Avoiding The Resources Curse – Spotlight on Oil in Kenya

Kenya is on the brink of joining the league of endowed oil producers with the striking of further oil deposits in the remote Turkana County. According to Kenyan blogger, Kennedy Kachwanya -  the Turkana environment is currently a beehive of activity as companies rush for a share of the oil fields that were once neglected and marginalized county.

Just a couple of months after oil giant – Tullow Oil announced a huge find of the precious commodity around Ngamia 1 in the county, its partner Africa Oil Corporation came out last week to announce that it has stumbled on a further 43 metres of potential oil in a different block in the same area.

The firm announced that though it had intended to drill to depths of 2700 metres, it had suspended the search as at 2300 metres since there were all indications of oil in the block. Its officials said the firm wills now contrite efforts on determining the commercial viability of the oil.

The discovery of oil can be a mixed blessing for any country, bringing both the prosperity of increased revenues and new jobs and also the “resource curse” of high-level corruption and governmental abuse. Kenyans are hoping that they can avoid the mistakes of other African oil giants such as Nigeria and Angola and channel any future oil revenues to building a stronger and more diverse economy.

But as East African countries come to terms with their new-found wealth, experts warn that the resource could be a curse if not managed properly. The real question is whether East Africa can avoid the “resource curse” that has plagued countries in Central, Northern, and Southern Africa.

In West Africa, political instability has been the common denominator. Nigeria, Africa’s biggest oil producer, is dealing with an armed rebellion in its oil-rich Niger Delta. Oil states such as Gabon and Equatorial Guinea, are plagued with corruption. In Central Africa, the democratic republic of Congo has never known peace despite rich natural resource endowment. Uganda and DR Congo have already clashed over the oil reserves in Lake Albert, which both countries share.

In North Africa, the Arab spring has exposed the bane that can accompany petrol dollars; the creation of deep seated aristocracies built out of oil wealth. Tunisia, Egypt and Libya ended up in civil strife.

Kenya’s oil finds may be larger than those found recently in Uganda. But what will oil revenues do to the Kenyan economy, and the socio-political culture?