Big Barrels: African Oil and Gas and the Quest for Prosperity
As an African entrepreneur, NJ Ayuk has witnessed the transformative impact of the oil and gas industry on the continent. The founder and CEO of Centurion Law Group, he has seen it build countries and shape economies and societies. He has seen oil and gas as a powerful force for good in Africa. In his first book, Big Barrels: African Oil and Gas and the Quest for Prosperity, co-written with João Marques, Mr. Ayuk confronts the widely communicated view that African nations with oil and gas resources inevitably suffer from the effects of the ‘resource curse’. The reality, the book argues, is very different.
The following is an excerpt from the introduction Big Barrels, which will be officially launched at Africa Oil & Power, on June 5, 2017. Mr. Ayuk will be on hand to sign books. Pre-order your copy of Big Barrels on Amazon.
For decades, Africa has been branded as a continent perpetually suffering from corruption, abject poverty, poor governance, military conflict and tragedy. The politics and economies of the 54 nations that compose the landmass have often been criticized both within Africa and across the wider world, seen as inherently unstable and beyond recovery. Certain problems are obviously undeniable. The combination of ethnic divisions, the scars of colonial heritage, a lack of adequate institutional strength, insufficient resources to feed populations and an inability to compete in an increasingly globalized world market has kept parts of Africa in darkness. But an exclusive focus on these issues has contributed to the prevailing narrative of the failed continent, an idea that contrasts sharply with many on-the-ground realities. Ultimately, this has diverted attention away from some of the more manageable issues facing African nations.
The international community has ostensibly made efforts to help the continent overcome some of these obstacles, with limited success. Over the years, the shortcomings of the prevailing aid paradigm has become more and more apparent, and it seems clear that aid-dependent countries are less capable now of rising out of poverty than they were 30 years ago. Initiatives such as the United Nations’ Millennium Development Goals (MDGs) have defined targets for the improvement of the lives of many Africans, but these only go so far in helping to fight poverty, disease, hunger and illiteracy. Perhaps the biggest barrier to the success of these endeavors is the fact that they are generally designed from afar, by donor nations and institutions with a limited understanding of both the needs of the recipient countries and their ways of operating.
After all, many African nations possess some of the world’s largest concentrations of natural resources within their borders and maritime boundaries. These resources are extracted and used to power the world’s biggest economies. Ironically though, it seems that the more resources a country has, the worse their situation tends to be.
Today, oil and gas industries represent the greater part of many African economies, yet they appear to contribute little to broader societal development. The oil price shocks of the 1980s in Nigeria, Angola’s decade of hyperinflation, the civil wars in both Congos, and the devastation of Libya’s economy following the collapse of the Gaddafi regime, have all shown the calamitous results of excessive dependence on natural resources. In these and many other cases this reality is undeniable. The value we place on natural resources has commonly formed the root of tensions across the continent, as in many other parts of the world.
The outside perception seems to be that African nations are intrinsically unable to effectively manage their natural resources and employ them for the betterment of their citizens’ lives. Some analysts suggest that governments should stop developing their natural resources entirely and focus only on other sectors such as tourism, agriculture and fishing, suggestions which disregard the transformative role energy can play in a nation. Is this really where Africa stands?
In this book we maintain that it is not. As we will see, solutions for many of the problems faced while managing the extraction of natural resources have already been discovered. Many of the issues that plague extractive industries and typically result in resource dependency for the nations involved are being addressed in innovative ways. Through a detailed analysis of case studies from across the continent, in countries whose energy industries are at very different stages of development, we make the case that African nations can devise a way to sustainably manage their resources and prosper. In the same way that certain Southeast Asian economies have used their hydrocarbon resources to promote a manufacturing industry that is today unparalleled in the world, so can African nations use their resources to build economically sustainable societies.
Ours is an insider’s view backed by many years of industry experience. We detail and debate examples of successful energy sector development and positive trends within the African oil and gas industry. The evidence makes it clear that the responsible and sustainable development of these resources is not only possible, but may be the quickest and most effective route to peace and prosperity for many of these nations. The question of how this can be done is central to this book. Each chapter will address some of the most pressing challenges surrounding the topic. From local content targets and the development of national oil companies (NOC) to the role of civil society and implementation of transparency initiatives, this book takes us across the continent to map lessons learned from the many changes witnessed by Africans over the industry’s lifetime.
In no way do we intend to neglect the negative effects of the oil industry that still afflict certain nations. However, those issues have been extensively documented and analyzed in . We propose a different approach, one that aims to avoid the wholesale demonization of the industry and attempts to reveal the potential benefits that oil and gas exploitation can offer the people of Africa.
To overcome economic hardship and social problems, African countries must find their own unique purpose within the grand context of the global economy. Unavoidably, natural resources will play a prominent role in shaping this destiny. Only by learning from the lessons of the present can a brighter future be promoted.
NJ Ayuk is the CEO and Managing Partner of Centurion Law Group, a pan-African corporate law conglomerate. Mr. Ayuk has been advising major companies on investment strategies, the establishment of joint ventures and cooperation structures, privatization, licensing and related tax, OHADA, Equatorial Guinea law, oil and gas, local content, litigation, negotiations, governance and other matters. He also frequently advises international oil companies, governments, oil service companies, financial institutions, development banks and construction firms across Sub-Saharan Africa.