Africa needs to open its oil books, World Bank says

Sep 26, 2005 02:00 AM

African oil producers need to fully disclose how much export money they take in and how it's spent to ensure surging revenues caused by recent oil market rallies don't lead to economic decay, the World Bank said.
The international lender said more open audits could cut waste, end corruption and force public debate on government spending priorities at a time when some turbulent nations are being enriched by sky-high oil revenues. Africa accounts for about 5 % of the world's oil production. Exploration interest in countries like Nigeria, Angola, Equatorial Guinea, Cameroon and Chad has peaked as burgeoning world oil demand has triggered ever-rising oil prices.

Charles McPherson, a senior advisor in the World Bank's oil, gas, mining and chemicals department, said many oil producing nations in Africa suffer uneven economic growth and social and political instability.
''When a government has access to one source of income which is very substantial, it has a diminished incentive to be accountable to the public's priorities,'' McPherson said. ''Many countries are now becoming very aware of this, and are taking steps to correct this.'' He said the Extractive Industries Transparency Initiative, a program launched by British Prime Minister Tony Blair in 2002, helps to shine a light on the flow of oil funds between governments, state-owned companies and private sector firms.

Audits required under the EITI initiative, some of which have begun being published in Nigeria and elsewhere, are likely to expose accounting gaps in some countries, McPherson said.
''The most important part of it, though, will be just getting credible numbers out in the public domain as a starting point for accountability on the expenditure side,'' he said. He said the audits would likely heap public pressure on governments to overhaul their budgets, particularly given now-huge inflows from booming oil exports. Development experts have long fretted over the ''resource curse'' that can make countries with natural riches dependent on exports and vulnerable to commodity price swings.

Senegalese Finance Minister Abdoulaye Diop, in Washington for the semi-annual meetings of the World Bank and International Monetary Fund, said it was important for African countries to refine more of their raw commodity goods.
''The most important thing for us is to process our products on the spot, process them locally, because we have noticed that most of our products are exported unprocessed,'' he said, citing textiles as an example. ''Senegal may not be a major exporter of cotton, but I think that if we were to process our cotton on the spot we would increase the value added, and we would increase our export earnings,'' he said.

Source: news.webindia123.com
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