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Africa’s tragedy: rich in resources but stinking poor

Edward Ojulu.

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.

Posted by on Jan 16 2012. Filed under Opinion, Other News. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.

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