Will offshore oil reduce poverty?

Mauritania, one of the world’s poorest countries, has received confirmation that it will soon join the growing ranks of Africa’s oil exporters. On January 6, Woodside Petroleum of Australia made the long-awaited announcement that it would go ahead with the development of an oilfield discovered off the Atlantic coast of Mauritania in 2001. Woodside said it expected its Chinguetti field to come on stream in 2005 producing 50,000 to 75,000 barrels of oil per day using a floating storage terminal moored next to the offshore wellhead. The oil will be offloaded directly onto supertankers for shipment to the refineries of Europe and North America. The oil and gas information group RigZone www.rigzone.com has conservatively estimated that oil revenue, including oil company taxation, will provide the Mauritanian government with at least US$ 100 million per year of additional revenue by 2008. That would lift the government’s annual income, which RigZone estimated at $421million in 2002, by a quarter. But not everyone in this sparsely populated desert state is happy at the prospect. “Some, a small circle of people, will become more rich. But the bigger majority will remain poor,” Cheikh Saad Bouh Kamara, a prominent Mauritanian human rights activist, told IRIN. Dusty Mauritania is a poor and unstable gateway between Arab North Africa and the black communities of sub-Saharan Africa. It is a country riven by ethnic tensions where slavery was only declared illegal in 1981. In 2002, the United Nations ranked Mauritania 139 out of 162 in its Human Development Report that compares living standards in countries around the world. President Maaouiya Ould Taya has ruled this Islamic state with an iron hand for 20 years and relies on exports of iron ore and revenue from commercial fishing in the country’s rich offshore waters to pay his soldiers and civil servants. But most of Mauritania’s 2.5 million people scrape a meager living from herding livestock on the edge of the Sahara desert and growing subsistence crops near the Senegal river valley in the far south. This life is tough and offers little hope for the future, so an increasing number of destitute and unemployed Mauritanians are flocking into the squatter camps that have sprung up around the capital Nouakchott. While the poor struggle to buy water and run electrical goods such as radios and televisions on car batteries in these shanty towns, the rich cruise the sand-strewn streets of the city center in air-conditioned four-wheel drive cars. The oil industry will undoubtedly provide a handful of jobs for qualified technicians and administrative staff. But unless the government funnels the windfall revenue from this black gold into national development projects, it may not have much impact on the lives of ordinary people. Kamara, a human rights activist who has been detained by the government for campaigning against slavery in the country, told IRIN that things are already getting worse for the Mauritania’s poorest people. The price of basic goods and services are rising rapidly. Kamara noted that beef had gone up by between 14 and 21 percent since elections in November. Cooking oil, sugar and rice have risen by similar amounts. Kamara believes this inflation is linked to a misplaced anticipation of wealth in the country by its merchant class. All the same, many are optimistic that the oil boom will give sleepy Mauritania a new sense of purpose. “Oil finds are encouraging people to stay in Mauritania and build the country up” said Sid’Ahmed Ould Abeidana, who works for an import-export company from an air-conditioned office in the capital. However, as Mauritania prepares to join the exclusive club of Africa’s new oil exporters, the examples set by current members Equatorial Guinea and Chad are not encouraging. In Equatorial Guinea, the family of President Teodoro Obiang Nguema has grown fabulously wealthy, while there has been little or no improvement in electricity and water supplies and basic health care for the country’s half million population. And in Chad, there is widespread cynicism that a mechanism developed by the World Bank to oblige President Idriss Deby to spend oil money on social development projects rather than arms will actually work. Sao Tome and Principe will join the club in March when the tiny island state receives about $240 million in front end payments from oil companies for the right to explore its promising offshore waters – equivalent to about 50 years of its annual earnings from cocoa exports. But there too, there are deep-seated fears that much of the money will simply disappear into the pockets of senior government officials. Resentment at the fact that many top government officials were building themselves ostentatious new luxury homes, while the most of the islands’ 170,000 people continued to live in grinding poverty led to an abortive coup attempt last July. In Mauritania, where Ould Taya narrowly survived a bloody coup attempt in June and was widely accused of rigging the presidential elections of 7 November which returned him to power for a further six years, there is similar skepticism that oil will prove a miracle cure for the country’s many woes. His government has remained tight-lipped on the subject of oil, as indeed on most domestic matters Kamara, the human rights activist, noted that Ould Taya’s promises of social development projects made during the presidential election campaign are no longer mentioned. And he warned of growing unrest if the already yawning gap between rich and poor is allowed to grow wider. “Prices are rising and a lot of young people can’t find work. Furthermore, there is much dissatisfaction in the country as the elections left the feeling that there is no democracy in this country. As a result,” said Kamara “many people are becoming very angry with those in power.”