Sunday, June 26, 2005

African poverty

With the recent debt forgiveness and an upcoming, Bono-led rally, African poverty is near the top of the news. I'm happy to hear it, though I also agree with people who worry that government corruption, racial tensions and oligarchs threaten to keep the benefits of most aid and debt relief packages from the people who need them most.

That said, I think some people, as characterized critically by New York Times columnist David Brooks, get it wrong when they present "lack of natural resources, lack of technology, bad geography and poverty itself as a self-perpetuating trap." Africa doesn't lack natural resources.

That's the problem.

Nigeria is the fifth largest supplier of oil to the United States and West African crude is of the highly prized "light, sweet" variety. The continent also has diamonds, gold and minerals in abundance. It's not that Africa has nothing to sell, it's that extractive industries suck.

Having natural resources and being able to safely and efficiently extract and export them do not go hand in hand. In Nigeria, the government enters into joint ventures with big companies that can get the oil out, and they split the profits. So, right there, they lose half the profits from their oil, in order to even get it out of the ground. The half that they keep is then prey to the various political forces in the region.

Of course, since Nigeria needs the help to get its oil to market, environmental regulations are... loose. Ever see an oil flare in the US? Even in the New Mexica and Arizona deserts, where I've seen then, the fires are kept small and on top of tall towers. I saw a flare in Nigeria. It was the size of a few football fields and on the ground, in a cleared out area of a mangrove forest, pumping out a choke-inducing fumes, and crackling like the afterburner of a jet fighter.

Ever seen an oil pipeline in the US? Me neither. I saw them in Nigeria. They ran above ground, by the sides of the roads. And who built the roads? Oil companies. Where do they go? Oil facilities. Some infrastructure!

Africa's poverty isn't about a lack of resources. It's about a lack of ability to market those resources. I'm all for debt forgiveness along with local and international non-governmental organizations bringing aid directly to the people that need it. But the long term problem will only be solved when we find a way to help African countries use and, if they want to, sell, their resources in a safe and effective manner.

We should know this, by now. We've spent $208 billion in Iraq. The war was supposed to be "free." Iraq's vast oil reserves were supposed to pay our way. But, for a lot of reasons (most of the blame goes to Hussein, some to us and our sanctions) Iraq has oil, but not an oil industry.

This puts us in a tough spot. The best way to elevate Africa from poverty is, in some sense, against the interests of powerful players here and in Europe. Nigeria needs to be able to call on itself, rather than a "Super Major" oil Company, in order to sell its oil.

But, is it really against our interests? In the short term, it might create competition for some entrenched players (who are, at the moment, rather highly profitable) but, in the long term, rising economic tides raise all boats. Our own economy, after all, could use more customers. We'll have to bring living standards up before those news customers can buy anything. If you think about our future in terms of decades, rather than months, helping impoverished nations develop the means to make the most of their own natural resources, and doing so safely, with care to the environment and the living standards of their own people, makes a lot of sense.


At 8:54 AM , Blogger JBuchanan said...

damn straight

At 11:18 AM , Blogger Ideasculptor said...

Aha - I just spotted this blog address in the sig of a certain someone at TPMCafe. Your secret is out, I know who you are, Mike. Incidentally, I'm ideasculptor over there.



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