Africa’s tragedy: rich in resources but stinking poor
At the beginning of this month, Reuters news agency predicted that Nigerian economic reforms and Kenyan general elections are some of the major events that will shake and shape the continent in 2012.
While court in Nairobi last week ruled that the polls should take place in March 2013 and not August 2012 as stipulated under the new constitution, in Nigeria, the prediction came to pass. Nigerians across the country took to the streets expressing anger over the removal of fuel subsidies that caused a more than double increase in fuel prices.
By the time we went to press, Africa’s most populous country and a top world oil producer was counting huge losses as the strike entered its fifth day.
In Uganda, the government removed subsidies on electricity, increasing bitterness among the population complaining about high cost of living after its purchasing power has been eroded by high inflation.
As we went to press on Saturday, traders were just reopening their shops following a three-day shutdown protest against a hike in interest rates on old loans that left banks, government as well as the traders counting losses.
They however return to work with their demand not met as the central bank refused to ask commercial banks not to increase interest rates on old loans as demanded by the traders whose largely import-based businesses are collapsing under the weight of a depreciating shilling and the rising cost of working capital. A near double increase in the unit price of electricity can only provoke more anger and despair among the struggling business community.
There has been street protest by the same business people in the past over massive power cuts without a corresponding reduction in the monthly power bills as consumers accused the power distributor of billing them for the electricity they did not consume.
Public anger over the removal of fuel subsidies in Nigeria and electricity subsidies in Uganda has one thing in common: That is the failure by governments in these resource-rich countries to manage public resources.
Nigeria is a major oil producer in the world, pumping 2.6 million barrels of crude oil each day of the week, according to the 2011 statistics. Despite this enormous resource that Nigeria has had for a long time, the country has not invested in a refinery – opting to market the entire oil product in its crude form.
So, a leading producer of oil is happy to be a net importer of oil products including petrol and diesel! In fact fuel shortages and long queues at filling stations are a common occurrence in Nigeria. At the centre of all this contradiction is the stinking corrupt political class that has been happy to stash away billions of dollars from oil at the expense of social infrastructure.
Nigeria therefore becomes a classic example of a typical African country that is contented with producing and exporting raw materials cheaply and importing finished products made from the same raw materials expensively.
Uganda on the other is the most endowed with hydro-power generation resources in this region. This is in addition to huge potential in solar and wind energy.
But Uganda has suffered from severe power shortage for the last two decades without a solution in the offing. Even where there have been attempts to increase capacity, corruption has ensured that projects have ended up being white elephants like in the case of the second dam in Jinja.
Despite warnings from the experts that a second dam parallel to the old Owen Falls Dam would not bring in more electricity, but instead affect the output from the old facility, the authorities went a head with the project because some individuals benefited from it.
At the end of the day, the second dam is just another bridge after sinking in millions of dollars. And when the construction of Bujagali started almost seven years ago, the country had been promised that the facility would be able to add at least 50MW of power to the national grid by 2011 to no avail.
Such is the tragedy of Africa – rich in resources but stinking poor.