In a new book, leading African energy lawyer NJ Ayuk examines how the oil and gas industry could help Africa to peace and prosperity. Some of his assertions are controversial.
W: It’s often said that Africa suffers from a resource curse. Economic experts say African countries shouldn’t just concentrate on developing their natural resources but also focus on other sectors like agriculture and tourism. In your book, “Big Barrels: African Oil and Gas and the Quest for Prosperity” you disagree with that thesis. Why?
Ayuk: I don’t disagree with the thesis of focusing on other economies. What I disagree with is the idea of using all the money to really focus on developing things. Of course, the best thing to reverse the resource curse is taking not just money from oil but ensuring that the whole supply chain and the value is used to develop other sectors.
If, for example, the government of Nigeria or the government of Congo takes one billion dollars from its oil resources and puts it into agriculture, that’s not enough. Money is not the only thing. You have to create an enabling environment for the other sectors to happen. If you don’t make it easy to create a business and have low taxes – without corruption – and ensure governance, you will not be able to create an agricultural sector.
Nigeria, for instance, mainly concentrated on extracting crude oil and gas and neglected other fields like the agricultural sector, which was for a long time the economic backbone of the country. Since the world price for crude oil dropped drastically, the Nigerian economy has almost collapsed. What should African countries that find themselves in such situations do?
You start diversifying from day one. We have to go back and look at what is the traditional African economy: It’s agriculture. If you can’t feed your people, you can’t have a sustainable economy. You can’t have a sustainable economy if you don’t build industries. The problem is we have to stop focusing so much on, ‘let’s take this oil money and let’s use it to do all these things’. Rather we have to use the oil to transform the country and the economy.
In your book, you also talk about the rapid development of Equatorial Guinea from an economic backwater to a leading light in Central Africa. Critics talk about Equatorial Guinea’s government as a dictatorship, the country is one of the most corrupt in the world. It has the highest gross domestic product on the continent but revenues from oil and gas go to the pocket of a small elite, while the majority of the country lives in poverty.
I do understand the critics. But here is where they are losing focus. You look at Central Africa: Congo, Cameroon, Gabon, Chad, Central African Republic. You look at Equatorial Guinea. In this book, we are focusing on the oil sector and saying ‘how do you build African solutions to African problems?’ ‘How do you use your resources to make it work?’
20 years ago [Equatorial Guinea] had no lights. Today the country has more power than any African country. It has been done with gas. We know that there are things which are not morally right. But let’s take a look at how they have been able to develop the infrastructure in the country, how they’ve been able to develop a lot of good things. So the message we have with this book is … Africa has success models. Let’s cut out what doesn’t work, let’s keep what works.
We have to focus more on solutions and creating values instead of always focusing on these negative narratives. And I think if we can do that, the issues of transparency, the issues of mismanagement are going to be addressed in that same process because we are using new technologies, we are using new references and we are going to win.
In your book, you claim ‘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.’ Isn’t that theory a bit overestimated?
No, it’s not overestimated, here is why: Most of the crisis on the continent has to do with oil, gas or diamonds. The keyword here is responsible. If you develop your resources responsibly and you manage them well, it will create stability. If you manage them irresponsibly, it will create instability. What we are trying to say is there is a school of thought that says: ‘Africans are not good enough to manage their resources. Maybe if you cannot re-colonize them, leave the resources in the ground until the day that they’ll be able to manage their resources.’
So the question is, who has the right to judge and decide when and how to manage this resources? Of course Africans can do right, we have principles of how it can be done right. You can look at these models and replicate them and see how you can promote your industry
Is this theory really future oriented since many other countries in sub-Saharan Africa like Zambia, Ethiopia or South Africa are increasingly investing in the development of renewable energies? Even the African Union plans to spend billions in green energy.
Green energy is important I agree with you. The oil and gas industry has to transform itself. For example, the French company Total, which is one of the biggest oil and gas companies in Africa today, is doing more investments in renewables. The African Union is right to focus on green energy and renewables.
The problem with the oil and gas sector is not to just focus on the extraction and sale of crude oil. That is a lazy phenomenon that has to stop. We have to look at the future and the futuristic approach is to look at this mass transformation. The beauty of this transformation is that we can do this at the same pace with some of the emerging counties because we are all starting at the same time [with the same available] technologies.
You are one of Africa’s leading lawyers for oil and gas and you are publishing a book, which ‘aims to avoid the wholesale demonization of the industry.’ Are you not afraid someone could accuse you of lobbying for the industry?
No, not at all. I think everybody who knows me knows that I’ve never been a lobbyist for the oil industry. I have focused my career on really pushing African companies in there. What I lobby for is for African indigenous companies and everyday Africans to be in this industry. We’ve been able to write a lot of legislation that has really ensured more scholarships and programs to promote civil society and advise them how they can take their rightful role in making sure that oil and gas replicates that. That [doesn’t make you] friends with the big oil companies. I don’t say ‘don’t let the Western companies or investors come in.’ But I also realize that we are better off as Africans when we talk with each other and with all our American and European partners. That approach might not be welcomed by everybody but you cannot love jobs and hate the ones who are creating jobs. It’s a partnership and everybody who cares about Africa must be included.
NJ Ayuk is the founder of Centurion, a law firm which advises the government of Equatorial Guinea on oil and gas deals and contracts. He was voted the third most influential man in Africa by Forbes Magazine in 2015. Ayuk co-authored “Big Barrels: African Oil and Gas and the Quest for Prosperity”(with Joao Marques), which was published in June, 2017.
Interview: Gwendolin Hilse