How Did Africa’s Prospective Petroleum Producers Fall Victim to the Presource Curse

 

This paper reviews resource sector developments in 12 countries in Sub-Saharan Africa that made their first (major) petroleum discoveries during the most recent commodity boom. The analysis, which goes back to 2001, looks at sector forecasts of international organizations, governments, and companies and compares them with the results that emerged. The paper finds that a third of the countries did not make any commercially viable discoveries. Among those that potentially had commercial finds, the latest timelines from discovery to production are 73 percent longer on average than initially expected. In the six countries for which there are comparable data, revenue collected thus far or the most recent revenue projections for countries yet to reach production are 63 percent lower on average than the initial forecasts. All 12 countries experienced a disappointment in at least one of the three dimensions analyzed—and these disappointments are likely to be exacerbated by the recent price crash. The paper also documents the various policies adopted in response to the discoveries and — with the benefit of hindsight — finds that, in some cases, this over optimism contributed to the ‘presource curse’: suboptimal policymaking that did not align with the new realities. Some recommendations are provided on how better to navigate the inherent uncertainties in developing the sector.

The paper is available at the link below.

National seminar for Guyana “Managing Resources Post-Discovery”

Significant oil fields have recently been discovered in Guyana. Their development would likely result in government revenues that are large compared with public spending, other domestic revenues and the economy. Large petroleum revenues, if wisely managed, can contribute to sustainable economic development. However, if poorly managed,they can retard economic development and create a ‘resource curse’. More specifically, they can lead to a loss of economic competitiveness, volatile and inefficient public spending,and unsustainable consumption. This is the summary of a workshop, held in Georgetown on 21–22 June 2017, that examined how petroleum development might influence Guyana’s development trajectory as well as the various mechanisms of saving petroleum revenues and rules for spending them. The seminar was hosted by the Ministry of Finance and the Ministry of Natural Resources.

A summary of the workshop is available at the link below.