Commodities: Africa’s oil boom should be approached with caution
African borrowers and international lenders need to be judicious in their approach to funding on the back of new energy discoveries.
As commodity prices have surged over the past five years, sub-Saharan Africa has proved fertile ground for oil and gas finds. The boom has already fuelled what might be described as a sub-Saharan African renaissance.
In such countries as Ghana and Uganda, oil finds, once developed, should transform tiny economies into much bigger beasts. Angola, one of Opec’s newest members, has already attracted attention. But Angola’s oil boom began when it was at a much lower developmental base than where Ghana is today – especially in terms of infrastructure.
Neighbouring countries will benefit from the oil finds. Kenya, for example, will be host to a pipeline from Uganda’s oil fields to the sea. It will be able to use this to revitalize industries such as petroleum refining. One might even draw some parallels with the railway built through Kenya in the 19th century to what was at the time the ultimate goal – Uganda.
That epic venture transformed Kenya, thrusting it into the modern world. But Kenya’s ample payback for this partly uninvited and extremely expensive rail project was ultimately colonization by British settlers, which ended tragically, especially for the Kikuyu, Kenya’s most populous ethnic group.