Resource curse will not be taken lightly, we will learn from the experiences of others

Sep 16, 2020 News

– Natural Resources Minister

By Kiana Wilburg

As Guyana oil industry continues the journey to maturity, the People’s Progressive Party /Civic (PPP/C) administration has categorically asserted that it will do everything within its power to ensure the wealth received from the exploitation of the new resource does not become a curse upon the nation.
This position of the party was reiterated yesterday by Minister of Natural Resources, Vickram Bharrat at the Caribbean Virtual Oil and Gas Business Summit (CARVIS) which concludes tomorrow.

Natural Resources Minister, Vickram Bharrat

During his presentation, Bharrat said that the PPP/C is aware that there are many examples around the world where developing countries have obtained windfalls from oil and gas but eventually ended up poorer than before. The Minister said that this phenomenon which is commonly referred to as the resource curse, will not be taken lightly and “we will learn from the experiences of others.”
“It must be noted, however, that our work is guided by several pillars which include good governance, increased value extraction, efficiency, improved transparency, accountability, predictability, balance, and evidence-based decision making. This will aid in avoiding the negative effects as mentioned before.”
For five years, Kaieteur News would have been at the forefront of exposing numerous examples where a number of the world’s most well-endowed oil producing nations, are actually worse off today.
One case this newspaper has often highlighted pertains to Nigeria. This African nation is arguably, without an equal when compared to its other counterparts. Not only is it the largest oil producer in Africa, but it also holds the largest natural gas reserves on the continent, raking in over US$17B in 2016 alone.
Despite such massive revenue earnings and enviable reserves, the World Bank found that Nigeria’s wealth only benefits a select few. The financial institution which is also assisting Guyana in developing its oil management capacity highlighted that 80% of Nigeria’s energy revenues only benefit one percent of the population.
Corruption was cited as the main cause, with the net effect being widespread poverty.
The World Poverty Clock, a credible data-gathering team that monitors the global progress against poverty, found that in 2018, Nigeria overtook India as the country with the most extreme poor people in the world.
This is in spite of the fact that India’s population is seven times larger than Nigeria’s which at 2017, stood at 190.9 million.
Further data by the World Poverty Clock shows that in June 2018, there were 86.9 million Nigerians living in poverty. By the end of 2018, that number rose to 90.8 million. To date, it stands at 94.9 million.
Even Bloomberg zeroed in on the state of Nigeria in February last, reporting that six people fall into poverty every six minutes.
But the World Bank, Bloomberg and the World Poverty Clock are not the only international entities to shed light on the level of inequality that has gripped this oil producing state.
Oxfam America, a confederation of 19 independent charitable organizations, noted in a special report that in Nigeria, the scale of economic inequality has reached extreme levels as there is an accumulation of “obscene amounts of wealth” by a small number of individuals.
In examining the numbers, the confederation which focuses on the alleviation of global poverty, pointed out that the richest man in Nigeria would have to spend US$1M a day for 41 years to exhaust his fortune.
In fact, the international body pointed out that the combined wealth of Nigeria’s five richest men amounts to $29.9 billion—more than enough to end extreme poverty at a national level.
Oxfam further noted that the amount of money the richest Nigerian man can earn annually from his wealth is sufficient to lift two million people out of poverty for one year.
Further computations by Oxfam also showed that between 1960 and 2005, about US$20 trillion was stolen from the treasury by public office holders. This is larger than the GDP of United States in 2012 (about US$18 trillion).
As a result of the mistakes made with the oil and gas resources, Oxfam noted that 57 million Nigerians lack safe water, over 130 million lack adequate sanitation, and the country has more than 10 million children out of school.
Considering the foregoing, the transparency advocacy body said: “Poverty and inequality in Nigeria are not due to a lack of resources, but to the ill-use, misallocation and misappropriation of such resources.
“At the root is a culture of corruption combined with a political elite out of touch with the daily struggles of average Nigerians.”
Oxfam America, the World Bank and many other international organizations have cautioned new oil producing states like Guyana would be wise to pay rapt attention to the mistakes by these and other nations as it pursues the development of its new found wealth.