Jinx or Jubilee as Africa strikes oil

July 19, 2009
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, CAPE TOWN, Jul 19 – Oil finds highlighting energy potential in Ghana and Uganda pose new challenges as the countries seek to avoid the "oil trap" that has left many producers mired in poverty and violence, experts say.

"Both countries have excellent stewardships, good governments with very strong ideas on how to avoid the so-called \’curse of oil\’ which has been experienced elsewhere in Africa," assured Tim O\’Hanlon of Tullow Oil, the European company which made the new discoveries.

He spoke to AFP on the sidelines of an energy conference in Cape Town last week where Ghana sought to assure participants it would not follow in the footsteps of Nigeria, Africa\’s largest producer that is beset by corruption and unrest over its oil profits.

Ghana is one of Africa\’s flagship democracies, highlighted by US President Barack Obama\’s visit last weekend, but nearly 80 percent of its 23 million people live on under two dollars a day.

High public demands and the sudden influx of billions of dollars into government coffers will have to be managed carefully.

But Ghana is taking steps to prevent misuse of funds, said Alex Vines, head of the Africa programme at the Chatham House think-tank in London.

"A country like Ghana has an opportunity to draw lessons from the mistakes of others. There are fundamentals in Ghana that are promising," Vines told AFP.

The world\’s second biggest cocoa exporter and Africa\’s second biggest gold producer, Ghana has a vibrant civil society and media to keep politicians to account.

"We are excited and we want to ensure … that we will make Africa proud. Oil and gas will be a blessing and not a curse in Ghana," Kwabena Donkor, Ghana\’s deputy energy minister told the conference.

Ghana\’s Jubilee field is set to start production in 2010, despite concerns the process was rushed. The nation is eager to reap profits and reduce a budget deficit that stands at 15 percent of the gross domestic product.

But an Oxfam report in February warned that oil profits fail to benefit most African producers, even though Africa produced 12.5 percent of the world\’s oil last year.

"Overall, resource-rich countries in Africa have experienced lower growth rates than resource-scarce countries," read the Oxfam report.

Angola rivals Nigeria as Africa\’s largest producer and its economy is one of the continent\’s fastest-growing, yet its under five mortality rate is the second worst in the world.

Vines said countries like Gabon and Equatorial Guinea, with large deposits and small populations, have failed to use their oil weath to break the cycle of poverty.

In Gabon other industries withered at the expense of the oil rush, while poverty soared and the nation was left with little but world-record champagne consumption by its elites, according to Vines.

Discoveries in landlocked Uganda pose other worries as they fall on the border of the war-ravaged Democratic Republic of the Congo.

But the country is hot property with more than a billion barrels expected in the largest onshore find in sub-Saharan Africa in 20 years.

Some 1,300 kilometres (800 miles) from the coast, pipelines will have to be built across one of Africa\’s most beautiful and wildlife-rich areas.

Chad, a central African nation emerging from civil war, was once seen as the most likely country to escape the oil curse, under a World Bank deal that financed a pipeline in exchange for using 70 percent of oil revenues for poverty reduction.

But in September 2008, Chad broke off that arrangement with the World Bank as a struggle over resources led to conflict.

"While some argue that Ghana is at the threshold of becoming a middle-income country, a mismanaged oil boom could easily tip it in the opposite direction," read the Oxfam report.

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