The Consequences of Oil in Malawi

A few weeks ago Malawi got the go-ahead from Tanzania to explore Lake Malawi for oil and gas. The lake acts as a border between the two countries so it’s important both countries have come to terms with an agreement. The prospect of oil is encouraging for a country like Malawi, whose GDP per capita is one of the lowest in the world. The discovery of oil could seriously turn things around for a country which mainly relies on a traditional and agricultural economy. It would boost local businesses, encourage trade and would give rise to serious foreign investment opportunities. The Chichewa language will become  an important language for translation companies and will be essential when dealing with international businesses. Undoubtedly, there will be progress in Malawi if there is indeed oil under the Lake. We only have to look at Uganda’s development of Lake Albert, where oil firms spend billions to exploit billions of barrels of oil. As always it is a double-edged sword that could improve the lives of locals but it could also open the door to potential corruption, environmental catastrophes and invite the so-called fat cat oil barons who will make no effort in aiding the general population of Malawi at the expense of their own bank accounts. Oil in a third-world country has always been a complex issue which more often than not inflates countries currencies, makes them import-dependent and makes their other exports uncompetitive. Yet still, it is something that is happening all over Africa. We only have to look at the amount of money invested to understand the scale of investment in the continent. A report issued by a fellow at the University of Pennsylvania estimated that since 1990, the petroleum industry has put in more than 20 bn dollars in exploration and production activity in Africa. A further 50 billion will be spent between now and the end of the decade. Africa has never experienced such growth before. But the whole thing is a bit of a so-called ‘economic paradox’ – where there is a lot of money going into the countries but then none of the locals actually get to see any of it. We only have to look at Nigeria for example which exports two million barrels of oil a day but where the life expectancy of the average Nigerian is 52 and where the average amount of money a single person earns is 2 grand a year. Most Africans see little benefit from the influx of oil drillers and investment and it may very well be the case for Malawi. Unless proper steps are taken, but what are they?

9 comments on “The Consequences of Oil in Malawi

  1. JONATHAN says:

    I HAVE NEVER BEEN A FAN OF AFRICAN CULTURE – FROM AN AESTHETIC VIEWPOINT… I DO NOT KNOW WHY…. MAYBE YOU COULD SHED SOME LIGHT ON THE POSITIVES OF AFRICAN CULTURE???

    • Why not visit the article Film Africa Presents? It describes the African film and theatre talent recently showcased in London, which present various aspects of this interesting culture. If you are looking to become more informed on African culture you could attend the many events like this one across the UK.

  2. naykdpoet says:

    The lure of new wealth often leads to more hardship then it resolves – unfortunately

  3. In the case of Nigeria, isn’t government corruption a large reason that the overall population hasn’t seen a larger amount of benefit from the sale of oil? If I recall correctly, some Middle Eastern countries such as Saudi Arabia, for all their faults, do a pretty good job of funneling at least some of the profits from oil into their nations’ infrastructure.

    Others such as Mexico, Venezuela and Nigeria, however, seem to see a good portion skimmed off by corrupt leaders. Obviously, with better schools, roads and hospitals, nations are better poised to improve more quickly and there are more likely to be better opportunities for citizens.

    Or am I being simplistic here?

  4. An American In A Foreign World says:

    A natural resource such as oil could be used for the benefit of the people, but it usually only makes a few people very rich and powerful.
    I am from America; it is clear that I do not have the answer, unfortunately.

  5. An American In A Foreign World says:

    Big Money and major corporations gain control and make huge profits. With these large profits, politicians are bought so that laws and regulations may allow for even more profits.
    The general citizen does not see any benefit in the domestic oil production.

  6. hearabout says:

    Uganda and Tanzania both heard cries within their country for a moratorium on explorations until proper legal framework for exploitation is achieved to assure, that truly the locals benefit from the extraction of their resources. Thank you for highlighting the Malawi case. I have wrote about the Tanzanian perspective here: http://hearabout.wordpress.com/2012/09/24/reserving-judgement-on-tanzanias-natural-gas-discoveries/

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