Africa's oil and gas map is changing. Can countries there with potentially lucrative supplies avoid the so-called "resource curse?"
That, essentially, was the overriding question at "East Africa's Oil & Gas Boom—Promise or Peril?", a day-long conference Feb. 20 at the Brookings Institution.
Experts who spoke there generally agreed that new approaches will be needed. They suggested the goal should be to involve, and benefit, more people at the local level over a longer period in broader constructive economic development.
"If we look back a short time, Africa's resources were dominated by Nigeria," said Ambassador Carlos Pascual, special envoy and coordinator for international energy affairs at the US Department of State.
"Now, if you look at East Africa, the gas finds in Mozambique and Tanzania and the oil finds further north are changing the map," Pascual said during the conference's final panel. "Still, 75% of the people in African countries with extractive resources live in poverty and have no access to electricity, education, and health care."
Simon Thompson, chairman of London-based Tullow Oil PLC, which operates in Africa, added, "It's important to manage expectations. Oil and gas is not the answer to all of Africa's problems. It could make things better or worse. The issue is how development is managed."
Outside companies need to get on their side, Thompson indicated. "The reality is that we won't create many unskilled jobs. Our focus will be on building steps up in local communities for people to get those jobs," he said, adding, "The objective should be to create generic skills that have applications outside the oil industry."
Outcome isn't promising
West and Central African nations' budgets mushroomed from 2002 to 2012, but results there have been modest, maintained Ricardo Soares de Oliveira, a lecturer on African politics at Oxford University. "The experience there is relevant to what's happening in East Africa now," he said. "Right now, a disappointing outcome is more possible than what we all would like."
He said outside companies should:
• Assume there will be a lack of government leadership because narrower constituencies demand more attention.
• Promote more external disclosure requirements to help national leaders create business opportunities instead of wards of outside largesse.
• Help establish more mechanisms to discourage corruption at the provincial and local levels.
Efforts to pass a petroleum industry bill in Nigeria have gone nowhere in 5 years, which is why there's no new oil investment there, Pascual said. "It's much harder to transform an existing system than to create a new one, which is why we're working so hard in countries where resource development is just beginning," he said.
