Poverty, Petroleum & Policy Intervention: Lessons from the Chad-Cameroon Pipeline

Abstract

The ‘resource curse’ – the tendency of resource wealth to impair natural resource exporting countries on various economic and political dimensions – has shown some of its strongest manifestations in Africa's petro-states. For this reason, the World Bank's recent attempt to engineer an accountable and transparent oil economy in one of Africa's poorest and most corrupt countries – Chad – deserves close scrutiny and critical analysis. Although the World Bank has conducted the Chad-Cameroon Pipeline Project with the belief that the ‘resource curse’ can be mitigated through sound economic and fiscal policies, the results thus far suggest that Chad is doomed to repeat an all too familiar fate of economic turmoil and political strife. This article draws on the disappointing realities since Chad's first oil exports, and examines three major factors underlying Chad's unsuccessful conversion of oil revenues into poverty reduction: institutional capacity constraints, socio-political incompatibilities, and subversive interactions with external lenders. Although the majority of critics attribute the project's failures to the World Bank's policy choices and management, this analysis suggests that the project has been hindered more by the external nature of the World Bank's policy intervention than by any particular design flaws. Given the shortcomings of the Bank's intervention, this article considers plausible revisions to the project, and draws policy implications for future development endeavours of this nature.

Corporate Social Responsibility and Societal Governance: Lessons from Transparency in the Oil and Gas Sector

“…Oil companies were not directly involved. The Chadian experiment yielded some positive societal benefits and it helped to insulate the country from the "resource curse" for several years (Gould and Winters 2007;Kojucharov 2007). …”

“…While the programme yielded some economic and social benefits, academic research has demonstrated that it fell far short of the expected outcomes (Gould and Winters 2007;Kojucharov 2007;Pegg 2006 On the other hand, the World Bank failed to effectively create the mechanisms for overseeing the use of oil revenues (including a strong and well-resourced oversight committee) before the start of oil production in 2003. While World Bank officials emphasized the importance of "sequencing" (that means, encouraging capacity building before allowing oil infrastructure construction), pipeline construction already started four months after project approval and oil production started one year ahead of schedule.…”

“…In effect, neither the project oversight committee nor Chad's government institutions were effectively prepared for the inflow of oil revenues, nor were the rules for handling oil revenues effectively established. One observer noted in 2007: "Nearly seven years into the project and four years since the first batch of oil exports, Chad, the World Bank, and the oil consortium are still trying to negotiate the rules and mechanisms for calculating and distributing oil revenues" (quoted in (Kojucharov 2007), p.488).…”

Oil in Chad and Equatorial Guinea: Widening the Focus of the Resource Curse

“…This body's purpose was the management of the revenues allocated to the priority sectors. Members of the Collège were appointed by the government, as well as by civil society through previously designed NGOs (Gould and Winters, 2007;Kojucharov, 2007). To complete the institutional setting, the first PRSP was finally approved in 2004 within the framework of the Heavily Indebted Poor Countries Initiative promoted by the WB and IMF.…”

The Political Economy of Africa's Natural Resources and the ‘Great Financial Crisis’

“…According to Watts (2005, p. 5089), in Nigeria, ‘oil capitalism produces particular sorts of enclave economies and governable spaces characterised by violence and instability’. Even the highly touted US$4.2 billion World Bank funded Chad‐Cameroon ‘Petroleum Development and Pipeline Project’ that started in 2000 did not manage to reverse the so‐called ‘resource curse’ (Kojucharov 2007). The main problem was not the many violent disputes that characterise the Nigerian situation, but rather that ‘the tensions created by the World Bank's control of Chad's economic policies have transformed the CCPP [Chad/Cameroon Pipeline Project] from a joint development initiative into a fundamentally counterproductive struggle for authority’ (Kojucharov 2007, p. 489).…”