By Tanu Jalloh
Sierra Leone has struck a couple of deals with potential investors, craving for the nascent oil industry. Diamonds have failed to raise the money the small West African country needed so badly to grease a cog in the wheels of what was largely a puerile economy. It was at the mercy of the powerful, while democratic rule nurtured its way through a defiant system, almost archetypal of all post-colonial African nations. Today there is talk of oil, probably all the country needs now to lubricate its rusty ratchets and prevent the kind of accident-of-a-war that killed one fifth of the country’s poor people (1991-2000).
What hope there is for the pending oil wealth? Do we have the proposals - fashioned in the usual short, medium and long term plans - to absorb revenues that could be generated by the nascent oil industry? Any plans to create a sense of nationalism around the said value, I mean establish and own the process entirely as a people? What kinds of help do we need from genuine outsiders, and who do we deal with and on what basis? Whose policy do we adopt and what are the considerations behind any of such bargains? Some of these questions have still not been answered by oil producing countries in Africa and Asia.
In Sierra Leone, long before these questions could even be countenanced, I am trying to present the situation as I see it and attempting to suggest ways through which we might find some answers. In all of these, I am not oblivious of the challenges often associated with homogeneity as well as certain cultural dissonances in the region. I have come to refer to them as economic cultures. For the purpose of contextual appropriateness, but also given its momentary relevance, let’s consider that coinage as the proverbial tradition that is never universal in nature. Here, like always, the argument for morality is constrained by determinism. In other words who determines standards, by defining others behaviour on moral grounds?
Consequently, standards keep struggling to define traditions the world over. This is because of the impression different people from different background hold about a given social perspective – e.g., oil wealth and social service delivery. People are entitled to their perspectives, anyway. Natural resources’ wealth and its use, in a country that is polarised by politics, are almost certainly fettered by inconsiderate political party dominion. In essence, the party in power is the sole custodian of the country’s resources, and the people its tools for populism. Like with diamonds, I have once asked a rhetorical question: “Sierra Leone: Who Owns The Country's Diamonds?” (Concord Times, March 2008). That screamer was the headline of an article I wrote four years ago questioning the very nature of how the country’s resources were being handled on behalf of the people.
In 2008, a Jenkins-Johnston Commission of enquiry had been set up to look into the fatal standoff between locals and security personnel of the Koidu Holdings mining company in Kono and had therefore questioned Sierra Leonean ownership of the country's minerals. In the 105-page report, including proceedings, findings, conclusions, reasons for the conclusions and recommendations to President Ernest Bai Koroma at State House, lawyer Blyden Jenkins-Johnston noted with grief that: “It is fundamental to note that even though Sierra Leone has been in the mining business for some 75 odd years, there has never been any document, legislative or otherwise, that states or reflects that the minerals belong to the people of Sierra Leone and not to those who have to mine.”
Arvind Ganesan, Director of the Business and Human Rights Program at Human Rights Watch, cut the title of his article: ‘Squandered oil wealth, an African tragedy,’ in 2009 to attract attention to the challenges of oil wealth management, wanted an open debate on ‘The Great Debate UK,’ (blogs.reuters.com/great-debate-uk). He too wanted to establish who would benefit and how from the recent boom in oil exploration, exploit and trade in Africa.
“Unfortunately, this ‘curse of oil’ now threatens to affect countries rich in other resources as well…It’s going to be quite a challenge for African oil-producers and other energy suppliers to hold governments accountable. Some are saying now that the constitutional crisis in Niger and President Tandja’s desire to extend his mandate are directly related to elites wanting control over uranium supplies.”
In Sierra Leone the same situation seems evident. Like with the iron ore boom, so also is likely to be with the advent of oil. Observers have called in with different perspectives to register their enthusiasm, but with caution. The message should be clear and free from partisanship. For instance, Steven Costello in a May 31 article asked: "Blood Ore" in Sierra Leone?” as its headline, with a rider: “Probably not, but the enthusiastic outlook for the mining sector could have a scary downside.” His parallels were drawn to converge at a common understanding of the nexus between diamonds and iron ore as they relate to the country’s wealth and misery.
His views resonate with those of the Human Rights Watch chief, Ganesan, who said he hoped systems for sharing wealth equitably were created, “otherwise we may see more resource conflict, more corruption, and more political tension in many African countries.”
Like Oil, Like Iron Ore
Like in the case of iron ore, the oil boom presents equal, if not tougher, socio-economic challenges. The stakes get higher every passing minute ahead of the November 17, 2012 elections because of the expected iron ore and oil wealth. We are talking about billions of dollars in direct foreign investments into a meager US$ 3 billion-economy that is so desperate to fulfill the Bretton Woods’ prophecy of economic growth. According to Costello although this investment turnaround could be clearly remarkable, scepticism understandably persists about such rose-tinted visions of the future. “Some forecasts may be too ambitious—the IMF has already been forced to revise downwards its initial 2012 growth forecast of 51.4 per cent after a fall in iron prices,” he said.
Given the above background, we should now be able to talk about the vogue in oil wealth transparency and judicious use in the interest of the people. Among many things reinvesting in the people and making youth employment a thing of the past should feature prominently in the development agenda. In addition several factors must be treated with the sensitivity they deserve – land ownership, tax regimes, environmental obligations, lease agreements, job creation, corporate social responsibility and corporate good governance - , lest the country heads for another cataclysmic debauchery.
Others’ Mistakes, Our Lessons
Celeste Hicks did a piece for the African Arguments last month in which she brought out the populist tendency of President Idriss Deby who had campaigned passionately to transform N’djamena, the capital city, into ‘La Vitrine d’Afrique’ or the ‘showcase’ of Africa. His only hope was the oil boom. Like President Ernest Bai Koroma of Sierra Leone, who promised to turn the country into a works yard, the Chadian president tried his best, overhauled the city and braced its infrastructure.
When Chad’s oil project came on-stream in 2003 an agreement had been drawn up with the World Bank, which funded the construction of a pipeline built to Cameroon so the oil could be exported, with the express aim of trying to ensure the revenues would be used to benefit the whole population. However, she discovered that the flagship scheme designed to put an end to what’s commonly known as the ‘oil curse’ went badly wrong, with the Chadian government re-writing the agreements in parliament and the World Bank withdrawing completely from the project in 2008. So, the question comes up again: Who do we deal with and on what basis?
Despite the oil wealth, life was still not easy in Chad, according to Hicks. For example, food and living costs were excessively high (Chad recently came in as the third most expensive city in the world for expatriates and those costs feed down to ordinary Chadians), and hasty promises to increase civil service salaries by up to 40% in the next two years would be difficult to achieve. The moral lesson here was that the Chadian president was too naïve to have placed his entire hopes on the World Bank and its estimates. Probably, too, Sierra Leone was almost hoodwinked into believing the IMF estimates without recourse to oscillating factors in the world market. Thus when prices for iron ore - whose commercial value informed the IMF pronouncement – dropped, soon after the bloated expectation, the Bretton Woods quickly cut its figures downwards from an initial 51 per cent to 32 per cent in economic expansion.
Is A Way Out Feasible?
Some ways out have been suggested but anyway that is devoid of transparency would attract the strongest criticisms from across the board. Yet, some countries wouldn’t mind dealing with their resources in the dark at all. In an article titled: “African nations see pros to managing oil wealth without transparency”, by Drew Hinshaw, writing for Africa Monitor in August 2010, noted that some African countries said the path to success was putting oil revenues into sovereign wealth funds that operate outside public scrutiny. The SWF - sovereign wealth funds – are being batted around as the fashionable way for Africa’s petrol powers to invest their oil wealth.
The idea of sovereign wealth funds could be a possible way, out of many, through which countries can accumulate, keep and distribute wealth equitably, provided there are set agendas – immediate, medium and long term plans for development. In Sierra Leone President Ernest Bai Koroma talks of his ‘Agenda For Change’ and ‘Agenda For Prosperity’ to tackle short and medium terms needs while the Sierra Leone Conference on Development and Transformation tries to produce blueprint for the long term agenda.
Interestingly, like me, Hinshaw would seem to believe that the continent’s top oil exporters, and even some of its newcomers like Ghana, were taking advice from similarly resource-endowed countries that run state revenues through SWFs, many of them in the Middle East and Asia. Some of Africa’s oil exporters, like Nigeria, are still struggling to safeguard resource revenue from the powers that be. However, the good thing would seem that, some other nascent oil powers, like Ghana, are trying to get it right.
