Transparency key to managing oil revenues

Amid Africa's oil boom, urgent policy changes must be made by governments, financial institutions, and oil companies to foster any chance of poverty reduction in the host countries, says Catholic Relief Services (CRS). In a new report entitled "Bottom of the Barrel: Africa's Oil Boom and the Poor", the NGO says that if the necessary changes are not made, oil riches will most probably continue to produce corruption and mismanagement, environmental destruction, human rights violations and conflict. Sub-Saharan Africa is fast becoming a key supplier of oil to the United States, which currently imports 17 percent of its petroleum from the region. In a decade, it is estimated that this figure will have risen to a quarter, while more than US $50 billion will be spent on African oilfields in the next seven years. CRS conservatively estimates that the countries which have the oil - including Nigeria, Angola, Congo-Brazzaville, Cameroon, Gabon, and Sudan - will receive over $200 billion in oil revenues over the next decade. Yet history has shown that "when taken as a group, all 'rich' less developed countries dependent on oil exports have seen the living standards of their populations drop - and drop dramatically", says CRS. "Countries that depend upon oil exports, over time, are among the most economically troubled, the most authoritarian, and the most conflict-ridden states in the world today," it says, as the gap between the expectations created by oil wealth and the reality produced becomes a dangerous formula for disorder and war. Many aspects of the oil industry are "deliberately concealed or shrouded in mystery", notes CRS, and key facts about oil are often treated as "state secrets". Whereas the primary responsibility for change lies with the African governments themselves, they currently lack incentives to change, due to the absence of a more transparent and accountable international policy environment, says the report. CRS recommends, among other things, that governments disclose oil revenues in their national budgets; that oil companies disclose all payments to the African states or communities in which they work; that the US and other northern governments identify, freeze and repatriate any looted oil wealth from African countries; and that the World Bank and IMF demonstrate how their activities in the oil sector directly impact on poverty reduction. To access the report see www.catholicrelief.org