How did Africa's Prospective Petroleum Producers Fall Victim to the Presource Curse ?

Abstract

The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.

Leapfrogging the darkness: contextualising the meaning of energy transitions for African countries

“…Recent experiences paint a challenging picture (Mihalyi and Scurfield 2020). Several SSA countries announced commercially exploitable oil and gas discoveries in recent years, but those that reached production by 2020, such as Mauritania, Ghana, and Niger, earned substantially lower revenues than initially forecast.…”

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“…At the same time, oil and gas projects are capital-intensive, difficult to execute, and often face cost and time overruns (Mihalyi and Scurfield 2020). Because of long lead times to develop their industries, countries will be in a race against time to reap the economic benefits of the oil and gas trade.…”

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“…In sub-Saharan Africa alone, 12 countries-including Kenya, Ghana, and Uganda-have become prospective oil and gas exporters. Across these countries, the average expected annual gross value of resources discovered since 2001 (as a percentage of 2000 GDP) is 81 percent (Mihalyi and Scurfield, 2020).…”

“…Nevertheless, the average period between discovery and production in these countries is often lengthy-about 12 years on average-due to the technical and logistical challenges of extraction; protracted negotiations with investors and multinational oil companies; and the slow process of creating regulatory, legal, and institutional frameworks to govern the extractive sector (Mihalyi and Scurfield, 2020). Increasingly, countries find themselves in prolonged post-discovery, pre-production periods in which the presence of oil and gas reserves are known, expectations about future revenue flows are being formed, but no actual resource extraction is happening.…”