The people of Guyana are justly excited when they hear news of consecutive high quality oil finds off Guyana. They are excited because they know that this means the country could be on the verge of seeing revenue inflows that are unprecedented in the history of this country, more lucrative even than the powerhouse industries of gold and other minerals which have long served as pillars of the Guyanese economy.
But even though oil has great potential to lift underdeveloped countries out of poverty, there are many grave issues that follow oil industries around the word, like unmitigated corruption and gentrification. They have rendered some oil producers crippled and their people unable to benefit from oil revenues.
Take Equatorial Guinea, for instance.
The Central African nation first discovered oil in 1995. Because of oil, Equatorial Guinea experienced rapid economic growth in the early years of the 21st century, reaching a point as recent as 2017, where its per capita wealth rivaled that of its former colonial master, Spain, according to a December Bloomberg report. The operations of ExxonMobil, Kosmos and other oil companies form pillars of the country’s economy.
Spain is one of the most developed nations in the world, with enviable human development indicators. Equatorial Guinea has not followed suit.
The country ranks 144 out of 189 countries in the United Nations Human Development Index. Human Rights Watch said that the country has the world’s largest gap between per capita wealth and human development.
The International Monetary Fund’s 2016 Article IV consultation IV report states that about 44 percent of the population is poverty stricken.
One anonymous resident of the capital, Malabo, told Financial Times that though there is a lot of money, it all goes to the president and his family. The man even registered a fear of speaking out on the issue; for fear that his life would be endangered.
Andres Esono Ondo, who is the secretary-general of one opposition party, named Convergence for Social Democracy, told Financial Times “We have many, many hotels. But no schools. No good hospitals. No water, nothing.”
Revenues from offshore oil fields have supported investments in large infrastructure programs over the years, but left little room for social projects. Little is spent on healthcare and education. Less than half of the 1.3M population has access to clean drinking water and 20 percent of children die before the age of five, according to United Nations data.
Worse yet, the oil price collapse of 2014 made the nation continue to suffer.
It is struggling to pay off its debts, and the government’s arrears to construction firms have piled up so high that the total equates to nearly 19 percent of its Gross Domestic Product, according to the World Bank.
The country’s governance problems intersect with a lack of transparency, corruption and nepotism.
The government was forced to turn to the International Monetary Fund (IMF) for support. The development partner, in exchange for its help, has demanded that the President and his senior officials make their assets public, along with a string of other anti-corruption reforms.
A lot is likely to be found out from those declarations, as scandals coming out of the African nation are already extremely worrisome.
The President, Teodoro Obiang Nguema Mbasogo, has ruled the nation for 41 years, and has been accused of squandering the nation’s wealth.
In January 2017, an American Senate Subcommittee investigation into the operations between the Government of Equatorial Guinea and ExxonMobil exposed a number of startling revelations.
Among the reasons for the hearing was that in 2004, the subcommittee identified a bank account in Washington where ExxonMobil and other oil companies deposited millions of dollars owed to Equatorial Guinea for operating there. The money went to President Obiang’s family, the subcommittee found.
Bloomberg reported that in December last, the IMF gave the go-ahead for a US$280M loan to the country, and at least US$40M has been dispersed already. The money is just about the same as was spent by Obiang’s eldest son and Equatorial Guinea Vice President, Teodoro Nguema Obiang Mangue, in the decade following 2000 before he got into trouble for money laundering.
Better known as Teodorin, the vice-president has been the subject of corruption investigations and asset seizures around the world.
In a money laundering case, he received a three-year suspended jail term and a US$35M fine from a French court in 2017 for spending tens of millions of dollars in public funds on a mansion, sports cars and jewelry. In September last, Swiss authorities raised US$27M in an auction of exclusive cars they had seized from him, including a limited-edition Lamborghini Veneno roadster that sold for US$8.4M. He has denied any wrongdoing.
Equatorial Guinea’s neighbour, Nigeria, bears similarities. It is also an oil producer, the 12th largest in the world. It has been producing for 62 years. But half of its 180million population is in the same boat as the poor citizens of Equatorial Guinea.
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