By Carl Greenidge
Minister of Foreign Affairs

Overview
ON February 18, Kaieteur News published an article titled: “After 100 years with ExxonMobil…20 African countries no better off today.” The impression derived from reading the article is that oil revenues were not beneficial to the 20 African countries identified, with their low human development index serving as proof of this claim. The underlying conclusion drawn from the headline is that the presence of Exxon Mobil in Guyana’s oil industry would not necessarily be beneficial to the country’s human development, unless other things were to happen. While this might be true, the way in which KN juxtaposed Exxon’s presence in Africa with the low HDI of the countries cited in the article is misleading. Central to the argument of the article is the way in which oil resources are used once obtained. The truth of the matter is, while Exxon might have been on the African continent for 100 years, its impact is far more recent. With the exception of Egypt, whose oil production could be traced back to 1920, Exxon has been producing oil in most African oil-producing countries for just about 60 years.

The purpose of this article is not to justify Exxon’s actions or the behaviour of the 20 African countries named in the article. It is merely to offer a perspective on oil production and development that is not easily gleaned from the article. It is important to note that of the 20 African countries cited in the article, only 11 of them actually produce oil as can be seen from Table 1 below. Of that 11, nine of them started producing oil from 1975 or after. All the other countries are still in various stages of exploration. So, it is hardly likely that Exxon’s presence could be a reason for the poor showing in human development in the 20 African countries.

Table 1
Low HDI Oil Production Year Status Medium HDI Oil Production Year Status Angola 1956 Oil Producer Equatorial Guinea 1992 Oil Producer Chad 2003 Oil Producer Egypt 1920 Oil Producer Cameroon 1977 Oil Producer South Africa 1998 Oil Producer Nigeria 1957 Oil Producer Ghana 1980 Oil Producer Ivory Coast 1980 Oil Producer Morocco 1980 Oil Producer Republic of Congo 1975 Oil Producer *Sâo Tomé – Exploration Stages **Papua New Guinea 1992 Oil Producer *Zambia – Exploration Stages *Mozambique – Exploration Stages *Kenya – Early production stage *Zimbabwe – Exploration Stages *Ethiopia – Exploration Stages *Senegal – Exploration Stages *Tanzania – Exploration Stages *Madagascar – Exploration Stages Source: Data put together by writer from various sources

The insinuation about oil and poverty is subtle, but damning and questions the value of Exxon’s operations on host countries as the impression given is that the oil giant was a major obstacle to progress. Indeed, Kaieteur News had little time for the real contributing circumstances to the unimpressive human condition lamented in the article. The situation of the four countries below might be indicative of some of the problems that could lead to misperceptions about oil and its impact on development in developing countries across the world, those in several African countries. For example, the article did not point out that the scale of oil production for several of the countries was rather small. The Cote D’Ivoire (Ivory Coast) was producing only 62,000 barrels per day at its peak in 2006, with output falling nearly 50 percent in less than 10 years thereafter. South Africa at its peak was producing only 56,000 barrels of oil per day. Latest statistics show that production was down to 2,000 barrels of oil per day. In the case of Ghana, of 20 years of oil production data (1996-2015) that was examined, average daily production was 6,000 barrels for 15 of those years. It was only in 2014 that Ghana’s oil production surpassed 100,000 barrels per day. Morocco from 1996 to 2013 was producing an average of 400 barrels of oil per day– hardly a bonanza.

In addition, the article did not take into consideration that the contribution of oil to GDP was not as impactful in all cases as the article implied, since oil revenues from such low production could hardly be enough to meet the needs of large populations. For most of these countries, the income change was insignificant and per capita GDP did not always grow. The average change in per capita GDP for the four countries was seven percent three years after oil production began. In the case of Cote D’Ivoire, per capita income actually contracted 20 per cent in the first three years after the start of oil production. Ghana’s per capita GDP fell 17 per cent in a similar time period following the start of oil production. In contrast to Cote D’Ivoire and Ghana, Morocco’s per capita GDP grew two per cent on its negligible oil production in the three-year period after commencement. South Africa saw a mere four percent increase in per capita GDP over a similar time period following oil production. So, to create the impression that all 11 oil producers in Africa were enjoying a revenue bonanza from oil for nearly 100 years is more than an exaggeration.

The strenuous efforts being made by these countries to improve human development over time is also ignored by the Kaieteur News article. Keeping children alive and in school are critical factors in human development. All four countries have reduced their Under-five Mortality (U-five Mortality) rates during the period of oil production. Cote D’Ivoire reduced its U-five Mortality rate from 150 in 1990 to 91 in 2016. Ghana reduced its own from 125 in 1990 to 59 in 2016, while the U-five Mortality rate went from 75 to 41 in South Africa and from 75 to 27 in Morocco. Life expectancy thereafter is a matter of lifestyles as much as it is a function of good personal hygiene. Unprotected sex could lead to HIV/AIDS and that is not necessarily government’s fault. Moreover, people in many countries do not have access to clean water and sanitary facilities. It takes time to accomplish these things. One could see therefore that these countries were making an effort to address major human development issues, even though their oil revenues were not significant.

Education is also important and the four oil producers have reasonable numbers in this area as well. Cote D’Ivoire has a 69 per cent net attendance ratio (NAR), Ghana has a 70 per cent ratio, while Morocco has an 89 per cent NAR and South Africa has a 97 per cent ratio. The quality of teachers in the classroom and personal attitudes to studying are just as important to literacy, as are factors of nutrition and a healthy home environment.

Contrasting Guyana
With a relatively small population and large oil reserves, (nearly four billion barrels), an estimated production of 120,000 barrels per day to start with in 2020 and a population of roughly 800,000 people, Guyana might be in a more fortunate position than the African countries. Guyana will be producing twice as much more oil than the highest African producer mentioned in the article — Cote D’Ivoire. In addition, the impact of oil on the GDP per capita would be significant with GDP estimated to increase over 30 percent the year immediately following oil production, according to the IMF. Guyana has the structure that fits that of countries such as Qatar, the United Arab Emirates (UAE), and Norway who have relatively high oil revenues and small populations. The model of these countries might be more consistent with the situation in Guyana.