Africa struggles to convert oil wealth into tool for prosperity

Nowhere has the blessing of higher oil prices been more mixed than in Africa.

Led by Nigeria, sub-Saharan Africa is becoming an increasingly critical player in the world oil market, with foreign energy giants flocking to new fields in poor countries such as Gabon, Angola, Congo, Cameroon and Chad. Production in the region is set to double by the end of the decade, according to a study by Stanford University political scientist Terry Lynn Karl and Ian Gary of the humanitarian group Catholic Relief Services.

U.S. multinationals have taken the lead, and Africa soon will be providing a quarter of all U.S. oil imports.

But the vast wealth pouring into major oil firms has not led to broad-based prosperity and, in many cases, has fueled political instability and corruption, often on a spectacular scale.

Just last week, anti-government rebel groups in Sudan’s Darfur region demanded a greater share of the country’s surging oil revenues in peace talks sponsored by the African Union. The rebels say they want the money to fund humanitarian projects, but the demand threatens to complicate negotiations to end what U.N. Secretary-General Kofi Annan has called the world’s worst humanitarian crisis.

Africa’s major oil exporters “have been largely unable to convert their oil wealth into broad-based poverty reduction,” Mrs. Karl and Mr. Gary wrote in an analysis published this year.

“To the contrary, petroleum has become a magnet for conflict and, in some cases, civil war.”

Officials in Nigeria, sub-Saharan Africa’s biggest oil exporter, estimate that the country’s coffers will garner an extra $2.5 billion in revenues this year from the higher oil prices.

But they note that Nigeria also will face higher import costs, as it must import petroleum-based products that also will reflect the higher oil prices.

Mohamed Bennini, director-general for trade promotion in Algeria’s Commerce Ministry, said last week that higher oil prices are a “doubled-edged sword” for all of Africa’s major exporters.

Rising oil prices have been directly implicated in the still-murky suspected coup attempt in Equatorial Guinea. The sparsely populated country, ruled for a quarter-century by military dictator Teodoro Obiang Nguema, ranks as the region’s third-largest oil exporter, behind Nigeria and Angola.

A team of mercenaries reportedly planning to overthrow Mr. Obiang were seized in Zimbabwe in March. The dictator’s government has accused Western nations, regional rivals and even some in his own government of seeking to overthrow him to gain control of the country’s energy riches.