African Resources: Gift or Curse? Ghana-Mozambique-Uganda, Diamonds and Oil.

Africa is widely known as a continent rich in natural resources, from global essentials such as fossil fuels that are found in Angola, Libya and Nigeria to mobile phone staple of coltan that is found in the DR Congo, Africa has much of the resources needed to earn revenues for development, and for building stronger societies.

However we have seen that such an abundance of resources leads to unwelcome consequences, such as the conflicts in the Niger Delta in Nigeria where the locals are fighting the central government over unequal distribution of profits from the oil production, as well as in the DR Congo, where in the mineral rich east of the country has seen wars and conflicts persist there for decades for control of the region.

In light of this, it will be interesting to see how two future oil producers on the continent will perform, and if the ‘oil curse’ is avoided. Ghana has discovered potentially 2 billion barrels of oil on the Jubilee Field off the coast, Uganda has discovered around 800 million barrels of the black gold in the Western region of the country, in what has been dubbed the biggest discovery of oil on land in Sub Saharan Africa. Both countries have since seen vast amounts of investments in developing an oil industry, firms from the China, France, India, Russia and the UK, even South Africa has got in on the act.

There however has been concern already at the lack of transparency in how the oil field will be developed. There will be settlements that will have to be relocated, and those on the lands that have oil deposits in Uganda have not been fully consulted on the ramifications of the discovery of oil, and if they will get a higher share of the profits that come from it. Similarly in Ghana, some of the contracts being awarded and the mechanism for ensuring that every dollar is traceable has not been as transparent as it should be.

Both countries should heed the example of Nigeria, where oil has been a severe curse, where the oil revenues haven’t benefited the masses despite decades of oil production in the regions in the tens of billions. The ambition of transforming their countries into prosperous ones should be sincere, and this means changing the way their economies are modelled, not only for an oil future, but also for a post oil era, because the oil will run out eventually.

In Mozambique and Zimbabwe, there is a brewing boom in the trade of diamonds. The existence of diamonds in Zimbabwe is not new, for the last 3 years, diamonds have been exploited in the eastern region of Chaidzwa, first by speculators, before the government sent in the army to control the region, killing over 200 impoverished speculators. The region has now been sealed off, and there are reports that an air strip has been built near the mines, it is up to speculation what comes in and goes out of that mine.

Mozambique will surely have been encouraged to also get their diamonds, most of the Zimbabwe diamonds were smuggled out of the country into the province of Manica where buyers from all over the world would buy them at price well below the world index, who would then fly them out and sell them onto the global markets. The government has now awarded licenses to 3 mining companies to exploit the diamonds in the Sofala province. One can only hope they do not go the way of Zimbabwe in how they exploit their new found wealth, but to also develop industries that add value to the diamonds before they are exported.