It’s well understood that the natural resource boons of oil and gas across Africa are responsible for a considerable portion of the continent's ability to provide an economic uplift to its people.
Abundant resources such as these have the ability to accelerate economic expansion, give rise to new employment opportunities, and produce financial support for governmental entities.
Oil and gas should be quickly dispensed with as resources without first quantifying the wealth and benefits that they generate for African nations. These benefits must then be weighed against any quantifiable harm to our environment before any sweeping reform renders chaos to African economies.
Nigeria as a Global Success: Creating Abundance and Prosperity
Nigeria is an excellent illustration of an African nation that has reaped considerable economic benefits as a result of its natural oil and gas resources.
As one of the greatest producers of oil throughout Africa, its oil and gas energy industry is responsible for a dominant amount of Nigeria’s gross domestic product.
It can be challenging to arrive at a definitive figure of the annual profit created by oil and gas developments in Nigeria since the amount is innately tied to factors such as the price of oil on the worldwide market as well as the general amount of production that takes place.
But despite not having a total figure, it’s clearly demonstrated that oil and gas make a significant contribution to Nigeria’s economy. Thanks to recent data provided by the Nigerian National Petroleum Corporation (NNPC), we know that the oil and gas industry was responsible for around 8.83% of Nigeria's GDP in 2020, as well as nearly 90% of Nigeria's foreign currency profits.
Prosperity is Not Without Challenges
Despite its great successes, it’s important to note that Nigeria is not without its difficulties in the oil and gas business. Some challenges regularly faced include, but are not limited to:
Beyond this, Nigeria has borne the brunt of fluctuations in the price of oil on a global scale. Because of this, the annual oil and gas profit in Nigeria can fluctuate considerably from one year to the next.
But despite challenges, the oil and gas sector of Nigeria does wonders in generating governmental income and creating employment opportunities. Its efforts are directly attributable to the growth of a variety of secondary sectors, including both the refining and petrochemicals sectors.
Disproportionate Wealth in Equatorial Guinea
While I believe wholeheartedly in the power of oil and gas resources to uplift African economies, it’s also important to be aware of examples of nations where the benefits of oil and gas are not equally enjoyed among their people.
One notable example is Equatorial Guinea, where oil and gas wealth has become increasingly concentrated in the hands of a relatively small elite. Despite this inordinate prosperity, many members of Equatorial Guinea’s population continue to live in abject poverty.
This is a struggle that is not unique to Equatorial Guinea, as there are other examples of countries throughout Africa (like Angola) that experience difficulty fairly dispersing their oil and gas wealth.
Keeping solutions at the forefront of our minds, these are some ideas that may better help to distribute the life-transforming wealth that oil and gas offer:
1. Increase accountability and transparency in the industry: Properly accounting for oil and gas profits and transparently reporting them can help assure wealth distribution.
2. Investing in infrastructure and social services: By investing a share of oil and gas money into education, health care, and housing, living standards will rise as poverty decreases.
3. Promote local growth: Oil and gas investment can help to create jobs and career pathways toward economic growth by supporting local businesses and industries.
4. Diversify the economy: Beyond just oil and gas, investments in agriculture, tourism, and technology will reduce a country’s dependence on oil and gas and build a more well-rounded economy.
5. Promote healthy governance: By encouraging good governance and identifying possible means of corruption, governments can ensure that oil and gas riches offer benefits to the entire population.
Such idealistic proposals will require political force of will and long-term effort over extended years. But these are without a doubt necessary to ensure that Africa uses its blessed resources to develop into a stronger continent rather than just developing power in small, concentrated pockets. Perhaps Equatorial Guinea and similar nations could consult the IMF, the World Bank, and other development agencies to put more horsepower behind these causes.
Oil and Gas at the Center of Development
In spite of challenges and barriers to growth, a significant number of African countries rely on the oil and gas sector as their primary source of economic growth.
Guaranteeing that the advantages of oil and gas are distributed more evenly across the population will require government officials and industry giants to consider how their profits can be rolled back into additional development. This development can, of course, include alternative energy sources as a means of improving the resilience of African economies while simultaneously raising the standard of living for the people of African nations.
In essence, the oil and gas sector is the central contributor to economic growth in African countries. With such great potential for good, it is essential to ensure that the benefits are widely distributed and that any adverse effects (environmental or economic) are mitigated to the greatest extent possible.
Focusing on these efforts, I believe it is attainable that the oil and gas sectors of Africa may operate in a manner that is open, accountable, and environmentally responsible.