A Review of the Nigerian Energy Industry

East Africa: Oil boom promises riches, but experts fear only elites will benefit

Brent crude oil10 March 2014, Nairobi – The oil and gas bonanza in East Africa is changing the power dynamics of one of the poorest regions in the world, promising to free governments from long dependence on foreign aid once the billions of dollars in natural resource revenues start to flow.

Civil activists from the region, diplomats and corporate officials alike at briefings in Washington over the last few weeks have warned that Kenya, Tanzania, Uganda and Mozambique are running out of time to agree on national policies to develop their newfound wealth in ways that will benefit the lives of their citizens.

The pressure to turn on the oil and gas taps and earn quick cash is so immense that activists and officials said they fear politics will trump good governance, and the money could end up lining the pockets of entrenched political and business interests rather than benefitting citizens where millions live on less than one dollar a day.

“Everyone looks at this as a game-changer for the poor, aid-dependent country, and it is a big opportunity,” Ariano Nuvungo, executive director of the Center for Public Integrity in Mozambique, said at a Brookings Institute forum here.

“But there is a high risk of corruption in countries where there is one dominant political party and a strong political and economic elite, which poses serious challenges about the extent to which there will be pro-poor development.”

Carlos Pascual, special envoy for international energy affairs at the U.S. State Department, said at the same event that East Africa is at a turning point. Oil and gas discoveries are “radically changing the picture, which is a good thing. But 70 percent of people in resource-rich countries live in poverty,” he said.

If countries are to avoid going down the path of Nigeria or Equatorial Guinea and break the cycle known as the “natural resource curse” – where the rich get richer off oil revenues and the poor sink further into poverty – they must push forward now on governance and transparency measures, he said.

National policies must address who owns the resources, who has the right to develop them, how are contracts awarded and on what terms, and how will the revenues be invested. “This has become a fundamental and central political question,” Pascual said.



In this article

Join the Conversation