Tuesday, November 06, 2007

Imperialism/Globalization - Part 3

African Economies and Resources

In the American popular imagination, Africa is perhaps most associated with poverty. And of course, there, poverty is a massive crisis plaguing millions of people. But Africa is also resource rich, and the national economies vary greatly from industrialized Egypt and South Africa to agrarian countries like Malawi and Burundi and the “great middle” like Ghana and Kenya – which like many others have extreme uneven development with the majority living in subsistence in small villages, but large concentrations in urban industrial and semi-industrial centers. Africa is a continent of poverty among riches.
First the riches. Africa is home to some of the greatest mineral and resource reserves in the world and exports huge amounts of aluminum, iron, copper, gold, titanium, diamonds, oil, etc. The Democratic Republic of the Congo, Mauritania, Guinea, South Africa, and Chad have some of the largest mineral resources. In nearly every country, extraction is controlled by foreign corporations and have brought little wealth to the average citizen. Some countries like Sierra Leone and The Democratic Republic of Congo have had almost wholesale rape of their mineral wealth. In other countries, governments or despotic rulers have been able to retain some amount of wealth locally. Some Africans are certainly getting rich from mineral extraction.
There is very little manufacturing in Africa, and the industrial centers are centered mostly in South Africa and the Arab countries of North Africa. While some small-scale manufacturing exists in most African countries, few countries export manufactured goods. Many have manufacturing industries that find it hard to compete with low-cost commodity imports from the US, Europe and Asia. There is, of course, as resulting imbalance in almost every African economy. There is a classic model of economic dependence, with nations dependent on foreign imports of commodities and even for the infrastructure, technical knowledge and capital to extract the natural resources they possess. An increasing problem is the flooding of African markets with agricultural goods from Europe and the US. Industrial farming techniques and government subsidies often make imported grain cheaper than the local variety. This has devastated many local farmers and even led to the replacement of traditional crops with foreign varieties.
Oil has become the new blessing (or curse) of Africa with its reserves are estimated between 100 and 120 million gigabarrels, which depending on the estimate is equal to or greater than reserves in South America or North America. Africa has “proved reserves” of 75.4 billion barrels (7 percent of the world’s total) and in 1998 it produced 7.8 million barrels per day (381 million tons/year) of over 40 types of crude oil. The top five producers, Nigeria, Libya, Algeria, Egypt and Angola – in order of decreasing output – account for 85 percent of the continent’s oil production. Nigeria along with Algeria, Libya and Angola are the African members of OPEC.
Nigeria is by far the biggest oil producer on the continent. It is the 12th largest producer of petroleum in the world and the 8th largest exporter, and has the 10th largest proven reserves. Petroleum plays a pivotal role in the Nigerian economy, accounting for 40 percent of the GDP.
Like nearly all African countries, this wealth is controlled by foreign corporations who have contracted to extract the oil and a few Nigerian elites who benefit from the relationship. The Southern Delta region where the oil is drilled, is one of the poorest in the country. The economic disparities, cultural oppression by the central government and some level of banditry have all led to armed attacks by the local population against the oil compounds, pipelines, etc. Nigeria’s recent elections put for the first time a southerner into the office of president. In 2006 Nigeria became the first African country to pay off its debt to the Paris Club, some $30 billion. It boasts the continent’s third largest GDP behind South Africa and Egypt.
Recent oil discoveries in Ghana, and elsewhere show where the race for new oil sources is leading. European petroleum companies, which have been the traditional “partners” in oil extraction in Africa, have new competition. China has made big inroads into oil development throughout the continent, particularly in Sudan.

Read the full story at Political Affairs Magazine - Africa Today