Africa’s fossil fuels & public expectations

Rising discovery of oil and gas in commercial quantities across Africa has unleashed a sea of excitement in potential markets outside the continent but more importantly in Africa itself.

Fossil fuels are essential to the modern economy, never mind the dangers these fuels pose to global climate and the fact that Africa is most at risk from climate change.

Thus, it came as no surprise that Kenya, East Africa’s biggest economy, is gripped with excitement following the president’s announcement of a major oil find. The British oil company, Tullow Oil made the discovery last week. It is the first such find in Kenya.

Kenya Energy Minister Kiraitu Murungi

Over the last six years, a host of African countries have made significant oil and gas discoveries. The list includes Ghana, Liberia, Sierra Leone, Somaliland and Uganda. Many more are set to join the club in the coming months and years. Angola, Nigeria, Gabon, Equatorial Guinea and Chad in Sub-Saharan Africa contribute a substantial amount to the global output.Nigeria alone contributes about 15% of US annual imports. Angola is a major supplier to China.

Growing instabilities in the Middle East can only emphasis the critical role of African fossil fuels are set to play in the global oil and gas economy.

But intrinsic in these discoveries are the dangers inefficient management and mismanaged public expectations pose to these fragile states. The Nigerian oil narrative is well documented. The growing tension between Khartoum and Juba is in part a proxy battle over oil and public expectation of oil dividends.

The discoveries in Africa is surely good news. It raises the long term prospects of these economies in the face of the ongoing global economic shifts and turmoil.

The oil crisis of the mid-1970s preceded the long and sharp decline 

of African economies which in part resulted in the adoption of the discredited structural adjustment policies in 1980s and 1990s in most Sub-Saharan African countries.

Over the last decade growth rate 

in Africa has been impressive. Millions though remain trapped in poverty with many of the continent’s one billion people still out of the reach of basic public services such as clean water, electricity and healthcare.

Discovery, production and export of the commodity in Ghana in 2007 have spurred foreign and local investment and expansion of the Ghanaian economy but not a lot of jobs. The subject of local content continues to engage analysts, policy makers and the ordinary Ghanaian. Ghana’s economy grew by 13.5 per cent in 2011. The economy  almost doubled last year, after oil exports began.

Evidently, the discovery has raised public expectations sky high to activate a hike in the cost of everything from housing to basic services to food and in some cases heightened tension between hitherto peacefully co-existing communities.

The Ghana Government is presently under fire for changing the proposed location of the country’s first modern gas processing plant to process gas from the Jubilee Field. Traditional leaders and youths of Domunli have even threatened to secede if government goes ahead to site the new plant outside the previously announced Jomoro District in the Western Region.

The plant is now to be sited at Atuabo in the Ellembelle District of the same region. The Domunli area is prone to flooding according to the authorities. It however begs the question why the area was selected in the first place after the first feasibility studies.

Threats of secession may be nothing more than grandstanding but it speaks to the larger issue of how unmanaged expectations could undermine a country’s development agenda and sow seeds of discontent.

Campaigns leading up the keenly contested 2008 presidential elections revolved around the discovered oil reserves. As Ghanaians go back to the polls this December, oil and the larger economy are shaping the campaigns.

Kenya holds its presidential and legislative elections early 2013. The post-election violence of 2007 and 2008 are still fresh in the minds of many even as the ICC seeks to prosecute alleged masterminds of the violence that ensued. Oil discovery in the Turkana County may well raise the stakes to define next year’s election but public expectation must be restrained.

It might seem contradictory but one way to address the possible shortage of relevant skills in the oil sector as well as sufficiently manage public expectation is for the Kenyan authorities to put in place a mechanism to begin the training of young Kenyans in anticipation of commercial production of the black gold. 

This way, Kenya may be more successful (than many other African countries) in minimizing the situation where all the best jobs associated with the industry go to non-Kenyans.