By KWAME MARFO
“But know this, that in the last days perilous times will come: For men will be lovers of themselves, lovers of money, boasters, proud, …without self-control…”
“…For nation will rise against nation, and kingdom against kingdom. And there will be famines, pestilences, and earthquakes in various places…then many false prophets will rise up and deceive many…”
The words of the good book, prophesized over a millennium ago, eerily capture the some of the enduring features of the times we live in. While there is the temptation to throw my hat into the midst of the legion of apocalyptic prophets, ride my luck and make a killing should a wild bet come to fruition, I’d leave that to Pastor Harold Camping and his cronies. It is not quite time to quit my day job…not yet.
On a more serious note, there is a headwind of geopolitical forces that pose an existential threat to our still fragile global economy and to Africa. Forget about Greece, the great recession, or even a too-big-to-fail bank unwinding and bringing the global financial ecosystem with it. The big elephant in the room is – Saudi Arabia, reputed to be sitting on almost a quarter of the world’s conventional oil resources. While Saudi’s unrivalled mineral wealth is generally accepted, dissenting voices inside and outside the kingdom indicate that we should not be so sanguine. Grey eminence of oil production, Salad al-Hussein, a retired top executive of Aramco, the Saudi national oil company, in an interview with New York Times contributor, Peter Maas, claims that Saudi Arabia’s production estimates are not based on sound logic and may be much smaller than we think. Saudi’s presumed excess capacity and its ability to meet demand shortfalls on short notice, such as it did during the ongoing crisis in Libya, is what keeps oil markets well lubricated and spares us the agony of speculators running amok with long bets on the oil markets.
In a more optimistic scenario, lets assume Saudi Arabia has as much oil as we think they do, our giddiness should be tampered with a measure of caution. Overworking ageing oilfields to squeeze out ever more oil could prove detrimental, as was the case with Oman. “Fields that are worked too hard can drop off quite sharply, in terms of output, leaving behind large amounts of oil…”trapped oil””, observes Peter Maas. Oil production has as much to do with well flow rates (the natural pressures that brings crude to the surface) as it does to the quantity buried underground.
In a less than optimistic scenario, it takes a great leap of faith to fathom how Saudi Arabia can escape the contagion effect of the Arab Spring especially against the backdrop of high unemployment, inflation and youth bulge. Secondly, as the cultural capital of the Middle East and regional power broker, democratic awakening in Egypt could ripple across the wider region and possibly unsettle Saudi Arabia, spooking oil markets in the process. Even if Saudi princes resort to their age old tricks of “bribing” its citizens to tow the line, such as its recent offer of $36 billion in extra benefits (and further promises of $400b in spending by 2014) in an attempt to quell the wave of uprisings, they will need persistently high oil prices to appease its citizens, especially its minority Shia population in its Eastern Province, where most of the oil lies.
Whichever way we slice and dice the Saudi equation, one fact is unmistakable: double-digit oil prices are a thing of the past.
So what does this mean for African countries?
With 90% of African of countries currently engaged in oil production of one form or the other, the continent is due for a major oil shakeout, unprecedented in its history as a result of new discoveries, increasing demand and dwindling global supplies (see figure 1). On the question of demand, according to Shell, oil demand is projected to double by 2050. This, in all likelihood, will be matched by ageing fields and decreasing sources of new finds. African countries have proven to be an exception to this trend. In 2010, the West Africa coast of the Gulf of Guinea became the number one source of oil in the world outside the OPEC region on the back of recent discoveries.
The history of resources on the continent leaves much to be desired. On one hand it brings Africa once again into the cross hairs of global race to secure resources by superpowers. While China often bears the opprobrium (not completely unjustified) for “oil grab” in Africa to secure resources for its energy-hungry industries, its chief critic, the United States’ intentions are not wholly altruistic. Need evidence? Listen to H. J. Cohen, who served as Assistant Secretary of States for African Affairs under President G. H. W. Bush. In a contribution to a lobbying effort in 2003, he argued, “the bottom line of US policy in Africa was to deploy an expanded military presence so as to impose an ordered stability in a region of growing crude oil production in West Africa”. Fast forward to 2007, a separate US military command for Africa, AFRICOM was established with the “benign” mission “to bring peace and security to the people of Africa and promote our common goals of development, health, education, democracy, and economic growth in Africa”.
On the other hand, domestic mismanagement of resources threatens to erode the economic gains over the last few years. Take Nigeria for example. It was an African success story in its early years. Today, it seems stuck in time, if not retrogressed after succumbing to the inordinate temptations of its oil mistress. Even though it has generated $400b from oil revenue since the seventies, its income per capita fell from $250 to $212 between 1965 and 2004. Even Angola whose national oil champion Sonangol, is deemed to be the most well run state organization in sub-Saharan Africa (outside of South Africa), its population and economy have not been spared the brunt of the deleterious effects of oil. With a Human Development Index of 162 out of 173, its citizens will handily top any measure of misery index. The least said about the likes of Sudan, Equatorial New Guinea and Libya the better.
In conclusion while in theory, high oil prices are a boon to resource-rich countries, African nations have miraculously made strange bedfellows out of bounteous oil windfall and poverty. This problem shows no signs of abating. Neither are its concomitant wars, greed and corruption. Until we find ways to manage these oil resources (see link for one such proposal), the coming apocalypse will be closer than meets the eye – and will be, I’m afraid, an African phenomenon.
By the way, Pastor Camping has now pushed the date of the Apocalypse to October 21st. Be very afraid!
Copyright 2011 (June) Neo-African Consensus