings

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