- The Washington Times - Thursday, June 7, 2007

DAKAR, Senegal

As the Group of Eight meets this week in Germany, one African leader is hoping to use the new flood of oil profits for a novel cause: combating poverty in Africa’s non-oil-producing nations.

“Energy and infrastructure — those are the new links,” said Senegal’s octogenarian president, Abdoulaye Wade, in an interview in Dakar before he left for the G-8 meeting in the seaside resort of Heiligendamm today. Mr. Wade will be joining G-8 leaders, including President Bush, British Prime Minister Tony Blair and the new “pro-American” French President Nicolas Sarkozy, in Heiligendamm, where the agenda will be dominated by AIDS and global warming. Mr. Wade hopes to piggyback on those concerns to highlight the plight of the African poor and the high toll that rising energy prices exact on the African continent.

Mr. Wade is something of an anomaly in Africa — a pro-Western leader of a predominantly Muslim nation. Since fall 2006, he has been leading a campaign to sensitize the West to the damaging impact of record oil prices on Africa’s poorest nations, a group of 14 non-oil-producing countries.

Mr. Wade, who has a doctoral degree in economics, is employing a two-pronged approach. He has helped form the African Non-Petroleum Producers Association and has tried to stimulate the development of homegrown biofuels to curtail energy dependency. At the same time, Mr. Wade has called on oil companies to invest a portion of recent record profits to help fight African poverty, with financial backing from the international community.

The problem

Few Americans can readily appreciate the devastating impact of soaring energy prices in Dakar, Senegal’s capital. In the Washington area, motorists typically start to fret when gas prices exceed $3 a gallon at the pump. In Dakar, gasoline costs close to $5.30 a gallon, and the price of a taxi ride from the airport to the downtown district has nearly doubled in a year.

In addition, the per-capita income in Senegal is a meager $849 a year, making the country’s astronomical oil prices all but unbearable. Last summer, the lights went out for several hours a day in Dakar because the state electric company could not pay for fuel. Neighboring Guinea Bissau, too, hovers near a total blackout. In fact, with little notice in the West, an energy crunch has blanketed the entire sub-Saharan region. Even oil-rich Nigeria, with a per capita income of less than $1,500, sees long lines at gas stations.

Mr. Wade argued before the U.N. General Assembly in September that long-standing Western concerns about corruption and political repression in Africa are unlikely to be addressed without a “swift and massive investment in infrastructure and the availability of affordable energy.”

Good governance and African efficiency, he told U.N. diplomats, hinge on the fate of energy prices and African development.

“The rest of Africa’s problems … we can find solutions to ourselves,” he said.

The answer

Mr. Wade’s solution is to essentially redirect oil profits to ease the energy crisis in Africa. The so-called “Wade formula” is beginning to receive attention in the boardrooms of oil giants and from policy experts at the United Nations and was the subject of a meeting last year at the Center for Strategic and International Studies (CSIS) where Mr. Wade spoke.

The Wade formula is deceptively simple. It pegs the 2003 oil price of $29 a barrel as an acceptable benchmark price of oil for Africa’s non-oil-producing countries. Under the formula, the difference between that price and the current price of oil (now at $66 a barrel) would be considered a surplus that would be set aside in a newly created fund to help reduce poverty in Africa’s non-oil-producing nations. The three partners in the fund would consist of petroleum companies drilling on the African continent, the international donor community and the central governments of Africa’s oil-producing countries that, as Mr. Wade points out, collect large rents or royalties simply by the fact that “resources lie under their soil and sea.”

In essence, Mr. Wade’s formula asks that the beneficiaries of Africa’s rich energy resources to give back elsewhere in the continent to ensure political stability, protect their downstream markets and save lives lost to malnutrition, HIV/AIDS and other afflictions.

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