Energy

What is the ‘Oil Curse’? | Oil in Sudan and South SudanUranium

This section introduces the energy situation in the regions we focus on, the history, the major players and how the industry affects political developments and peoples’ lives. As well as looking at oil in Sudan, South Sudan and Uganda, we will look at uranium in CAR and the DRC.

Africa’s potential as an energy producer has attracted many an investor. Political complications in the Middle East make Africa’s untapped resources even more appealing, and the continent is likely to take centre-stage in the energy market in the coming decades. Yet as suggested by the popular political concept of ‘the Oil Curse’, oil’s potential to trigger devastation is cause for concern, and a lack of adequate analysis prior to extraction is commonplace.

What is the ‘Oil Curse’?

The ‘Oil Curse’ is also known as the ‘Resource Curse’, in that the effects are not limited to oil but to many extractive industries, from diamonds, gold and rare earths to other forms of energy. It is essentially an observation; that while such resources should be a benefit to a country in need of an economic boost, and should help development rather than hinder it, the opposite is often true. In the wake of the oil boom-and-bust of the 1970s and 1980s, it was observed that countries that had begun exporting oil were far worse off [maybe a link to back this up?]; the industry had fuelled conflict, corruption, environmental degradation, political turmoil and economic crisis. Examples include Algeria, Nigeria, Angola and Chad.

Economists have considered a number of different blanket theories as to why this happens. One such theory is known as ‘Dutch Disease’, which states that when a country finds oil, its currency rises in value on the international exchange. As a result, all its exports increase in price, and therefore buyers will look to other countries for alternatives to those exports, so while oil may bring in revenue, other exports suffer. Others suggest that oil fuels conflict in post-colonial states when it is discovered in a disputed region with ethnic divides and competing claims to different areas, such as in Nigeria’s Niger Delta. However, each situation has its unique intricacies and history, and what was true for one cannot be assumed for another.