THE SCRAMBLE FOR THE NEW GULF OF GUINEA

Several international expert panels have identified the availability and allocation of natural resources as a key security risk for the 21st century. For many people living in poor but resource-rich countries, the natural resource wealth is not a risk but has long become a fact with disastrous consequences.

This is especially the case in the world’s poorest resource-rich region: the Gulf of Guinea along the West and Central African Atlantic coast.

From this region, the oil rigs have indeed fuelled the world and keep on doing so, with its global relevance steadily increasing.

On the other hand, these exports have more than just ‘failed’ the very same group of countries. Many of those exporting oil have some of the worst development indicators in the world. In areas like Nigeria’s Niger Delta for example, decades of oil production have virtually destroyed the environment, many people’s livelihoods and their hopes for a better future. Will natural resources, particularly oil and gas, from the Gulf of Guinea continue to fuel the world but fail this region in the 21st century?

 Which possible solutions exist at the domestic, regional and international level to make oil and gas work for economic development, social justice and democratic governance?

 The “resource curse” (Gelb 1988; Auty 1993) or “paradox of plenty” (Karl 1997) thesis basically says that countries rich in natural resources are less well off in terms of economic growth and development more generally than countries without such an abundance of natural resources. Both terms have since become catch-all phrases for the bundle of negative developments in resource-rich countries such as persisting poverty, lack of economic diversification, rising inequality, growing corruption and violent conflict. Although resource wealth is often simply assumed to have caused these outcomes, empirical evidence supports the links between resource wealth and relatively slower economic growth (Sachs and Warner 2001), civil war (Collier and Hoeffler 2004) and authoritarian rule (Ross 2001; Jensen and Wantchekon 2004)

 Three particular mechanisms through which the resource curse is supposedly working are often distinguished: the ‘Dutch Disease’ mechanism, the expansive spending mechanism and finally the rentier state’ mechanism. The Dutch Disease mechanism refers to the massive inflow of resource-based state income driving the real exchange rate and wage levels up. Productive and trading sectors, especially manufacturing and agriculture thus become less competitive on the world market.

Through this mechanism the resource-rich country’s economic structure is fundamentally transformed from a manufacture- or agriculture-led – if it was one before – to a resource extraction-led economy. This leaves the country less productive, more exposed to sudden commodity price changes and with a significantly lower number of jobs than before.

 The second mechanism refers to expansive spending often accompanied by excessive borrowing against expected future oil income. With oil rents suddenly flooding in like manna from heaven, the elites of the newly resource-rich states often go on a spending spree. Whether the money is invested in infrastructure or public services or wasted on luxurious prestige projects, money is being spent on a large scale where this has not been the case before. This sudden increase in spending may increase inflation and have an impact on the exchange rate. It may also lead to a massive accumulation of debts as soon as the terms for the repayment of the loans turn less favourable.

 These are the two classic economic mechanisms through which the resource curse works. They have been studied extensively and approaches have been developed to deal with them effectively. The third mechanism, here called ‘rentier state’ mechanism, is of a different nature. It is not economic but political and refers to the effects of the income from natural resources on politics and political institutions. ...... Michael Roll Friedrich-Ebert-Stiftung (FES) Africa Department, Berlin.

 Now Ghana has discovered oil and has now joined the league of the Gulf of Guinea. However, consider that Ghana, which had US$ 500 more in per capita income than Vietnam in 1985, is poorer than Vietnam by about the same amount in 2005.

 The question l want to ask is, would Ghana follow this trend in her oil production?

Would the Ghanaian oil fuel the world and fail the region where this oil is from?

Let’s make that giant difference because we have absolutely no excuse as a country and as a people due to all the experiences that all the other Gulf of Guinea neighbours have of which we must learn.