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Senegal sees oil as anti-poverty tool
Question of the Day
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.
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.
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.
Principal African oil-producing countries include Nigeria, Algeria, Libya, Gabon, Angola, Congo and Equatorial Guinea. Few statistics are published on regional receipts from oil, but gross revenue from oil from 2002 to 2006 in Nigeria alone has been reported to exceed $70 billion.
The co-founder of the Earth Rights Institute, Alanna Hartzok, said, “Western oil companies extract oil worth an estimated $150 billion a year from the Gulf of Guinea region.”
The hard sell
Last fall, CSIS sponsored a round table for Mr. Wade to present his idea. Mr. Wade fielded questions from the U.S. State Department, World Bank officials and the Algerian ambassador to the United States.
On his Web site, www.thewadeformula.com, he has offered to personally reply to comments sent to him via a link at “Ask the President.” To date, no major oil company has shown a readiness to invest in a dedicated fund to help non-oil-producing African nations lower their energy costs, despite enjoying a string of record-setting corporate profits. At best, the Wade formula has received a respectful hearing at Chevron’s corporate offices, where company executives are deeply worried about security and fostering community ties after the recent kidnappings of Chevron employees in Nigeria’s treacherous Niger Delta.
Not surprisingly, oil industry executives have seen little short-term advantage to committing a portion of profits to helping the African poor. But standing in front of a flip chart that is permanently positioned in his Dakar office, Mr. Wade scribbled out the mathematical workings of his formula and argued animatedly that the petroleum industry was being short-sighted. Mr. Wade is generally a free-market advocate, but he argues that an unfettered oil market in Africa is laying the groundwork for a pan-African disaster.
“It’s about poverty,” he said. “Poverty is the primary instigator of mass migration of desperate people and thus the most destabilizing factor to security and responsible governance.”
Although there is a certain appeal to Mr. Wade’s remedial formula, some of the stiffest resistance may well come from African leaders of oil states faced with abject poverty at home and widespread internal graft. The so-called “oil curse” has afflicted Nigeria, Angola and even tiny Equatorial Guinea, where the high gross national product has done little to improve daily life despite public-relations campaigns to label the tiny republic as the “Kuwait of Africa.”
In late June, after the G-8 summit and the World Economic Forum on Africa in Cape Town, South Africa, Mr. Wade intends to invite oil executives operating in Africa, international donors and a few African leaders from oil-producing nations to Dakar to hash out the next step in his campaign to curb energy costs.
One thing is certain: Mr. Wade, who recently triumphed in a hard-fought re-election campaign, is committed to redirecting attention to the energy crisis in Africa. Even though his formula has yet to lead to concrete changes, it has highlighted the dangerous implications of unbridled oil costs on the continent and pushed non-oil-producing nations to give more attention to alternative sources of energy like biofuels. Citing Brazil’s successful substitution of ethanol for gasoline, Mr. Wade argued that West Africa should follow suit.
“There is no reason why countries like Senegal can’t become an energy exporter,” he said.
Echoing a sentiment that many Americans and his counterparts at the G-8 might subscribe to, Mr. Wade pointed out that international energy policy is stuck for now in a quagmire of conflicting demands.
“We live today in a world of interdependence,” he said. “Yet our aim is for energy independence.”
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