Africa's Oil and the Poor: No More Business as Usual

Catholic Relief Services
Tuesday, 17 June 2003

Catholic Relief Services (CRS) released a report today urging critical changes in the way oil is developed in sub-Saharan Africa and targets reforms in U.S. diplomatic policy, oil corporation business practices and the role international financial institutions in influencing how petro-states manage oil revenues.

"Bottom of the Barrel: Africa's Oil Boom and the Poor" argues that U.S. and other Western government policymakers, international financial institutions and the oil companies themselves have a unique opportunity to help alleviate poverty and authoritarian rule tied to oil development in many African countries and elsewhere in the world. But they must make a concerted push to change the way they do business, the report states.

"'Bottom of the Barrel' reveals that despite the promise of oil wealth, oil production is, in fact, exacerbating the poverty that already exists in sub-Saharan Africa," said Ken Hackett, CRS executive director. "This report is not just a critical examination of the problems of oil development. It is, perhaps more importantly, a call for specific, concrete changes that will help reverse the oil curse and bring long-term development and security for Africa's poor. Hundreds of billions of dollars will accrue to African petro-states in the next decade, and these funds must be targeted to combat poverty."

The report is available for download at www.catholicrelief.org/africanoil.cfm. For a hard copy of the report, please contact Cecile Sorra at (410) 951-7215 or csorra@catholicrelief.org The report was released with a telepress conference this morning. Hear a playback of the press conference by calling 800-858-5309 (for international access, dial U.S. country code followed by 334-323-7226). The access code for the conference is 40924. When prompted, enter the pass code 56937. The conference will be available for playback until July 1.

CRS will sponsor two panel discussions on the report's findings in London on June 20 and in Washington on June 23. Panelists will include the report's authors, CRS Africa partners from Chad, Cameroon and the Niger Delta and representatives from oil corporations and the U.S. Treasury Department. Please see details of the panel discussions below or online at the report's website www.catholicrelief.org/africanoil.cfm .

REPORT OVERVIEW

Africa is fast becoming a key supplier of oil to the United States, which already imports 17 percent of its oil from sub-Saharan Africa. In a decade, nearly a quarter will come from the region. The report--written by Ian Gary, CRS Strategic Issues Advisor for Africa, and Terry Lynn Karl, Stanford University Professor of Political Science--conservatively estimates that sub-Saharan African governments will receive more than $200 billion in oil revenues over the coming decade.

Such wealth will enable them to vastly improve lives through investment in health, education, water, roads and other vital necessities. But ordinary Africans will see no such improvements so long as revenues generated by the current oil boom continue to flow into governments lacking in transparency and accountability.

The report makes several concrete recommendations for policy reforms--particularly ones that call for more transparency in how petrodollars are managed and the increased involvement of civil society groups in the management of oil wealth. The changes are designed to encourage African oil producers to channel oil revenues into development and poverty-reduction plans. Recommendations include: oil companies disclosing taxes, royalties and other payments to all national governments, as called for by the "Publish What You Pay Campaign"; World Bank and IMF policies that require transparency in oil company and government operations; and U.S. and other G8 government relationships with African petro-states that prioritize transparency, accountability and respect for human rights.

The report argues that voluntary approaches to increasing transparency of oil revenues - such as those discussed today in London by UK Prime Minister Tony Blair and other government, company and civil society representatives at the high-level Extractive Industries Transparency Initiative meeting - are unlikely to deliver in the countries in Africa that need it most.

The report is the culmination of more than a year of intensive study of oil development in Africa. CRS, in its mission to serve the poor, not only provides direct relief and aid to people who need it most, but also seeks to address the underlying factors that lead to injustice and poverty. From that mission comes "Bottom of the Barrel." The report is among the first to trace the regional outcome of oil's discovery in sub-Saharan Africa and to recommend specific policy reforms that provide the best prospects for long-term development for the poor. CRS financially supports church and civil society programs addressing oil in Nigeria, Chad, Cameroon, Congo-Brazzaville, Angola and Sudan.

For more information, or to contact Catholic Relief Services, see their website at: www.catholicrelief.org