Posted by: Home Strange Home | May 17, 2010

Recent Oil Finds in Africa

A number of recent oil discoveries in Africa over the past several years have reignited debates over whether oil is a blessing or a curse for developing countries. 

In the Democratic Republic of Congo, where it is argued the country’s mineral wealth has fuelled civil war, oil discoveries have been made on the eastern shore of Lake Albert.  An estimated 2 billion barrels lie in reserve under the lake.  Lake Albert straddles the bordered between the Congo to the east and Uganda to the west.  The main economic activity around the lake is fishing.  

Currently, the Congo produces only 28,000 barrels a day, which are extracted by a French company called Perenco and come from the Congo’s narrow Atlantic coastline.  The Congolese government has not done much to encourage foreign investment to develop the oil industry.  The lack of infrastructure, weak institutions, and poor safety record in the Lake Albert region will make it difficult for foreign investors.  

Some foreign oil companies have been waiting years for President Joseph Kabila to allow them to start exploring oil blocks which they made upfront payments for in the past; other licenses are being disputed.  For example, Tullow Oil, a British oil firm, in consortium with Heritage Oil and Cohydro, signed an agreement for an oil block on Lake Albert in 2006 and paid a $500,000 “signature bonus.”  But the government subsequently revoked it, saying it was invalid, and gave the permit to a rival consortium which includes South Africa’s state oil company PetroSa. 

Tullow Oil is the same company that announced the discovery of 600 million barrels of oil offshore in Ghana in 2007.  The national oil company, Ghana National Petroleum Company (GNPC), has partnered with a number of foreign oil companies to contribute their expertise and help extract the oil.  Ghana has traditionally exported gold, timber, and cocoa, and the discovery of offshore oil reserves in the Gulf of Guinea has induced a sort of mania among the government and the populace in anticipation of an oil boom.  But some think these expectations are unrealistic. 

After all, the oil is offshore – 100 kilometers out to sea – and it may be extracted without ever coming onshore.  Even people in the southwestern region of Ghana, the closest region to the oil, are unlikely to benefit.  Such enclave extraction has very few linkages with the local economy and generates few possibilities for job creation for the average Ghanaian.  The oil rigs will only create a few highly specialized employment opportunities (perhaps 200 jobs).  And some existing jobs may be destroyed—local fisherman have already complained that the boats going out to the rigs run over their nets, and they are being limited in terms of where they can fish.  

Moreover, the government will not keep all of the oil revenue, but will only receive royalties in the range of 10%.  The question is how the government will use this oil revenue.  Ghana is cognizant of the possibility of the “oil curse,” and has looked to Norway for advice on how to best manage the oil find and build a fund for oil revenues that can be harnessed for the nation’s development.  That said, so far the government has not even made detailed projections of the revenues, yet how they will be used.

Posted by: Home Strange Home | April 17, 2010

Good news for maternal health worldwide, but a mixed bag for Africa

Millennium Development Goal number five is to reduce the maternal mortality ratio by 75% from 1990 to 2015.  A recent publication by Margaret Hogan et. al. in the medical journal The Lancet (12 April 2010) suggests that significant progress has been made towards this goal.  

Maternal mortality is measured as the number of women who die in pregnancy and childbirth per 100,000 live births.  Sub-Saharan Africa (SSA) is the region with the highest maternal mortality ratio (MMR).  There is significant variation across countries, but the aggregate figure for the region is 920 deaths per 100,000 lives births.  SSA is followed by South Asia, where the MMR is 500.  (As a point of comparison, the MMR in most developed countries is around 8).  About 34% of these maternal deaths in SSA are caused by hemorrhage.  

The Hogan et. al. study examines trends in maternal mortality from 1980 to 2008 across 181 countries.  They find a 35% drop in maternal mortality from 526,300 deaths in 1980 to 342,900 deaths in 2008.  In proportionate terms, this represents progress from 422 deaths per 100,000 live births worldwide in 1980 down to 320 in 1990 and 251 in 2008.  The researchers attribute these advances to higher incomes (leading to improved nutrition and health care access), better education for women, and greater availability of people with medical training to assist with birth.  

How does Africa fare in this good news?  The truth is that much of the progress is driven by India and China.  Progress was varied across countries.  Most of the African countries that had substantial improvements are in North Africa (Morocco, Algeria, Tunisia, Libya, and Egypt).  Meanwhile a number of African countries saw increases in maternal mortality rates over the period (e.g. South Africa, Zimbabwe, Botswana, Namibia, Mozambique, Malawi, Cameroon, Nigeria, and Cote d’Ivoire).  Surprisingly, the US was also one of the countries with an increase in maternal mortality. 

HIV/AIDS was blamed a significant cause of maternal deaths, particularly in East and Southern Africa, and the need for HIV management for pregnant women was highlighted. 

A recent National Bureau of Economic Research (NBER) paper issued in March has sparked a debate over trends in poverty in Africa. The paper, jointly authored by Xavier Sala-i-Martin and Maxim Pinkovskiy, is entitled “African Poverty is Falling… Much Faster Than You Think.”

The conventional wisdom is that poverty in Africa is either stagnating or even increasing. The NBER paper challenges that view and suggests poverty is actually declining in many African economies. Martin and Pinkovskiy use their own methodology, developed in 2009, to estimate poverty rates, inequality, and income distributions for African countries over the period 1970-2006.

They find poverty in Africa has fallen rapidly since 1995 and this holds true across a wide range of countries. If this trend continues, Africa will be able to achieve the Millennium Development Goal of reducing the proportion of people living on less than $1/day by 2015.

Martin and Pinkovskiy also assert that the benefits of the 1995-2006 growth spurt have not been limited only to elites; according to the Gini coefficients, inequality has actually decreased. Furthermore, they find the fall in poverty is “remarkably general” and not limited to natural resource rich countries or countries with any other geographical or historical qualities. All countries across the board, be they landlocked or coastal, mineral-rich or mineral-poor, former colonies and slave exporters or not, witnessed a reduction in poverty.

Their findings, while encouraging, have been controversial because they are based on non-conventional measures of poverty. Most poverty estimates, including those produced by economists at the World Bank, are based on poverty lines from nationally representative household surveys in low-income countries. These estimates are based on the consumption of the household and focus on basic needs such as food.

Sala-i-Martin and Pinkovskiy use their own and alternative method of measuring poverty, in which they take national GDP data (which includes not only household consumption, but also government spending and private investment) and work down to average income per household. Because Sala-i-Martin and Pinkovskiy’s method allows for investment and government spending, their estimates consistently find a smaller number of people living under the poverty line than the World Bank estimates. Therefore, some argue that they have overestimated the decline in poverty.

Posted by: Home Strange Home | March 13, 2010

Post-Election Violence in Togo

Protests continue in Llomé, the capital of Togo, in response to the contested presidential election held on Thursday, March 4.  The incumbent, President Fauré Gnassingbe, was challenged by the main opposition candidate, Jean-Pierre Fabre of the Union of Forces for Change Party (five other candidates also participated in the election). On Saturday, March 6, the election commission announced the provisional vote counts: 1.2 million of the 2 million votes cast were for Fauré Gnassingbe (60%), whereas only 692,584 were for  Jean-Pierre Fabre (35%).  The win still needs to be declared by Togo’s Constitutional Court before it becomes official.   

The UCF immediately announced that it did not recognize the result and claimed the victory was rigged.  The UCF asserted there were irregularities in the vote counts, that opposition supporters were kept away from voting stations, and that voters were bought off by the ruling party.  The UFC plans to use Constitutional Court to challenge the result.  Despite the accusations, the elections were supervised by a number of outside parties (including the EU, AU, and ECOWAS) and international observers deemed the elections to be satisfactory and did not find evidence of vote rigging.  

The opposition supporters organized a protest against the provisional results on Sunday, March 7; riot police responded by using tear gas on supporters.  Another protest march on Tuesday, March 9 was banned by the authorities; only a couple hundred young men came out to participate.  Eyewitness reports indicate that the protests continue but the number of protesters is diminishing.  Six thousand gendarmes are patrolling the city of Llomé.  

Togo has essentially been ruled by the same family for 43 years, as President Gnassingbe came into power after his father, the dictator Gnassingbe Eyadema, passed away on February 5, 2005, ending 38 years of rule which began in 1967.  Upon his father’s death, the military took control and installed Fauré Gnassingbe in power.  “Elections” were held later in 2005 in which Fauré Gnassingbe “won,” but they were widely considered to be fraudulent as the military interfered at polling stations.  In the violence following the 2005 elections, several hundred people were killed, and there is concern that history might repeat itself in the current situation. 

Posted by: Home Strange Home | February 19, 2010

Coup d’état in Niger

Yesterday in Niamey, soldiers attacked the presidential palace as President Mamadou Tandja was holding a cabinet meeting.  After a short gun battle in which ten soldiers died, Tandja was captured along with his cabinet members.  While his exact whereabouts are unknown, there is speculation that he is being held captive at a military barracks west of Niamey.  

The coup d’état was organized by the Supreme Council for the Restoration of Democracy (CSRD), led by Colonel Salou Djibo and Colonel Djibril Hamidou.  Djibo controls about 40% of the Nigerian army and is in charge of the capital of Niamey and other regions.  After the coup, Djibo announced the suspension of the constitution and the dissolution of all state institutions.  

The coup is the culmination of the political tension that has built up over the six months since August 4th, when Tandja held a referendum to modify the constitution with the goal of extending his time in office so he could serve a third term.  He had already been in office for 10 years, since 1999, and served the maximum of two terms.  This action led to ECOWAS suspending Niger’s membership and the US cutting off all but humanitarian aid to the country.  (See my earlier post on this referendum.) 

France, the African Union, and ECOWAS have all condemned yesterday’s coup because they oppose all unconstitutional changes to the government.  This is slightly ironic, in light of Tandja’s own unconstitutional changes  last year which effectively amounted to a sort of slow coup d’état.  Rather than condemn it, one might argue that the coup could be an opportunity to salvage democracy in Niger and hold the elections that should have happened last year.  

That said, the CSRD gave no indication of how long they intend to stay in power or if and when they plan to hold elections.  It may be never, as is so often the case.  However, the fact that Hamidou is one of the leaders of the coup is perhaps reason for hope, given that he was also involved in the 1999 coup that led to the elections which democratically brought Tandja to power. 

 Outside of the presidential palace, people appeared to be going on with their lives as usual on Friday, with schools and offices reopening and only a few soldiers on the street.  Sadly, Niger remains desperately poor – it ranks in 182nd place out of 182 countries in the most recent Human Development Index, with a life expectancy of 50.8 years, an adult literacy rate of 28.7%, and a GDP per capital of PPP US $627 (Source: Human Development Report 2009).  Moreover, recent erratic rainfall has caused food shortages which are estimated to impact up to half of the population; the UN has pledged to provide additional funding of US$220 million to prevent the food crisis.

Posted by: Home Strange Home | February 8, 2010

Tourism in Africa

After attending the Destinations Travel Show in London Earl’s Court today, and being pleasantly surprised to see an exhibition presence from African countries as diverse as Namibia, Swaziland, Cape Verde, Malawi, and Tanzania, I started to think more about the tourism industry in Africa and the role tourism does (or can) play in African development.  

After doing looking at data from the UN World Tourism Organisation, I learned that Africa received 44 million international travelers in 2007.  It sounds like a lot, until you realize international tourist arrivals to France alone tallied at 80 million in 2008 (France is by far the most visited country in the world).  Within Africa, the most visited destinations are Egypt (8.6 million visitors in 2008), South Africa (8.4 million), Morocco (7.5 million), and Tunisia (6.5 million).   But all of them are pretty far down the global ranking of most visited countries, coming in at 24th, 25th, 30th, and 33rd, respectively.

Taking South Africa as an example, tourism has grown from 4.6% of GDP in 1993 to 8.3% of GDP today.  The tourism industry now earns more foreign exchange than gold exports and employs 947,000 people.  Moreover, in 2006, South Africa tourism grew 14%, more than three times the global tourism growth rate.  For Africa as a whole, tourism is growing about 7-8% per year. 

Whether tourism is good or bad for local development is a contentious debate.  There are a number of economic arguments in favor of tourism development.  First and foremost, tourism is a labour-intensive sector and there is a clear link between increased tourist arrivals and new jobs created.  However, what jobs are created are likely to be marginal, low skill, low wage employment.  

Secondly, the tourism sector can also be an important source of foreign exchange earnings, generating the money needed to import food and industrial inputs.  But, it is debatable how much money ends up in the local economy – with many package holidays or overland trips booked in Europe and the US, most of the revenue goes to Western tour operators rather than local businesses.  

Thirdly, in some cases  the presence of large numbers of tourists can encourage infrastructure development, although the location of such development and whether it serves local needs is a different question.  Finally, some argue that tourism can provide an incentive to protect the environment, especially in eastern and southern Africa where many tourists go for the purpose of viewing the wildlife and nature on safaris and in national parks.  However, game drives, SUVs, long-haul flights, and overdeveloped resorts are probably more likely to contribute to environmental destruction rather than preservation and regeneration. 

Not to mention, a constant influx of tourists into rural village areas, coming to witness indigenous peoples as “performers” to be photographed, can arguably lead to cultural erosion.  While tourism can be an important part of a country’s development strategy, it is hardly a panacea.   

Posted by: Home Strange Home | January 20, 2010

The Politics of Food in Eritrea

The UN estimates that approximately 20 million people in the Horn of Africa are in need of emergency food aid due to the second year of poor rainfall in the region.  Drought was exacerbated after the November rains failed, with rivers drying up, crops dying, and livestock starving.

But the UN finds that while it has been able to help Ethiopia and Sudan, it has been unable to reach needy Eritreans because of political issues.  The Eritrean government has turned down food aid, saying they don’t need help and claiming Eritrea is on a path to food self sufficiency.  Girma Asmerom, Eritrea’s Ambassador to the EU, said on television that Eritrea is accountable to its own people, not the international community, and Eritrea will be able to feed itself.  Allegedly, food will be moved internally from surplus to deficit regions to meet needs.

Reports on the ground contradict this claim, although it is difficult to verify the extent of the food shortage because access to the country is restricted.  Work permits are not being issued to UN staff, so they cannot get access or information about what is happening on the ground.  The repressive regime also places restrictions on the movements of its own people out of the country.  So, the only information that is leaking out is through the refugees fleeing the country for Ethiopia and Sudan.

Some of the refugees report that the government has been confiscating farmers’ harvests, paying them only a fraction of the market value (8 to 10%).  This government policy keeps food prices low, but it cripples farmers, and the amount people are allowed to buy at the artificially low price is too small, leading to a black market with much higher prices.  Eritrean refugees spoke about the difficult conditions back home, including the harsh national service requirements and the poverty.  The UN estimates that two thirds of the population are malnourished.

The government seems to deny all problems, including the existence of any refugees.  I am not sure how they explain away the fact that, on their last trip to Kenya for a tournament, the Eritrean football team ran away to avoid having to return home to Eritrea…

Posted by: Home Strange Home | January 11, 2010

Bad Start to the African Cup

The African Cup of Nations, the main international football competition in Africa, got off to a very bad start this year when on Friday the 8th the Togolese team was attacked by rebels while travelling by bus through Cabinda, the oil-rich province of northern Angola.  Cabinda is separated from the rest of Angola by a narrow strip of the Democratic Republic of Congo to the south and is bordered by the Republic of Congo to the north.  Cabinda has suffered from separatist action in the past, with some groups wishing to proclaim an independent Republic of Cabinda.  

The Front for the Liberation of the Enclave of Cabinda (FLEC), the main separatist group, has claimed responsibility for the 30-minute attack on Friday, in which the Togolese team bus was fired upon and three people were killed (an Angolan driver, the assistant coach, and a team spokesman) and eight were wounded.  That said, there has been some inconsistency and disagreement between the announcements by Angolan and Togolese government officials on exactly how many people were injured and killed.  The Togolese team had been driving from their base in the Republic of Congo; the Angola government later expressed surprise that they chose to drive through Cabinda rather than fly to Angola.  However, Togo says that Angola did not warn them of potential dangers in Cabinda. 

After the attack, the Togolese players wanted to stay in Angola and play in the Cup, but the President of Togo, Faure Gnassingbe, put in a call to the Captain of the Togo team, Emmanuel Adebayor, and the decision was taken to withdraw Togo from the African Cup for security reasons.  The players flew home to Togo while the tournament officially opened on Sunday.  However, there is a possibility the team may return; Togo’s sports minister lobbied the Confederation of African (CAF) football to allow them return after the three days of mourning, but it appears CAF has taken a final decision to exclude them.  All the back-and-forth changing of positions may have more to do with politics than practicalities.  It is still unclear what will happen. 

The African Cup was first held in 1957 and has been held every two years since 1968.  The 2010 competition will go ahead, including six matches scheduled to take place in Cabinda.  The incident is likely to spark further debate as to whether the 2010 World Cup taking place in South Africa this summer will be safe and run smoothly. 

Posted by: Home Strange Home | December 16, 2009

Global warming increases risk of civil war in Africa

Marshall Burke, a Research Associate at the Program on Food Security and the Environment at Stanford University, in conjunction with several other researchers from the University of California Berkeley, NYU, and Harvard, has recently published a journal article which predicts that climate change will worsen armed conflict in Sub-Saharan Africa in the future.

The projections are based on a historical analysis of the relationship between temperatures and conflict over the period 1981-2002 in Sub-Saharan Africa.  The study finds a statistically significant positive correlation between temperature and the incidence of civil conflict (defined as involving at least 1,000 battled-related deaths).  Warmer than average years experienced a 50% greater likelihood of civil conflict.   

This is consistent with previous research which has found a link between precipitation and conflict; wars are more likely to occur after rain failures and in drier years.  When precipitation is incorporated into Burke’s regression, the temperature effect on conflict remains robust. 

The climate-conflict relationship is not surprising, given the key role of agriculture in many African economies, the evidence that higher temperatures hamper agricultural productivity, and other research which indicates a causal link between poor economic growth and civil conflict (e.g. Collier).   With limited irrigation and crop varieties, poor farmers may be ill-equipped to respond to adverse climate shocks, hurting their livelihoods and incomes.  Burke et. al. call urgently for policy measures to protect the poor from these adverse climate shocks.

Source:  Stanford University Food Security and Environment.

Posted by: Home Strange Home | December 8, 2009

e-Waste in Ghana

Despite international laws banning the export of unusable electronic products, an increasing amount of electronic waste, which cannot be easily,  cheaply, and legally disposed of in western countries, is ending up in the rubbish dumps of Ghana (and Nigeria, China, and India, for that matter). 

Labelled as “second-hand goods,” computers and televisions arrive by container ship into Tema Harbour and are dumped in the Agbogblashie scrap yard in Accra.  The electronic waste is then “processed” in the most rudimentary and dangerous ways – poor people from the nearby slums (often young boys) disassemble the computers by hand and burn wires to extract the copper, which can be resold as scrap.  Toxic fumes are released, and no protective equipment is worn.

While it is illegal to export e-waste from Europe, unscrupulous traders get around this by labelling old electronics for “reuse.”  It is suspected that some British recycling companies collect old computers, but instead of recycling them, they cut deals with Ghanaian business people to export them.

When Greenpeace published a report in August of last year about this practice, there was public outcry in the UK (not helped by the fact that some of the computers found in Agbogbloshie were labelled as belonging to the NHS and UK councils).  British citizens complained to the UK Environment Agency, which says it is investigating the issue.

Greenpeace believes that the solution to the problem lies in pressuring large electronic companies to take responsiblity for recycling their old products and institute global recycling schemes. 

Sources: Greenpeace and Ghana Business News.

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