“Botswana is what it is because of diamonds.”
-Festus Mogae,
Former President of Botswana
Botswana is a landlocked country in southern Africa. Botswana was a British territory known as Bechuanaland until it gained independence in 1966 and became known as Botswana. The first president was Sir Seretse Khama who served fourteen years as president until his death in 1980. Sir Khama’s son Ian Khama became the president of Botswana in 2008, when then president Festus Mogae graciously retiring after serving for ten years, which is a rare occurrence in African politics.
Upon its independence most of the people survived by raising cattle since agriculture is limited by the sand that covers most of Botswana. This feeble economy was often susceptible to crisis because of frequent draughts in the region. But, with the discoveries on several diamond mines the fate of Botswana changed dramatically. Diamonds are the only reason that Botswana is one of the richest countries in sub-Saharan Africa instead of one of the poorest.
Many African Nations have the "oil curse" or a similar situation with gems or precious metals; however Botswana is one of the few nations which has utilized their resources for the betterment of the country and the people. Botswana has become an exemplar of the success and stability that mineral-rich African nations are capable of and should strive for. Botswana is one of the only economically, politically, and socially stable countries in sub-Saharan Africa. Botswana is the largest diamond exporter in the world and most mining operations are run by the government. Moreover, with only 1.8 million people, Botswana’s per capita income is four times the regional average at $5,900 per capita and taxes are also among the lowest as well. In addition, the government in Botswana has been able to avoid corruption and properly allocate its funds. Botswana government has spent its diamond revenues on building schools, clinics, roads, and sanitation.
Diamonds and the Economy
Upon Botswana’s independence most of the people survived by raising cattle since agriculture is limited by the sand that covers most of Botswana because of the Kalahari Desert. This feeble economy was often susceptible to crisis because of frequent draughts in the region. But, with the discoveries on several diamond mines the fate of Botswana changed dramatically. Diamonds are the only reason that Botswana is one of the richest countries in sub-Saharan Africa instead of one of the poorest.
Botswana’s government has partnered with De Beers, which controls more than seventy percent of all diamond worldwide. This partnership is responsible for the production of almost all of Botswana’s diamonds. Unfortunately this causes the government to become the sole driving force behind Botswana’s economy, since the private sector. This realization is a concern for Botswana’s economical future, since diamond production in Botswana will plummet in the next fifteen to twenty years barring the discovery of new mines.[i]
Before Botswana picks its diamond mines dry it must find a way to diversify its economy much as Algeria has succeeded in doing. If Botswana cannot diversify its economy it will plunge into a depression, which could cause a civil war and result in the destruction of Botswana’s reputation of stability that Botswana’s government has worked so hard to establish. Currently the only thing that Botswana’s economy can fall back on is Botswana’s large coal reserves, which are similarly limited. Botswana’s government has announced that it plans to build power stations, which would be a sustainable source of income for Botswana.
There are also other economic issues that currently face Botswana. Aside from mining companies interested in diamonds Botswana has been unable to appeal to foreign companies and investors. Botswana’s government has tried to appeal to foreign investors with its low taxes and labor costs. Additionally, unemployment is roughly eighteen percent and the income gap between the people in the cities and those in rural regions of Botswana is large and growing.
[i] Economist southern star
Showing posts with label oil. Show all posts
Showing posts with label oil. Show all posts
Friday, March 27, 2009
Sunday, March 22, 2009
Nigeria's oil curse
“This is an example of how closely we are tied to the global economic chain of crude oil. We're often asked how a strike in Nigeria or an incident in Russia could have an effect on us here.”
-Michael Geeser, Triple A Spokesperson
Nigeria was part of the British Empire from 1906 until October 1, 1960 when it gained its independence from the United Kingdom. Like neighboring Niger, Nigeria takes its name from the Niger River which runs through the two countries. After gaining its independence in 1960 Nigeria fell victim to a series of military coups. The first coup occurred in January of 1966 when Prime Minister Balewa, the second Nigerian prime minister, was assassinated and Major General Johnson Aguiyi-Ironsi assumed power. Ironsi abolished the federal system that was in place at the time and established a military government. But six months after his own accession to power he was killed in a countercoup. Ironsi was succeeded by Major General Yakubu Gowon who restored the federal system in Nigeria.
The Nigerian government has been notoriously known as one of the most corrupt in the world since it gained its independence more than forty years ago. Nigeria is also the leading African oil exporter and supplies the United States with twenty percent of its crude oil imports. There has been a large amount of outcry from the Nigerian people in response to the government poor allocation of funds produced by oil revenues.
Oil
Nigeria is one of the four African nations with membership in OPEC the others being Angola, Algeria, and Libya. Nigeria’s economy is almost completely dependent on its petroleum and liquefied natural gas as they accounted for 93.3% of all Nigerian exports in 2006.[i] Most of these exports were sent to the United States as more than 58% of all Nigerian exports are imported by the US. Oil also accounts for more than eighty percent of the government’s revenue and more than forty percent of the GDP (gross domestic product) in Nigeria.[ii]
Shell is the most prominent oil company operating in Nigeria as it controls over half of all Nigerian oil and gas reserves. The Niger Delta region currently accounts for more than ten percent of Shell’s global production. Other well known oil companies such as Chevron and ExxonMobil are currently operating in the Niger Delta region and many offshore Nigerian oilfields.
There has been a large outcry from the poor of Nigeria, because despite Nigeria’s great wealth of oil the people are not reaping any of the benefits. All of the profits are going to international oil corporations and the corrupt government. Furthermore all of the jobs created by the oil industry are given to the foreign workers of the international oil corporation that mine the oil fields.
Many rebel groups have been sabotaging the oil corporations. In a single year Nigerian rebels took more than a hundred foreign oil workers hostage and held them for ransom. Nigerian rebel groups have also caused many oil spills by sabotaging the oil pipelines which are poorly maintained as well. One area that has suffered the most from these rebel actions is Port Harcourt, which is considered to be the Nigerian oil capital, and the rest of the Niger River Delta along the west coast of Nigeria. Umaru Musa Yar'Adua, Nigeria’s current president, has promised to make this area a priority in an attempt to stop rebel sabotage of the oil industry. Many oil contractors are charging ten times more to work in the Niger Delta due to the recent kidnappings of foreign workers by Nigerian rebels.
Due to the rebel sabotage of oil operations in the Niger Delta, Nigerian revenues are forty percent lower than initially projected and the oil industry significantly underperformed. Aside from reduced production caused by sabotage, a change to offshore oilfields has reduced the government’s short term revenue. The traditional oilfields were managed by joint venture agreements where companies would have to pay the government as it accumulates revenue. The offshore oilfields are governed by more recent production-sharing which allow companies to wait longer before paying large fees to the government.
Aside from the political ramifications the oil industry has on Nigeria, Nigerian gas flares are an ecological hazard. Gas flaring is when oil companies burn gas to separate it from the crude oil. Nigeria outlawed the practice of gas flaring in 1979, but most companies continued and paid small fines or were granted exceptions by the government. These gas flares produce greenhouse gases and contribute to acid rain. In Nigeria, these gas flares burn 20 billion cubic meters and also wastes $500 million worth of gas annually. Russia is only country that wastes more gas through gas flaring and Nigeria now accounts for more than thirteen percent of all gas flaring worldwide. Gas flaring is also another cause of outrage and sabotage as one irate Nigerian put it, “Our environment is being destroyed. So there is an acceptance that if [militants] blow up a pipeline, at least they are taking revenue out of the government's pocket.”[iii]
[i] Economist.com fact sheet on Nigeria
[ii] Pg 114 of A Game as Old as Empire
[iii] Economist “gas flaring”
-Michael Geeser, Triple A Spokesperson
Nigeria was part of the British Empire from 1906 until October 1, 1960 when it gained its independence from the United Kingdom. Like neighboring Niger, Nigeria takes its name from the Niger River which runs through the two countries. After gaining its independence in 1960 Nigeria fell victim to a series of military coups. The first coup occurred in January of 1966 when Prime Minister Balewa, the second Nigerian prime minister, was assassinated and Major General Johnson Aguiyi-Ironsi assumed power. Ironsi abolished the federal system that was in place at the time and established a military government. But six months after his own accession to power he was killed in a countercoup. Ironsi was succeeded by Major General Yakubu Gowon who restored the federal system in Nigeria.
The Nigerian government has been notoriously known as one of the most corrupt in the world since it gained its independence more than forty years ago. Nigeria is also the leading African oil exporter and supplies the United States with twenty percent of its crude oil imports. There has been a large amount of outcry from the Nigerian people in response to the government poor allocation of funds produced by oil revenues.
Oil
Nigeria is one of the four African nations with membership in OPEC the others being Angola, Algeria, and Libya. Nigeria’s economy is almost completely dependent on its petroleum and liquefied natural gas as they accounted for 93.3% of all Nigerian exports in 2006.[i] Most of these exports were sent to the United States as more than 58% of all Nigerian exports are imported by the US. Oil also accounts for more than eighty percent of the government’s revenue and more than forty percent of the GDP (gross domestic product) in Nigeria.[ii]
Shell is the most prominent oil company operating in Nigeria as it controls over half of all Nigerian oil and gas reserves. The Niger Delta region currently accounts for more than ten percent of Shell’s global production. Other well known oil companies such as Chevron and ExxonMobil are currently operating in the Niger Delta region and many offshore Nigerian oilfields.
There has been a large outcry from the poor of Nigeria, because despite Nigeria’s great wealth of oil the people are not reaping any of the benefits. All of the profits are going to international oil corporations and the corrupt government. Furthermore all of the jobs created by the oil industry are given to the foreign workers of the international oil corporation that mine the oil fields.
Many rebel groups have been sabotaging the oil corporations. In a single year Nigerian rebels took more than a hundred foreign oil workers hostage and held them for ransom. Nigerian rebel groups have also caused many oil spills by sabotaging the oil pipelines which are poorly maintained as well. One area that has suffered the most from these rebel actions is Port Harcourt, which is considered to be the Nigerian oil capital, and the rest of the Niger River Delta along the west coast of Nigeria. Umaru Musa Yar'Adua, Nigeria’s current president, has promised to make this area a priority in an attempt to stop rebel sabotage of the oil industry. Many oil contractors are charging ten times more to work in the Niger Delta due to the recent kidnappings of foreign workers by Nigerian rebels.
Due to the rebel sabotage of oil operations in the Niger Delta, Nigerian revenues are forty percent lower than initially projected and the oil industry significantly underperformed. Aside from reduced production caused by sabotage, a change to offshore oilfields has reduced the government’s short term revenue. The traditional oilfields were managed by joint venture agreements where companies would have to pay the government as it accumulates revenue. The offshore oilfields are governed by more recent production-sharing which allow companies to wait longer before paying large fees to the government.
Aside from the political ramifications the oil industry has on Nigeria, Nigerian gas flares are an ecological hazard. Gas flaring is when oil companies burn gas to separate it from the crude oil. Nigeria outlawed the practice of gas flaring in 1979, but most companies continued and paid small fines or were granted exceptions by the government. These gas flares produce greenhouse gases and contribute to acid rain. In Nigeria, these gas flares burn 20 billion cubic meters and also wastes $500 million worth of gas annually. Russia is only country that wastes more gas through gas flaring and Nigeria now accounts for more than thirteen percent of all gas flaring worldwide. Gas flaring is also another cause of outrage and sabotage as one irate Nigerian put it, “Our environment is being destroyed. So there is an acceptance that if [militants] blow up a pipeline, at least they are taking revenue out of the government's pocket.”[iii]
[i] Economist.com fact sheet on Nigeria
[ii] Pg 114 of A Game as Old as Empire
[iii] Economist “gas flaring”
Sunday, March 15, 2009
Problems with Lake Albert
Lake Albert, which is also known as Albert Nyanza, sits on the loosely defined and contested border between the Democratic Republic of the Congo and Uganda and it is also the northernmost of the African Great Lakes. The lake is the seventh largest lake in Africa and is fed by the Victoria Nile which flows from Lake Victoria to Lake Kyoga and then to Lake Albert. The lake was named for Prince Albert, Queen Victoria’s consort and it became known to the western world in 1864 when it was discovered by Sir Samuel Baker. When Mobutu Sese Seko reigned as the dictator of Zaire (now Democratic Republic of the Congo) he named the lake after himself and officially changed the name of Lake Albert to Lake Mobutu Sese Seko. After Mobuto Sese Seko fell from power Lake Albert was restored as the name of the lake.
One of most important and relevant issues in the Democratic Republic of the Congo aside from the civil war is that oil deposits were recently discovered the Albertine Basin, beneath the lake bed in the sediment, which due to loosely defined borders in Lake Albert has spurred an armed conflict between the Democratic Republic of the Congo and Uganda which prompted UN peacekeepers to intervene. The conflict over the oil in Lake Albert has resulted in fatalities for both armies, but unfortunately innocent civilians have been caught in the crossfire including a British geologist who was working for the Heritage Oil Company which was hired by the Ugandan Government. Additional oil was discovered below the surface of the east coast of Lake Albert, but this oil is not disputed as it clearly belongs to Uganda.
The Democratic Republic of the Congo is one of the many countries that has fallen victim to the African curse of abundant natural resources. This is a curse because the Congolese economy is dependent upon the commodity markets and it fluctuates with the price of commodities such as diamonds, cobalt, and oil. The oil in Lake Albert is estimated to have enough oil to produce slightly less than 100,000 barrels of oil per day for only ten years which would not ensure financial stability for the Congolese economy. The revenue produced by the oil from Lake Albert would provide an opportunity for the diversification of the Congolese economy into industrial and technological markets. The diversification of the Congolese economy would help to stabilize the economy and provide a safety net if the value of a particular Congolese commodity plummets.
Rukwanzi Island, a small island in the southern region of the lake, has become one of the center points in the struggle between the Democratic Republic of the Congo and Uganda. Rukwanzi Island was home to about a thousand fishermen most of who have fled since the Congolese military occupied the island. The island was part of Uganda, but the government abandoned the island because they feared that it was sinking into the lake. Recently the Democratic Republic of the Congo claimed the island and established a military encampment on the island. Both the Congolese and Ugandan government’s want ownership of the island because it could serve as a base for oil mining in the lake.
There are also several ecological issues associated with Lake Albert including eutrophication, hypoxia, a decreasing fish population, and reduced biodiversity in the lake. Eutrophication is caused by excess nutrients in the lake in particular high nitrate and phosphate levels, which would be exacerbated by industrializing the lake in order to mine for oil. Hypoxia is an oxygen deficiency which both exacerbates and is exacerbated by eutrophication. Algal blooms from eutrophication serve as a barrier that blocks dissolved oxygen from reaching fish and plant life in the deeper portion of the lake. When the fish and plant life decays it produces nitrogen which is converted to nitrates and further contributes to the eutrophication of the lake. Hypoxia and eutrophication have adversely effected the fish population and biodiversity of the lake. Over fishing particularly by Ugandan fisheries has also greatly contributed to decreased fish population in Lake Albert. The Ugandan fisheries have also introduced nonnative species which have damaged the equilibrium of the natural ecosystem in Lake Albert and appreciably contributed to the recent decrease in the biodiversity of Lake Albert. Ironically the Nile Perch (Lates niloticus) and the Nile Talapia (Oreochromis niloticus) were taken from Lake Albert and transferred to Lake Kyoga and Lake Victoria where they have similarly disrupted the natural ecosystem and caused a decrease in biodiversity in both of the lakes.[i]
Drinking Water
As in many countries in Sub-Saharan Africa the safety of drinking water is a major problem in the Democratic Republic of the Congo. Diarrheal diseases such as cholera, typhoid, and dysentery are the main concern. There are also some diarrheal diseases such as trachoma which can often cause blindness. During his congressional testimony in 2000, Peter Lochery, a senior advisor for the relief agency CARE, stated “Water-related diseases including diarrhea are the single largest cause of human sickness and death.”[i] It has been estimated that three million children die of diarrheal diseases each year. The Democratic Republic of the Congo suffers from many of these water safety issues and there was recently a widespread outbreak of cholera in one of the northern provinces of the Democratic Republic of the Congo. Most drinking water in the Democratic Republic of the Congo is unsafe and most be boiled to eliminate fecal coliform bacteria.
The water from Lake Albert is becoming to high nitrate levels due to the eutrophication of the lake. Consumption of water with high nitrate concentrations by infants under six months old can cause methemogolbinemia, more commonly known as blue baby disease, which can cause death. Methemoglobinemia is the result of nitrates converting the hemoglobin in red blood cells, which carries oxygen through the body, into methemogolbin, which can not carry oxygen and if untreated will result in death. Methemoglobinemia is highly noticeable because it cause skin to become bluish-gray if diagnosed it is easily treated. Unfortunately, many Congolese citizens are unaware of these symptoms and many do not have sufficient access to healthcare. Additionally, long term consumption of water with high nitrate concentrations have recently been linked to certain cancers by several medical studies. Also, when pregnant women drink water with high nitrate concentrations, it has been shown that the baby is placed at an increased risk of deformity.
Deforestation of Congolese rainforests also contributes to water problems. Typically plants alongside rivers will absorb nutrients such as nitrates and phosphates from the river as it passes. As these plants die off more and more of these nutrients flow into still water bodies such as lakes or ponds where high levels of phosphates and nitrates causing eutrophication and then hypoxia which can devastate aquatic ecosystems. Additionally, deforestation also causes riverbanks to erode much more rapidly than they would naturally.
[i] Global Access to Safe Water: Mr. Peter Lochery; Congressional Testimony 10-12-2000
[i] http://cat.inist.fr/?aModele=afficheN&cpsidt=17337796
One of most important and relevant issues in the Democratic Republic of the Congo aside from the civil war is that oil deposits were recently discovered the Albertine Basin, beneath the lake bed in the sediment, which due to loosely defined borders in Lake Albert has spurred an armed conflict between the Democratic Republic of the Congo and Uganda which prompted UN peacekeepers to intervene. The conflict over the oil in Lake Albert has resulted in fatalities for both armies, but unfortunately innocent civilians have been caught in the crossfire including a British geologist who was working for the Heritage Oil Company which was hired by the Ugandan Government. Additional oil was discovered below the surface of the east coast of Lake Albert, but this oil is not disputed as it clearly belongs to Uganda.
The Democratic Republic of the Congo is one of the many countries that has fallen victim to the African curse of abundant natural resources. This is a curse because the Congolese economy is dependent upon the commodity markets and it fluctuates with the price of commodities such as diamonds, cobalt, and oil. The oil in Lake Albert is estimated to have enough oil to produce slightly less than 100,000 barrels of oil per day for only ten years which would not ensure financial stability for the Congolese economy. The revenue produced by the oil from Lake Albert would provide an opportunity for the diversification of the Congolese economy into industrial and technological markets. The diversification of the Congolese economy would help to stabilize the economy and provide a safety net if the value of a particular Congolese commodity plummets.
Rukwanzi Island, a small island in the southern region of the lake, has become one of the center points in the struggle between the Democratic Republic of the Congo and Uganda. Rukwanzi Island was home to about a thousand fishermen most of who have fled since the Congolese military occupied the island. The island was part of Uganda, but the government abandoned the island because they feared that it was sinking into the lake. Recently the Democratic Republic of the Congo claimed the island and established a military encampment on the island. Both the Congolese and Ugandan government’s want ownership of the island because it could serve as a base for oil mining in the lake.
There are also several ecological issues associated with Lake Albert including eutrophication, hypoxia, a decreasing fish population, and reduced biodiversity in the lake. Eutrophication is caused by excess nutrients in the lake in particular high nitrate and phosphate levels, which would be exacerbated by industrializing the lake in order to mine for oil. Hypoxia is an oxygen deficiency which both exacerbates and is exacerbated by eutrophication. Algal blooms from eutrophication serve as a barrier that blocks dissolved oxygen from reaching fish and plant life in the deeper portion of the lake. When the fish and plant life decays it produces nitrogen which is converted to nitrates and further contributes to the eutrophication of the lake. Hypoxia and eutrophication have adversely effected the fish population and biodiversity of the lake. Over fishing particularly by Ugandan fisheries has also greatly contributed to decreased fish population in Lake Albert. The Ugandan fisheries have also introduced nonnative species which have damaged the equilibrium of the natural ecosystem in Lake Albert and appreciably contributed to the recent decrease in the biodiversity of Lake Albert. Ironically the Nile Perch (Lates niloticus) and the Nile Talapia (Oreochromis niloticus) were taken from Lake Albert and transferred to Lake Kyoga and Lake Victoria where they have similarly disrupted the natural ecosystem and caused a decrease in biodiversity in both of the lakes.[i]
Drinking Water
As in many countries in Sub-Saharan Africa the safety of drinking water is a major problem in the Democratic Republic of the Congo. Diarrheal diseases such as cholera, typhoid, and dysentery are the main concern. There are also some diarrheal diseases such as trachoma which can often cause blindness. During his congressional testimony in 2000, Peter Lochery, a senior advisor for the relief agency CARE, stated “Water-related diseases including diarrhea are the single largest cause of human sickness and death.”[i] It has been estimated that three million children die of diarrheal diseases each year. The Democratic Republic of the Congo suffers from many of these water safety issues and there was recently a widespread outbreak of cholera in one of the northern provinces of the Democratic Republic of the Congo. Most drinking water in the Democratic Republic of the Congo is unsafe and most be boiled to eliminate fecal coliform bacteria.
The water from Lake Albert is becoming to high nitrate levels due to the eutrophication of the lake. Consumption of water with high nitrate concentrations by infants under six months old can cause methemogolbinemia, more commonly known as blue baby disease, which can cause death. Methemoglobinemia is the result of nitrates converting the hemoglobin in red blood cells, which carries oxygen through the body, into methemogolbin, which can not carry oxygen and if untreated will result in death. Methemoglobinemia is highly noticeable because it cause skin to become bluish-gray if diagnosed it is easily treated. Unfortunately, many Congolese citizens are unaware of these symptoms and many do not have sufficient access to healthcare. Additionally, long term consumption of water with high nitrate concentrations have recently been linked to certain cancers by several medical studies. Also, when pregnant women drink water with high nitrate concentrations, it has been shown that the baby is placed at an increased risk of deformity.
Deforestation of Congolese rainforests also contributes to water problems. Typically plants alongside rivers will absorb nutrients such as nitrates and phosphates from the river as it passes. As these plants die off more and more of these nutrients flow into still water bodies such as lakes or ponds where high levels of phosphates and nitrates causing eutrophication and then hypoxia which can devastate aquatic ecosystems. Additionally, deforestation also causes riverbanks to erode much more rapidly than they would naturally.
[i] Global Access to Safe Water: Mr. Peter Lochery; Congressional Testimony 10-12-2000
[i] http://cat.inist.fr/?aModele=afficheN&cpsidt=17337796
Subscribe to:
Comments (Atom)