Red, Black, and Green: Why Oil Exploration on Lake Malawi May be a Bad Idea

The new scramble for Africa’s oil can aptly be summed up in the three colors of the Malawian flag, ‘Black, Red and Green’. Oil or ‘Black Gold’ in Africa, makes up about 10% of the world’s proven oil reserves, “Libya's 41.5 billion barrels of oil reserves and Nigeria's 36 billion barrels are both twice the size of China's proven reserves and just under twice the size of US reserves” (AfricatheGoodNews).  The current rush for Africa’s oil is proving to be lucrative for oil company investment.The oil exporting countries of Equatorial Guinea, Angola, Chad, Sudan, Nigeria, Congo Republic and Gabon alone have enjoyed an average GDP growth of 7,4% from 1996-2005. This means that there is plenty of Green money to be made - and green here doesn’t not mean environmentally friendly nor innocent.

It is no wonder then that with the current oil crisis that is on-going in Malawi, Malawians from many sides of the political arena are looking towards oil exploration as a positive solution to the current fuel crisis. Proponents of oil exploration have argued that it will bring prosperity, help improve infrastructure (build schools and hospitals etc…) and more importantly, end the fuel crisis that has been plaguing the country. Opponents of oil exploration are largely citing environmental concerns. Although environmental concerns are important, it is equally imperative that other factors are considered, particularly the political economy. There is need to have further public debate inclusive of social, economic and political concerns so that Malawi does not repeat mistakes made by other African countries that have experienced the ‘curse of oil’. Malawians need to be educated about what becoming an ‘oil producer’ really means so that they can make informed decisions about moving towards becoming an oil producing country. Oil discovery should not be simply seen as the great savior for Malawi’s socio-economic problems. One should not ignore the fact that the discovery of oil (like most mineral resources) in African countries has largely been a curse. Oil prosperity in Africa has been limited to a select few individuals and large oil companies. Studies have shown that in almost all countries where oil has been discovered in Africa, the average standard of living of the majority has gone down and oil corruption has risen (i.e Chad, Gabon and Nigeria). In Nigeria’s case, we should recall that it was revealed that Shell oil had infiltrated every level of the government in order to exert its influence on that country’s government. The practices of oil companies and their Nigerian counterparts have disrupted good governance in Nigeria, business, and civil life. Its discovery is often viewed as a ‘curse’ for many people in that country – Particularly, to the people that come from the oil producing region.

 Although governments argue that they will undergo the necessary environmental assessments, the reality is that assessments are often rubber stamped in the face of the potential for billions of dollars that oil company’s promise to bring or due to corruption (ie Russia’s Sakhalin project went through environmental impact basement but led to the depletion of fauna due to the corruption within the body charged with overseeing the environment). Even when thorough assessments are done, there are no safety guarantees because pipes often burst due to poor maintenance by oil companies. Oftentimes they use old pipes in African countries or just don’t maintain them due to cost or negligence. Oil spills in Nigeria’s Niger Delta region equivalent to the Gulf spill have been occurring yearly. Oil companies have failed to clean up their spills, often blaming sabotage by ‘rebels’ (angry villagers wanting justice and/or militia groups wanting money, many that were initially trained by the oil companies).  In the case of the recent court case that the Ogoni people in the Niger delta region won, it is estimated that the environmental impact is so large that it would take years to clean up. In an ocean, spills can spread for miles but it may only take one such spill to cover Lake Malawi with oil. One spill could potentially end aquatic life and livelihood for people that depend on the lake for generations to come. It will also mean the death to the lake-based tourism industry that is supposed to be one of the catalysts for Malawi’s development goals.

Although the continent is likely to attract $50 billion in investment in the oil sector alone by the end of the decade, Oil does not necessarily mean prosperity and development across Africa. Profit Sharing Agreements that are signed between governments and oil companies often mean that the oil company provides the capital and pays the government back only when they have recouped their costs. Often, crude oil is pumped out of the country and refined elsewhere as an export. Since there are no refineries in Malawi, Malawi would need to buy back its own oil at a premium such a situation would not resolve our fuel crisis. Rather it is reminiscent of colonial systems of mercantilism and extraction.  Oil companies have had years of experience in developing extractive practices that lead to underdevelopment in Africa – they have the resources, capital and lawyers to take on many poorer African governments or local bodies. There has been little or no development in the oil rich Niger-Delta region. The Niger-Delta is one of the poorest in the world since oil money doesn’t trickle down to the region.  In Gabon, oil has lead to mass importation of costly foreign foods at the expense and/or neglect of local agricultural industries. Most of these imported goods are too pricey for ordinary Gabonese to benefit from them even though the country can afford to import them – again, it is the poor that lose out. Thus a young democracy like Malawi would need to have above average governance in African terms to manage this resource. African countries have failed to manage resources in a way that benefits trickle down to the poor people due to internal and external factors. Malawi’s institutions would need to be mature enough to withstand global forces of globalization, neo-colonialism and western hegemony in order to prosper from oil money. 

Lastly, it should be noted that where there has been oil in Africa, there has been conflict or ‘blood oil’. This brings us to the last color- Red. The red blood of Africans has been shed continent wide over this resource. This includes on-going instability in Nigeria, Angola, and Sudan. It includes countries like Libya and Uganda where oil/oil exploration created environments conducive to government systems of central control. Malawian institutions would also need to be strong enough to withstand these internal forces. The amount of resources and wealth that oil brings makes for a good breeding ground for greedy dictatorships and militarism to rise within a government. Oil has the ability to turn politicians into oil mongers. Control of Oil may be a catalyst for future power struggles and war in peaceful Malawi. The Late President Kamuzu Banda, who ironically was a dictator, intentionally did not allow drilling on the shores of the lake because he knew it would bring instability to his government and to the country. Whether he did this purely to secure his own leadership or for the greater good of the country is debatable. Nonetheless oil exploration needs to be closely examined in 'Red, Black and Green'. . It’s important that the country looks at experiences of their neighbors and not repeat their mistakes so that Malawi’s fuel crisis doesn’t become an outright oil crisis.

-- A version of this article entitled, "Malawi's Potential 'Curse of Oil' " appeared in the opinoin column My Turn in the Malawi newspaper, The Nation on August 15th, 2011 - Ms Tinga

Gbagbo and the Chocolate Factory: Power & Cocoa in the Ivory Coast

Over the years, Chocolate eggs have been placed in Easter baskets around the world in Europe, America, and other continents across the globe.  Chocolate has become a central part of some religious and secular practices during the month of April. Year round, it is used to make chocolate coins for Hanukah or Santa Claus (Father Christmas), for courting on Valentine’s Day, and it used daily to make food and beverages. Not much thought is given by the general public in the west on the African origins of most of the Cocoa they consume or the labor used to obtain that luxury. Instead, when people think of Chocolate, they think ‘Swiss’ or ‘America’ when countries like Switzerland, Germany, and America don’t grow cocoa. Ivory Coast happens to be the world’s largest supplier of Cocoa. This means that the money that Gbagbo is clinging to is being funded by local Chocolate Easter Egg hunts and addictions to high-end chocolate lattes. Needless to say, the chocolate industry is very lucrative and holds the Ivory Coast’s purse strings. Similarly, I would like to point out that the Ivory Coast holds the chocolate industry’s purse strings as well. This is evident in how the current political crisis has impacted on the chocolate industry economically. In recent months, we have seen how the political situations in Libya, Egypt and now Ivory Coast has impacted prices of various commodities around the world. Hopefully, these events have given a chance for Africans across the continent to reexamine (and reevaluate) their central roles in the global economy and how their products affect prices world-wide.  The recent political crisis in the Ivory Coast is a clear example of this. The crisis has resulted in the rise of cocoa prices which increased to a 32-year high as a direct result of the political situation. According to Bloomberg report, Cocoa prices in New York had risen as much as 34 percent since the disputed elections where Gbagbo refused to step down. Prices only fell for the first time this year on March 4, 2011 because there were signs that Gbagbo’s reign as CEO of this large 'chocolate factory' was finally coming to an end. This shows the impact that the Cote d Ivoire situation has on the businesses on an international scale.

This raises the question on how we value African produced commodities both in the raw form and manufactured form. Particularly those products that African countries have a monopoly in supplying like chocolate. Since roughly, 50 million people around the world rely on cocoa for their livelihood, this gives Ivory Coast a considerable amount of power. Whilst only a few people will draw the connection between Chocolate producing Ivory Coast and its role in the global economy, and the political crisis, it effects have a real impact on many. Three quarters (67%) of the world’s cacao bean production takes place in West African in countries like Ghana and Ivory Coast. Ivory Coast alone supplies 43% of the world’s cocoa. Many people in the Ivory Coast (or outside of it) may underestimate the impact the country has on global industries and economies, but is is now being made visible. Whenever a large supplier of chocolate like Ivory Coast, cannot provide a regular supply, it will have a ripple effect on buyers all the way up the supply chain. It will also affect all industries connected to chocolates (milk, raisin, nuts, and peanut butter).  If Cadbury (See: Cadbury: An Ethical Company struggles to ensure Integrity of its Supply Chain) or Hershey is not able to get a regular supply of cocoa, it will cost them more to make chocolate and hence the price of chocolate will go up worldwide. Regular consumers will feel this impact at grocery stores and restaurants. Thus large chocolate manufacturing countries have a stake in Gbagbo’s presidency and on undervaluing the importance of Ivorian Cocoa to their products.

When they restructured the world cocoa market in the 1990s, it left Ivory Coast with little real power over the market. The liberalization policies still don't benefit Ivory coast and have led to large companies having power in the industry (See: Global Restructuring and Liberalization: Cote d' Ivoire and the end of the International Cocoa Market).  Realizing the value to African commodities through their effect in the global economy and branding them will be beneficial to Ivory Coast. At this juncture in its economic history, Ivory Coast should be synonymous with chocolate even if it’s not producing a finished product. As a comparative example of the importance of branding raw products, Colombia’s coffee beans are known worldwide as quality beans in their raw form so any product that uses Colombian beans has added value and can fetch a higher price. Ivory Coast is producing more chocolate than any other country, and clearly, their ability to supply chocolate impacts the chocolate industry. Clearly, it should be able to set prices of Cocoa at a fair trading price. Ivory Coast is in a position to negotiate Cocoa prices. The Chocolate companies know the value of their product and of the Cocoa they are getting. The misnomer that large MNCs will simply and easily ‘go somewhere else’ has been used for years but it doesn't make good business sense and is not an easy feat. For businesses, there are large switching costs that they will incur, and getting a new large supplier would change everything from its pricing strategy, production costs, and may cripple that company. MNC’s have been encouraging countries to mass produce cocoa so that they can achieve economies of scale (drive prices for the consumers down due to large supply of cocoa). Even if they were to go somewhere else, will that new country will probably not be able to meet the demand without large investments in infrastructure that many times the MNC is not prepared to pay. It will also mean the end to unreasonably low cost chocolate for customers in the western market.

There are always economic reasons why MNCs enter a certain country initially (and it is clearly not for humanitarian endeavors). There is no cocoa grown in Malawi, Zambia, Tanzania (much less America or Europe) so Ivory Coast has a product that not many countries can supply at that price. Yet, for some reason this adage that African countries are interchangeable and have ‘little’ to offer the world of economic value is persistent and internalized by some African leaders. not knowing the value of their product in global terms affects their bargaining power.  There is little reason that Ivory Coast is not in a position to set price minimums so that chocolate money trickles down and can be used for schools as opposed to being used to employ child labor of children that can not afford to go to school. There is also an added need perhaps, for this country to brand itself as the ‘Cocoa Coast or Chocolate Coast’ internationally to help add value to their raw product as is the case with Colombian beans. This can trickle to other industries and create and/or ‘chocolate development’ or even ‘chocolate tourism’. This 'chocolate tourism' though should be done in a way that is progressive and does not result in continued abuse of chocolate farmers. In the event that an MNC does get supply ‘elsewhere’, then that country can concentrate on getting another buyer and/or diversifying its products to make more food products that can be consumed locally or regionally. If Ivorians are unable to ‘feed themselves’ working as laborers on cocoa farms,  we then need to question the real life benefits of these farms for them. Their labor is on this farm may be wasted and they may benefit more from selling and growing items that will sustain them or that they can actually eat.

The International Cocoa Organization  (ICO) and the World Chocolate Foundation (WCF) appear to be the foundations in charge of setting standards and guidelines for the cocoa industry. Unfortunately, the latter ‘chocolate police’ are primarily made up of MNC’s and the goal for businesses is to provide value for its shareholders.  In the case of the ICCO, Ivory Coast, Togo, Ghana, Cameroon, Gabon and Sierra Leone are all represented but I think it is also important for regional agreements to made so that work on common issues as a united front in the board. Ivory Coast used to have a Cocoa board (CSSPPA) that was dissolved in the 1990's that was powerful but was dissolved to make way for liberalization. Although this board may not have been perfect, it created some standards within the country and protected farmers at some level.  With no real representation, the question of who is really looking after the primary interest of the Ivory Coast needs to be raised?  Just like in Charlie and the Chocolate Factory, we can see how economic wealth and greed has played a key role in the chocolate industry. A few companies and people are getting rich from the labor of the hard working people in an exploitative way. Currently in these plantations, child labor, debt servitude (‘slavery’) and displacement of people still exists because of the chocolate industry (see: Chocolate Work or read: Chocolate Nations: Living and Dying for Cocoa in West Africa (African Arguments)). Cocoa does not fetch an economically sustainable price for the farmers who are the suppliers. Gbagbo and his supporters have benefited from this industry and this is evident in his unwillingness to step down. Gbagbo’s Ivory Coast has also not lead to the type of economic growth that the Ivory Coast has the potential to realize. The challenge will be to see how Mr. Ouattara’s Chocolate Factory will look like and if his presidency will mean change for the Ivorian people that rely on Chocolate for their livelihood. In his attempts to liberalize the Ivorian economy, we hope that he will set an agenda that helps Ivory Coast receive an equitable price for its Cocoa and that children will be eating cocoa instead of picking it.

Corporate Irresponsibility, Extraction, And The Nigerian Oil Spill

The world recently watched a minute-by-minute play on the oil spill in the Gulf, but the inhabitants of the Niger-Delta region in Nigeria have been watching minute-by-minute oil spills for the past 40 years. As the world watches every single step taken by BP to clear up the oil spill, the Nigerians watch  rivers already flowing with oil due to lack of any clean up effort, giving the Gulf region a precedent of the damage that can occur, and leaving them little room to speculate about what may lay ahead for the Gulf. Large oil producing MNC's like Shell, have been spilling oil in the region with little regard for the environmental guidelines. According to the BBC, there were over 7,000 spills, large and small, between 1970 and 2000 which amounts to an estimated 13 million barrels of oil. According to News Desk article,  'Niger Delta Oil Spills Dwarf BP, Exxon Valdez Catastrophies',  Idris Musa, head of Nigeria’s oil spill response agency, said "an additional 2,405 spills by all major oil companies in the region have occurred since 2006." The discovery of oil in this region has been a nightmare for the 31 million living in the area. This has caused the pollution of water, land and air in this region. The Ogoni are the dominant ethnic group that live here and over the years, they have watched their fisheries depleted in the oil-rich area, catapulting them in to a life of hunger, disease and poverty. Although human rights groups and Nigerians have protested about the disregard of enviomental guidelines here, little improvements have been achieved. Shell, for example, has blamed sabotage for the oil spills and denied responsibility.



The oil spills in this area are a result of a mixed combination of  factors including an aging oil infrastructure, corroding pipes, and sabotage by thieves or rebel groups. Whilst Shell may not be responsible for every single oil spill, instead of making attempts to clean up the environment,  they have been using evasive tactics when it comes to Nigeria. Shell, which controls the majority of the oil industry in Nigeria, defends itself by claiming that 85% of spills are caused by sabotage instead of corroded pipelines and poor infrastructure. It seems like corporate social responsibility for Shell, is confined to select geographical locations -  Niger-Delta is not one of them. Nigerians that have resorted to protesting against the company and the government but have been met by paid armed Shell employees, and by a government clamp down, labelling protesters as mere rebels. A womens protest group protesting Exxon, was once met with armed gaurds who beat and assulted the protesters. In fact, the Niger-Delta conflict that arose in the 1990's centers around the struggle between the Ogonis and Ijaw people and the oil companies. They feel that they are being exploited and also want to see oil profit trickle down to their communities. Although, many regard their plight  and the civil war in Nigeria to inter-ethnic ('tribal') conflict over control of resources, their struggle is not simply about 'warring tribes' that dislike eachother fighting for oil. According to Walter Rodney in his book, 'How Europe Underdeveloped Africa' "...to accept such a contention would mean extending the definition of tribe, to cover Shell Oil and Gulf Oil!" In what some term, 'blood oil', there are definitive corporate roots in the development of the oil spills and oil crisis. In spite of a boycott by activists against Shell, and a call from the US and UN for the company to correct its wrongs, it also seems like there is more talk than action and the poor, as usual, will lose out.

While it’s easy to lay blame only on Shell and MNCs, we need to consider the role that the Nigerian government has played in branding the Niger-Delta area as a place for oil extraction and not oil investment.  Nigeria is a member of OPEC, and one of the top oil producing countries. Nigeria is the fifth largest exporter of oil to the United States and the largest producer in Africa. The government gets about 80% of its profits from oil. It turns a blind eye to the wrong doings of Shell, and in exchange, Shell keeps the governments purses filled with oil money. In  a blatant display of loyalties, Nigerian government went as far as hiring a former Shell employee as the minister that overseas the oil sector. With recent progress, it makes, one wonders what image or brand Nigeria is trying to portray to the world about itself and its people. The stereotypical Nigeria or the new Nigeria under Goodluck Jonathan, that's trying to shake and rebrand its negative reputation and leave it behind them. The President, incidentally, is of Ijaw ethnicity, born in the Niger-Delta and has been able to stabilise the area in terms of attacks so far. He also has a degree in zoology and has worked for the environmental protection department. Hopefully, these factors and his desire to maintain good international relations (particulary with the Obama administration), will spark an interest in cleaning up, both politically and environmentally, the Niger-Delta crisis.

The rebranding of Nigeria began a few years back through the launch of the the Nigeria Image Project in 2004.  It was taken a step further in 2009 with a campaign to rebrand Nigeria. According to Robin Sanders of Galaxy television, the aim is to "not only aimed at improving Nigeria's image in the international community, but to position her as a good destination for tourism and investment in Sub-Saharan African." In the controversial documentary, "Welcome to Lagos", the Nigerian government is shown making progress towards trying to rebrand itself as a government concerned about the welfare of its people. They are seen cleaning up the streets for Lagos from loiterers, landscaping the city, implementing a sanitation and 'clean up' day once a month, and razing shanty towns which they cite as a breeding ground for crime and disease. Its actions in the Niger-Delta  region the past few years however, are a sharp contradiction from the country that its trying to become. A government needs to put its people first, and send out the message that it thinks all of its people deserve clean air, water, and land. Only when the Nigerian government is able to send a consistent and paternalistic  message through actions that protect its people from the big oil companies, only then it can truly realise the transformation that it seeks as a rebranded nation. Only then can we truly say that we see an image change in the country, a new Nigeria. Right now, Shell enjoys an extractive relationship with Nigeria, making other areas of development investment challenging.  One cant attract long lasting foreign direct investment with a system of extraction. The manner in which Nigeria is letting Shell treat its people is also the manner in which other people will treat Nigeria as a nation.

In a surprising  move though, the government did slap Shell with a fine of over $100 million in punitive damages for oil spill damages in Rivers State, Nigeria, which Shell has been violently protesting, claiming that such a fine will effect its future $40b  investments in the area. Claims which are ludicrous since that amount is really minuscule in comparison to the profits oil companies gain. The amount of money BP is spending for the Gulf oil spill fund alone is $300b dollars, an amount which people criticized BP for because it pales in comparison to the profits it earns. Shell should be prepared to shell  out more for its consistent history of abuses and violations in the area. The oil industry is very lucrative and 'black gold' is a commodity that the world relies on. Oil producing countries, in essence, are in a position where they can make demands on the companies that rely on oil. Cleaning up after an oil spill is a  socially and environmentally responsible demand to make and the Nigerian government should begin make better efforts. The chances of MNCs actually pulling out of the country are very slim since its a lucrative commodity.What we must do now is sit and watch to see if this fine will be paid or if the case will disappear in the system. It is also important to note that in spite of all the revenues earned by oil, the Nigerian National Petroleum Corporation (NNPC), is unable to meet all its financial obligations which indicates that some of the oil revenues have also somehow disappeared in the system.

Since the Nigerian oil crisis can be seen as a precedent to the damage and abuses caused by oil companies, we also hope that other countries take heed and learn from it. American media attention is certainly keeping BP honest in the Gulf but unless  there is this type of pressure, many coporations will continue to neglect enviromental law for profits. They will continue to place profits over people.  They will continue to let pipes erode, spills to occur, and people to suffer... It certainly is the right time for Nigeria to move forward in making demands from the oil companies. Uganda is going to be an oil producing country in the next 5 years and may become an unwelcome competitor for Nigeria. It will also provide the oil companies with alternatives. I only hope that Uganda take the necessary precautions so that they don't create another Niger-Delta crisis in Uganda. Uganda will need to make an effort to brand its oil sector as investment and not extraction through greater controls. The discovery of oil should be able to uplift a country in to wealth and not impoverish it. With Libya, we have seen it taking several decades before their oil money has really began to create wealth in the country and trickle down. Under Gaddafi's new course for Libya, many of the recent public works and infrastructure developments have been long overdue. In certain aspects, for countries like Malawi, where their is evidence of oil but also where oil in Lake Malawi has not been fully explored, it may be a blessing in disguise. None of the Malawian Presidents have made oil drilling in Lake Malawi central to their economic goals perhaps its diverse population of Cichlids has been the lakes saviour. What will be the saviour for the crisis in Niger-Delta? Perhaps, the discovery of new energy sources.