Africa's Oil: A Blessing or a Curse?

Oil money is flowing in, but is drilling really a good move?

Oil, Oil Everywhere - In today’s global economy, oil is king. But despite the windfall of revenue generated from exporting oil, many African nations with oil reserves have struggled to manage both the influx of money and the powerful multinational corporations that are making the deals possible.With the recent announcement of new discoveries of oil in several African countries previously unaccustomed to the trade, BET.com takes a look at the benefits and the shortfalls that come when dealing in oil. — Naeesa Aziz    (Photo: REUTERS/Tullow Oil plc/Handout)

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Oil, Oil Everywhere - In today’s global economy, oil is king. But despite the windfall of revenue generated from exporting oil, many African nations with oil reserves have struggled to manage both the influx of money and the powerful multinational corporations that are making the deals possible.With the recent announcement of new discoveries of oil in several African countries previously unaccustomed to the trade, BET.com takes a look at the benefits and the shortfalls that come when dealing in oil. — Naeesa Aziz    (Photo: REUTERS/Tullow Oil plc/Handout)

Booming Demand Creates Rig Shortages - A worldwide rig shortage is delaying oil drilling in East Africa, which is slowing growth and pushing up costs in one of the industry's hottest new exploration areas, industry players and officials said."Demand for deepwater rigs has gone up for use in East Africa ... there is definitely more international interest in the region," said Marne Beukes, an analyst who studies sub-Saharan Africa for global data firm IHS.(Photo: SIA KAMBOU/AFP/Getty Images)

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Booming Demand Creates Rig Shortages - A worldwide rig shortage is delaying oil drilling in East Africa, which is slowing growth and pushing up costs in one of the industry's hottest new exploration areas, industry players and officials said."Demand for deepwater rigs has gone up for use in East Africa ... there is definitely more international interest in the region," said Marne Beukes, an analyst who studies sub-Saharan Africa for global data firm IHS.(Photo: SIA KAMBOU/AFP/Getty Images)

Kenya: Fair Deal? - Nigeria’s woes present a cautionary tale to oil export newcomers such as Kenya. Oil recently was discovered in the East African nation, and although it may take as many as five years before oil actually begins to flow from the pipelines, lawmakers are already busy trying to ensure it is not marred by corruption or fighting over control of mining sites and revenue sharing.The Kenyan government has reached a deal with Tullow Oil, which allows the company to take home 80 percent of the oil revenue in the first year, while Kenya keeps only 20 percent.(Photo: REUTERS/Njuwa Maina)

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Kenya: Fair Deal? - Nigeria’s woes present a cautionary tale to oil export newcomers such as Kenya. Oil recently was discovered in the East African nation, and although it may take as many as five years before oil actually begins to flow from the pipelines, lawmakers are already busy trying to ensure it is not marred by corruption or fighting over control of mining sites and revenue sharing.The Kenyan government has reached a deal with Tullow Oil, which allows the company to take home 80 percent of the oil revenue in the first year, while Kenya keeps only 20 percent.(Photo: REUTERS/Njuwa Maina)

Some Nations Avoid Transparency - Despite conventional wisdom that increased government transparency will aid nations in ensuring equitable distribution of oil revenues, many nations are not even considering the prospect. In lieu of putting their cards on the table, some nations are taking their chances with Soverign Wealth Funds.The funds are massive, state-held investment funds — like a 401(k) for a country. The fund invests the oil money in a range of different assets, but it doesn’t invest the money at home, shielding the funds from the economic instability of the local market. (Photo: REUTERS/Ismail Zitouny)

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Some Nations Avoid Transparency - Despite conventional wisdom that increased government transparency will aid nations in ensuring equitable distribution of oil revenues, many nations are not even considering the prospect. In lieu of putting their cards on the table, some nations are taking their chances with Soverign Wealth Funds.The funds are massive, state-held investment funds — like a 401(k) for a country. The fund invests the oil money in a range of different assets, but it doesn’t invest the money at home, shielding the funds from the economic instability of the local market. (Photo: REUTERS/Ismail Zitouny)

Paving the Road to Prosperity - According to the World Bank, African governments need to spend a collective $93 billion each year to rectify a shortage of tarred roads, deep sea ports and power plants that will aid in the continent’s overall development. While there is plenty of work needed to be done, the prospect of continued oil exploration and so increased wealth is huge, given estimates that Africa still holds 127 billion barrels of untapped oil, numbering almost 10 percent of global reserves.(Photo: SIA KAMBOU/AFP/Getty Images)

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Paving the Road to Prosperity - According to the World Bank, African governments need to spend a collective $93 billion each year to rectify a shortage of tarred roads, deep sea ports and power plants that will aid in the continent’s overall development. While there is plenty of work needed to be done, the prospect of continued oil exploration and so increased wealth is huge, given estimates that Africa still holds 127 billion barrels of untapped oil, numbering almost 10 percent of global reserves.(Photo: SIA KAMBOU/AFP/Getty Images)

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Angola: “Africa’s Dubai” - Trying to create “Africa’s Dubai,” Angola has used its immense oil wealth to fuel development projects in and around its capital city of Luanda. According to the IMF, Angola’s GDP per capita in 2010 was $4,328, among the highest in Africa. However, despite the building boom, not all Angolans feel that the country’s wealth is for all.“The leaders have forgotten us, they are just building for themselves,” said Samuel Quitangui, according to Reuters.However, President Dos Santos, Africa’s second longest-serving ruler, says that all Angolans have to do is look around to see how the oil revenue is working for them.“To those who say they don’t see the benefits, I say no. It’s with that money that we build roads, bridges, hospitals and give scholarships,” Dos Santos said.(Photo: REUTERS/Rafael Marchante)

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Angola: “Africa’s Dubai” - Trying to create “Africa’s Dubai,” Angola has used its immense oil wealth to fuel development projects in and around its capital city of Luanda. According to the IMF, Angola’s GDP per capita in 2010 was $4,328, among the highest in Africa. However, despite the building boom, not all Angolans feel that the country’s wealth is for all.“The leaders have forgotten us, they are just building for themselves,” said Samuel Quitangui, according to Reuters.However, President Dos Santos, Africa’s second longest-serving ruler, says that all Angolans have to do is look around to see how the oil revenue is working for them.“To those who say they don’t see the benefits, I say no. It’s with that money that we build roads, bridges, hospitals and give scholarships,” Dos Santos said.(Photo: REUTERS/Rafael Marchante)

African Development Bank Chief Warns Against Populist Policies - Amid the news of new oil findings in West Africa, African Development Bank President Donald Kaberuka warned governments against using the extra cash from oil and gas exports to pursue populist policies like raising public sector wages. "[They should) avoid using the resources to rapidly increase recurrent expenditure. That is what people will be expecting but that would be the wrong thing to do," he told Reuters.Instead, he said extra revenues should be channeled into areas such as infrastructure and education to ensure that the nations are building solid foundations for the future.(Photo: REUTERS/Rafael Marchante)

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African Development Bank Chief Warns Against Populist Policies - Amid the news of new oil findings in West Africa, African Development Bank President Donald Kaberuka warned governments against using the extra cash from oil and gas exports to pursue populist policies like raising public sector wages. "[They should) avoid using the resources to rapidly increase recurrent expenditure. That is what people will be expecting but that would be the wrong thing to do," he told Reuters.Instead, he said extra revenues should be channeled into areas such as infrastructure and education to ensure that the nations are building solid foundations for the future.(Photo: REUTERS/Rafael Marchante)

DR Congo Protects Its Natural Wealth from Oil Exploration - Rejecting the potential for yet another stream of mineral wealth derived income, the Democratic Republic of Congo recently rejected a bid by the U.K. company Soco International, which wanted to search for oil in the country’s famed Virunga National Park, home to rare mountain gorillas.(Photo: REUTERS/Finbarr O'Reilly)

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DR Congo Protects Its Natural Wealth from Oil Exploration - Rejecting the potential for yet another stream of mineral wealth derived income, the Democratic Republic of Congo recently rejected a bid by the U.K. company Soco International, which wanted to search for oil in the country’s famed Virunga National Park, home to rare mountain gorillas.(Photo: REUTERS/Finbarr O'Reilly)

Obama Does His Part to Fight Corruption - In 2010, President Obama approved the ‘Lugar-Cardin’ provision in the Dodd-Frank Act. The law requires all U.S.- registered extractive industry companies (a distinction which includes oil companies) to disclose payments to governments in SEC filings starting in 2013, thus fighting the secrecy that allows oil revenues to be funneled away from the populations that need it most.(Photo: Yuri Gripas-Pool/Getty Images)

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Obama Does His Part to Fight Corruption - In 2010, President Obama approved the ‘Lugar-Cardin’ provision in the Dodd-Frank Act. The law requires all U.S.- registered extractive industry companies (a distinction which includes oil companies) to disclose payments to governments in SEC filings starting in 2013, thus fighting the secrecy that allows oil revenues to be funneled away from the populations that need it most.(Photo: Yuri Gripas-Pool/Getty Images)

South Sudan Shutting Down All Oil Production - South Sudan announced that it has taken the first steps toward halting oil production, signaling further escalation of its dispute with Sudan over oil revenue. Without its own set of oil pipelines to rely upon, South Sudan alleges that Sudan continues to steal southern oil that flows through its pipelines.    (Photo: REUTERS/Isaac Billy/United Nations)

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Neighbors Clash Over Oil Fields - Sudan and its southern half, South Sudan, have been at odds since before South Sudan declared its independence in July 2011. However, the stakes have risen in the conflict between the two nations as hostilities increase surrounding the disputed ownership of the Heglig oil fields. The Sudanese government recently announced it will use "all legitimate means" to expel South Sudan from its largest oil field, which lies on the border between the two nations.(Photo:REUTERS/Isaac Billy/United Nations)

Newest Members of the Oil Club - Liberia and Sierra Leone are the latest nations to join the oil-exporting club of African nations. But as both countries have only recently recovered from long civil wars, their governments will be tasked with the especially difficult duty of managing expectations about oil wealth distribution amid cooling tensions."It will take time to fully appraise this discovery. And years — between five to seven years — before a drop of oil is produced from the well,” Liberia National Oil company head Randolph McClain said on local radio, according to Reuters, urging patience with the process.  (Photo: Courtesy National Oil Company of Liberia)

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Newest Members of the Oil Club - Liberia and Sierra Leone are the latest nations to join the oil-exporting club of African nations. But as both countries have only recently recovered from long civil wars, their governments will be tasked with the especially difficult duty of managing expectations about oil wealth distribution amid cooling tensions."It will take time to fully appraise this discovery. And years — between five to seven years — before a drop of oil is produced from the well,” Liberia National Oil company head Randolph McClain said on local radio, according to Reuters, urging patience with the process.  (Photo: Courtesy National Oil Company of Liberia)