Africa’s Oil Wealth: Good Governance and Development Challenges

In Africa’s oil producing countries, only a tiny fraction of the revenue is used to fight poverty, and in many cases “black gold” has become a hurdle to development. Oil in Africa lies at the center of questions of good governance and development, as oil prices and revenues soar but fail to bring better living standards for millions of people on the continent. Not only does oil wealth fail to translate into economic development, but in many instances it distorts the country’s economy and holds back the development of other export industries.

All across Africa, “black gold” has fostered corruption and bureaucracy without benefiting the poor. Africa’s economic output has increased since 1990, fueled by high demand from importers such as China. Yet despite the flow of oil revenues, African producers fare no better than importers in terms of economic development. The benefits of oil have failed to reach the poor with almost half of Africa’s population living below the poverty line.

Millions of dollars are being spent in exploratory enterprises. Oil is a resource that is indispensable to the world economy. Therefore it should generate money to address the health and social issues of the oil producing countries in Africa. African countries have to do a better job at internal structures in order to ensure that oil wealth reaches the ordinary people. In other words, there has to be viable systems in place to monitor the industry.

African producers will only be able to fight corruption, improve governance and create sustainable development by reducing their dependency on oil. In other words, oil should not become a panacea to Africa’s economic woes but rather an impetus to a broader sector of development.