https://www.youtube.com/watch?list=UUUyY2nS9jtBeLLut53JaKqA&feature=player_embedded&v=NuhovSZLTts
Saturday, 30 November 2013
Friday, 29 November 2013
Kenya: So Rich Yet So Poor, Is Turkana Selling Its Due?
Article featured in the Star newspaper on 29 November 2013
see: http://allafrica.com/stories/201311290270.html
Imagine a place that is linked to the origin of humankind; is one of the world's leading archaeological sites and is now a World Heritage Site; has preserved wildlife fossils, which include the giant tortoise and the 20-foot long crocodile; is home to one of the smallest tribes on earth who still wear goat or fish skins and accessorize with fish bones or fish teeth; has the world's largest permanent desert lake which is also the world's largest alkaline lake; has an island with scenic crater lakes each harbouring its own kind of animal species like flamingos, crocodiles and tilapia; has sand dunes that measure over 40 feet high that are surrounded by palm trees; has a forest;is rich in wild life; has commercially viable oil deposits and a lot of water. Well, what do you think about this place? I think it is too good to be true. I think it should be one of the world's biggest attractions.
Unfortunately it is not. The people from this place, when compared to a Kenyan of average status (which is not that great), are two times poorer; fifteen times less likely to get a formal job; thirteen times less likely to earn more than seven thousand two hundred shillings (Ksh 7,200) per month; four times less likely to learn how to read and write; seventeen times less likely to have a primary education; sixty three times less likely to have a secondary education or above; three times less likely to have access to clean water; sixty three times less likely to have access to sanitary facilities; eighty two times less likely to live in a house with a cemented floor or a mabati roof; three hundred and thirty six times less likely to live in a house with stone/brick walls; thirty four times less likely to cook with cooking gas (LPG), bio fuels or electricity; and no chance on using electricity.
These are a lot of 'less likelies' for such a rich place but regrettably, these are the contradictions a person born in Kotaruk/Lobei in Loima Constituency, Turkana County, has to live with.
While on one hand the opportunities and resources in this county can be a blessing and thus the county has the potential to make incomparable sums of money to kick-start economic growth, eradicate poverty, raise literacy levels, improve health indicators, ensure food security, access to clean water and sanitation, create jobs to increase household incomes and purchasing power, enable the transfer of technology, improve infrastructure and encourage the flourishing of other related industries; on the other hand, these resources could be a curse.
see: http://allafrica.com/stories/201311290270.html
Imagine a place that is linked to the origin of humankind; is one of the world's leading archaeological sites and is now a World Heritage Site; has preserved wildlife fossils, which include the giant tortoise and the 20-foot long crocodile; is home to one of the smallest tribes on earth who still wear goat or fish skins and accessorize with fish bones or fish teeth; has the world's largest permanent desert lake which is also the world's largest alkaline lake; has an island with scenic crater lakes each harbouring its own kind of animal species like flamingos, crocodiles and tilapia; has sand dunes that measure over 40 feet high that are surrounded by palm trees; has a forest;is rich in wild life; has commercially viable oil deposits and a lot of water. Well, what do you think about this place? I think it is too good to be true. I think it should be one of the world's biggest attractions.
Unfortunately it is not. The people from this place, when compared to a Kenyan of average status (which is not that great), are two times poorer; fifteen times less likely to get a formal job; thirteen times less likely to earn more than seven thousand two hundred shillings (Ksh 7,200) per month; four times less likely to learn how to read and write; seventeen times less likely to have a primary education; sixty three times less likely to have a secondary education or above; three times less likely to have access to clean water; sixty three times less likely to have access to sanitary facilities; eighty two times less likely to live in a house with a cemented floor or a mabati roof; three hundred and thirty six times less likely to live in a house with stone/brick walls; thirty four times less likely to cook with cooking gas (LPG), bio fuels or electricity; and no chance on using electricity.
These are a lot of 'less likelies' for such a rich place but regrettably, these are the contradictions a person born in Kotaruk/Lobei in Loima Constituency, Turkana County, has to live with.
While on one hand the opportunities and resources in this county can be a blessing and thus the county has the potential to make incomparable sums of money to kick-start economic growth, eradicate poverty, raise literacy levels, improve health indicators, ensure food security, access to clean water and sanitation, create jobs to increase household incomes and purchasing power, enable the transfer of technology, improve infrastructure and encourage the flourishing of other related industries; on the other hand, these resources could be a curse.
World over, the resource contest for opportunities by the elite most often leads to poor governance, high corruption, a culture of rent-seeking, devastating health and environmental consequences at the local level and intensified conflict to divert attention as the resources are looted. This might be already happening in Turkana County.
The southern part of the county is under siege with armed militiamen from the neighbouring Pokot community recently holding three police camps hostage. While it may be assumed this is the usual age old difference over land, pasture, water and cattle, it is important to interrogate the extent to which there is political will to ensure that the abundant resources here mutually benefit all the people of Turkana.
Recently some companies prospecting for oil in Turkana County applied to be exempted from paying taxes both to their country of origin and the Kenyan Government. They are known to have built a few schools, health centres and sunk a few boreholes in Turkana County. On the basis of these they argue that they should be allowed to extract Turkana County oil without paying their dues to either the County Government or the National Government. Should this be allowed? Corporations are known to spend little money on local communities in what is commonly known as 'Corporate Social Responsibility', then proceed to extract valuable natural resources worth billions of dollars after which they leave. In most of these cases the local communities are left worse off because they were not skilled enough to take up the opportunities provided. The infrastructure left often collapses and the unchecked extraction of natural resources leads to extreme environmental destruction.
It is important that the Turkana County Government is cognizant of their role in providing adequate social services to improve the welfare of their citizens. Sustainability and equitable distribution of resources should therefore be at the forefront otherwise the custodians of the birthright of the Turkana people will be sold off for the proverbial 'bowl of soup' and the owners forever remain condemned to poverty and lack.
Katindi Sivi-Njonjo is an African Futurist, a Social Researcher and Policy Analyst, a Gender Budgeting Practitioner and the Programme Director at Society for International Development (SID) - East Africa. Katindi was instrumental in the recent launch of "Exploring Inequality in Kenya" Report by SID East Africa and The Kenya National Bureau of Statistics (KNBS). For more information about the report, please visit: http://inequalities.sidint.net/kenya/
Friday, 2 August 2013
What Pre-oil Economies in Africa must Consider!
First featured on Foresight for Development Website:
http://www.
Last Updated on Thursday, 01 August 2013 11:49
Strong symbolism is attached to oil since this raw material was the foundation of economic systems in the 20th century and continues to be the fuel of global industrialization in the 21st. It is a key to the hierarchy that exists between countries from the richest to the least advanced. An oil based economy also involves incomparable sums of money (Magrin & Vliet, undated). That is perhaps why recent discoveries of commercially viable deposits of oil in the East African region and ‘the probability of the region becoming a global player in oil production’ (United States Geological Survey [USGS], 2012) has caused a lot of excitement.
It is envisaged that this ‘black gold’ could eradicate chronic poverty due to a likely increase in exports that results in additional revenue to finance poverty alleviation (DI, 2012 July 3). It could also enhance economic growth and the creation of jobs, enable the transfer of technology, improve infrastructure and encourage the flourishing of other related industries (Karl, 2007 January). After all, Africa’s oil exporting countries, although have the least diversified economies, have among the continents highest GDP per capita (MGI, 2010 June) as illustrated in figure 1.
Figure 1: Africa’s Diverse Growth Paths
Source: McKinsey Global Institute [MGI], 2010 June
For Kenya, it is envisaged that oil discovery will contribute towards the transformation of Kenya into a middle income country by 2030. According to an interview with Sumayya Athmani, Chief Executive Officer, National Oil Corporation of Kenya - featured by the 2013 Africa Energy Yearbook, petroleum is the single largest import by Kenya, accounting for 21% of the country’s total imports. Own production will certainly help in management of the balance of payments and stemming loss of foreign exchange. A commercial discovery would also spur a whole new economic sector and industrial development. An East African regional partnership for infrastructure development is also anticipated with South Sudan and Somali also having shown interest. There is already in place a regional refinery development plan of a gas pipeline from Tanzania to serve countries in the region. The Lamu Port and South Sudan Ethiopia Transport (LAPSSET) Corridor project which is being championed by Kenya is also aimed at regionally integrating petroleum and transport infrastructure. With the biggest obstacle being old and inadequate infrastructure hence significant bottlenecks in the effective distribution of petroleum in Kenya, the projects aim at positioning Kenya as the ultimate global petroleum logistics hub in the region.
While some countries rich in oil resources like Malaysia and Indonesia were able to improve economic performance, the experience of almost all other oil-exporting countries to date illustrates few of these benefits. According to Karl (2007, January: 2), ‘the consequences of oil-led development tend to be negative, including slower than expected growth, barriers to economic diversification, poor social welfare performance, and high levels of poverty, inequality and unemployment. Furthermore, countries dependent on oil as their major resource for development are characterized by exceptionally poor governance and high corruption, a culture of rent-seeking, often devastating economic, health and environmental consequences at the local level, and high incidences of conflict and war. In sum, countries that depend on oil for their livelihood eventually become among the most economically troubled, the most authoritarian, and the most conflict-ridden in the world’.
The challenges are certainly not due to the existence of the resource per se but due to the structures and incentives that oil dependence creates. For this reason, it is worth examining some of the assumptions pre-oil economies like Kenya make when they discover such resources. This is important for purposes of averting the proverbial ‘paradox of plenty’ or the ‘resource curse’ so that this ‘black gold’ once exploited, can be benefitial to the country.
Kenya is categorized as a transitional economy whose GDP per capita is lower than the oil led or the diversified economies (see figure 1), but the economy is growing rapidly. Given that by the year 2020, the world oil consumption will rise by about 60% and transportation will be the fastest growing oil-consuming sector, there is rising global demand for oil. Expanding resource exports through oil is therefore an opportunity to ‘turbo-charge’ growth (MGI, 2010, June). However various factors can reverse that opportunity.
Oil exporting countries face the macroeconomic instability that is linked to fluctuations in the global price of oil (Magrin & Vliet, undated). According to Karl (2007, January), the price volatility of oil is usually twice that of international primary commodities. As a result, oil economies are likely to face more frequent economic shocks and are thus susceptible to acute boom-bust cycles. Thus despite significant rises in per capita income, over the past several decades, all oil-dependent countries have seen the living standards of their populations drop, and sometimes drop very dramatically from the initial levels.
During the oil boom, windfall gains provoke a type of “feeding frenzy”. Budgets are based on optimistic projections and therefore the over investment and over spending creates vulnerability to commodity prices. When the never anticipated reversal of circumstances occurs due to the price volatility of petroleum, major economic tensions are created as government finds it difficult to moderate spending (Karl 2007, January). According to Soares de Oliveira (2007), oil states tend to be heavily indebted because they use their oil resources as guarantees during periods of busts. The funds from loans frequently land in private hands while the problem of debt repayment is left to the public thus affecting economic performance.
The loss of fiscal control measured by overspending and soaring debt are among the ingredients that cause unstable macro-economic environments.
2. There will be political will to ensure mutual benefit for all
According to Sala-i-Martin and Subramanian (2003), oil more than any other resource destabilizes institutions and absolutely corrupts. In fact the Corruption Perceptions Index (CPI) created by Transparency International each year ranks the oil states of the Gulf of Guinea among the ten worst. Because windfall gains that arise from petroleum encourage rent-seeking behavior, the state becomes a type of ‘honey pot’ in which competing interests try to capture a significant portion of resource rents by capturing portions of the state. A vicious cycle results in which all actors try to gain parts of the bureaucracy while governments, in turn, reward their supporters by funneling favors their way. This greater spending on patronage, in turn, weakens existing pressures for representation and accountability (Karl, 2007 January).
Karl further asserts that rulers often support policies that produce personalized rents even if these policies result in lower overall social welfare and because they need to share these rents with supporters and subordinates, the level of distortion can be very great. Officials tend to finance mega projects in which payoffs can be more easily hidden and the collection of bribes is easier like infrastructure and defense projects. Oil wealth also creates a class of rulling elite that consolidates power to benefit this small group of individuals. It is therefore not surprising that oil resources are closely associated with military spending and the creation of extensive repressive apparatuses. This is in part due to the fact that the rulling class are wary of letting oil reserves fall out of the control of their allies and into the hands of possible opposition groups.
Natural resources like oil will therefore have a negative impact on both economic growth and income levels of the population if governance institutions are weak.
3. The existence of oil and the internal social and demographic trends will help spur growth
According to McKinsey Global Institute (MGI, 2010 June), Africa’s long term growth will be lifted by the growing labour force, urbanization and a rise in middleclass consumers. With provision of education and skills, this large workforce could account for a significant share of production and consumption.
However, according to Karl (2007, January) most jobs created by the petroleum industry are temporary or seasonal in nature, and because the growth in jobs generally occurs only during the exploration phase as land needs to be cleared, equipment transported, roads, pipelines and other infrastructure constructed, the industry actually offers comparatively few jobs over time than initially anticipated. Thus, while discoveries trigger changes, employment levels tend to decline dramatically when infrastructure construction is complete. These problems are compounded by the expropriation of arable land for resource extraction activity and environmental damage, which promote a shift away from subsistence agriculture especially when the small available male workforce abandons food production to go and get employed in oil fields (Pourtier 1989).The resulting employment, income and food instability stresses the local economy.
The promise of new jobs that new oil exploitation seems to offer typically attracts large numbers of migrants to an exploitation area. The rapid influx of people and the higher relative salaries of oil project workers inflate the local prices of key goods and services, bringing about a significant increase in the cost of living (sometimes up to 300 percent), even for those who do not share in the benefits of the oil project. The exodus often leads to rural crises of desertification as well as urban crises of large concentrations of rural poor with no urban employment opportunities (Karl, 2007 January).
The social fabric of oil localities also changes due to migration as disparities in income emerge and increase in prostitution, HIV/AIDS infection rates and crime also escalate. After the construction phase has been completed and the initial oil boom begins to decline, the original residents who may not have been able to share in oil benefits increasingly clash with ‘newcomers’ as they see their own ways of life greatly disrupted. Resource wars that are secessionist in nature are likely to occur especially during bust cycles when economic opportunities dry up. They may be triggered by longstanding grievances over land expropriation, environmental damage, corruption, or earlier mal-distribution of resources that adversely disadvantage the local communities while all the benefits accrue to non-locals or to the nation. Oil resources are also associated with civil wars that last long durations. Wars are expensive to pursue, and both governments and rebels can use oil rents to finance their armies (Karl, 2007 January; Magrin & Vliet, undated).
The string of discoveries in Kenya’s coastal areas is reigniting historical separatist agitation by the Mombasa Republican Council (MRC) that is demanding a review of the historical agreement binding the coastal region to the central government (Control Risks, undated). The prospect of missing out on a share of lucrative exploration contracts with foreign companies is a major reason for these protests.
4. The oil will help forge new types of economic partnerships that further enhance growth and development
While Africa’s natural resources are attracting new economic partnerships, these agreements may not necessarily lead to growth and development. Exploitation of oil requires more and more sophisticated technologies that are accessible to only a small number of foreign players. The strong competition between oil companies from America, Europe and emerging Asian countries like China and Malaysia to secure access to African oil fields leads to secrecy and non-transparency. The extraction of oil therefore remains in the hands of a small number of large foreign companies and a small group of the rulling elite. This explains why very little information is available about the amount of resources generated (Soares de Oliveira, 2007).
Soares de Oliveira (2007) also asserts that revenues coming from oil exploitation are often siphoned off as a result of non-transparency. This is compounded by the structure of the now widely applied variant of production sharing contracts, the principle of which is first and foremost to reimburse the oil company’s input costs (Shaxson 2005). Squandering oil profits through ostentatious consumption and other types of unproductive spending like military, further cements the unproductive system of the oil economy thus jeopardizing development.
5. The assumption that oil will continue to be the main source of global energy in the future
The world’s population growth will certainly increase the demand for energy hence the increase in demand for oil. However, the coming cycles may certainly not be as simple as imagined. A drop in global demand could occur due to an international economic crisis tied to the increase in energy prices thus accelerating developments in alternative energies that are more reliable, affordable and less volatile. Under such circumstances, oil would be buried as a main source of energy in its own grave.
In projecting the share of oil reserves, it is apparent that oil reserves in non-Middle East countries are being depleted more rapidly than those of Middle East producers. It is projected that by 2020, 83% of global oil reserves will be controlled by Middle Eastern regimes as illustrated in figure 2, particularly Saudi Arabia (25%), Iraq (11%), Iran (8%), UAE (9%) and Kuwait (9%). The dependence on oil from one supplier puts in place an international system that is not sustainable due to the fact that a handful of Middle East suppliers would regain the influence they had in the 1970s and once again be able to dictate the terms on world oil markets and manipulate oil prices and world politics. For national security purposes, this would necessitate a revolutionary change that would lead us all away from depending on a diminishing resource and find more sustainable alternatives.
Figure 2: share of global oil reserves
Source: Based on projection of 2002 production levels, BP Statistical Review of World Energy
6. That oil excavation will not have any environmental consequences
According to Karl (2007, January), localities where oil is actually located over time tend to suffer from lower economic growth and lower per capita incomes than the rest of the country, greater dislocations as well as higher environmental and health hazards.
The environmental dimension of oil exploration is a chief cause of social dislocation. Hazardous wastes, site contamination, and the lack of sufficient protection of surface and subsurface waters, biodiversity and air quality (both in the immediate vicinity of the oil project and in relation to global concerns such as ozone depleting substances and greenhouse gases) have endangered the health of local populations near oil installations and pipelines and destroyed local livelihoods such as farming and fishing. Local communities, for example, report a sharp rise in infantile leukemia near oil facilities.
There would be need to integrate the petro-dollars into other revenue sources like agriculture, service and manufacturing sectors in order to diversify the economy. This is less problematic as it reduces economic and political effects of oil price fluctuations.
The reduction of existing asymmetries between oil companies, the states, and civil society are critical. The central issue of transparency cannot be gainsaid.
The need for extensive capacity building to provide the skills that will be required for driving the oil industry forward (2013 Africa energy year book) is critical in reducing foreign domination in the industry and enhancing opportunities for local labour.
The creation of policies that ensure local involvement in decision making as well as the mutual benefit of these resources between the local people and the national government will be the domestic glue.
Without the implementation of reforms, the consequences of oil dependence will continue to be adverse.
Katindi Sivi Njonjo
Guest Editor
Katindi Sivi Njonjo, a futurist with joy and passion for foresight
Designation: Programme Director (Kenya)
Organization: Society for International Development – East Africa
Read more about the author and her view on being a futurist.
Control Risks. (undated). A New Frontier: Oil and Gas in East Africa. http://www.controlrisks.com/Oversized%20assets/east_africa_whitepaper_LR_web.pdf (Accessed 31st July 2013)
Development Initiatives [DI]. (2012, July 3). A 4-Point Policy message to East Africa on the discovery of oil and gas in the region. http://www.devinit.org/wp-content/uploads/A-4-Point-Policy-Messge-to-East-Africa-on-the-discovery-of-oil-and-gas.pdf (Accessed 31st July 2013)
Karl, T. L. (1997). The paradox of plenty: Oil booms and petrostates. Berkeley, CA: University of California Press.
Karl, T.L. (2004). Oil-Led Development: Social, Political and Economic Consequences. Encyclopedia of Energy 4: 661-667. http://politicalscience.stanford.edu/sites/default/files/documents/KarlEoE.pdf (accessed 31st July 2013)
Magrin G. and Vliet G.V. (Undated). ‘The Use of Oil Revenues in Africa’. http://www.ifri.org/files/Energie/MAGRIN.pdf (accessed 31st July 2013)
McKinsey Global Institute [MGI]. (2010, June). Lions on the move: The Progress and potential of African Economies. http://www.google.co.za/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&ved=0CCsQFjAA&url=http%3A%2F%2Fwww.mckinsey.com%2F~%2Fmedia%2FMcKinsey%2Fdotcom%2FInsights%2520and%2520pubs%2FMGI%2FResearch%2FProductivity%2520Competitiveness%2520and%2520Growth%2FLions%2520on%2520the%2520move%2520The%2520progress%2520of%2520African%2520economies%2FMGI_Lions_on_the_move_african_economies_Exec_Summary.ashx&ei=FE75UZPBCImXhQejnoC4BQ&usg=AFQjCNEny4vMjnV3KIs93D0MIF5994PvEw&sig2=_1_9j_JlBe7-w7TPadrG7g&bvm=bv.49967636,d.ZWU (accessed 31st July 2013)
Pourtier, R. (1989). Le Gabon 2: Etat et développement. Paris: L’Harmattan.
Sala-i-Martin, X. and A. Subramania. 2003. Addressing the natural resource curse: An illustration from Nigeria. IMF Working Paper No. 139. Washington, DC: IMF. http://www.imf.org/external/pubs/ft/wp/2003/wp03139.pdf (accessed 31st July 2013)
Shaxson, N. (2004). The Elf trial: Political corruption in the oil industry. In Transparency International, ed., Global Corruption Report 2004, 67–71. London: Pluto Press
Soares de Oliveira, R. (2007). Oil and politics in the Gulf of Guinea. New York: Columbia University Press.
United States Geological Survey [USGS]. (2012). Mineral Commodity Summaries 2012. http://minerals.usgs.gov/minerals/pubs/mcs/2012/mcs2012.pdf (accessed 31st July 2013)
http://www.
Last Updated on Thursday, 01 August 2013 11:49
Katindi Njonjo shares her reflections on African considerations following the Futures Forum on Post-Oil Economy held in Baku, Azerbaijan (June 2013).
Strong symbolism is attached to oil since this raw material was the foundation of economic systems in the 20th century and continues to be the fuel of global industrialization in the 21st. It is a key to the hierarchy that exists between countries from the richest to the least advanced. An oil based economy also involves incomparable sums of money (Magrin & Vliet, undated). That is perhaps why recent discoveries of commercially viable deposits of oil in the East African region and ‘the probability of the region becoming a global player in oil production’ (United States Geological Survey [USGS], 2012) has caused a lot of excitement.
It is envisaged that this ‘black gold’ could eradicate chronic poverty due to a likely increase in exports that results in additional revenue to finance poverty alleviation (DI, 2012 July 3). It could also enhance economic growth and the creation of jobs, enable the transfer of technology, improve infrastructure and encourage the flourishing of other related industries (Karl, 2007 January). After all, Africa’s oil exporting countries, although have the least diversified economies, have among the continents highest GDP per capita (MGI, 2010 June) as illustrated in figure 1.
Figure 1: Africa’s Diverse Growth Paths
Source: McKinsey Global Institute [MGI], 2010 June
For Kenya, it is envisaged that oil discovery will contribute towards the transformation of Kenya into a middle income country by 2030. According to an interview with Sumayya Athmani, Chief Executive Officer, National Oil Corporation of Kenya - featured by the 2013 Africa Energy Yearbook, petroleum is the single largest import by Kenya, accounting for 21% of the country’s total imports. Own production will certainly help in management of the balance of payments and stemming loss of foreign exchange. A commercial discovery would also spur a whole new economic sector and industrial development. An East African regional partnership for infrastructure development is also anticipated with South Sudan and Somali also having shown interest. There is already in place a regional refinery development plan of a gas pipeline from Tanzania to serve countries in the region. The Lamu Port and South Sudan Ethiopia Transport (LAPSSET) Corridor project which is being championed by Kenya is also aimed at regionally integrating petroleum and transport infrastructure. With the biggest obstacle being old and inadequate infrastructure hence significant bottlenecks in the effective distribution of petroleum in Kenya, the projects aim at positioning Kenya as the ultimate global petroleum logistics hub in the region.
While some countries rich in oil resources like Malaysia and Indonesia were able to improve economic performance, the experience of almost all other oil-exporting countries to date illustrates few of these benefits. According to Karl (2007, January: 2), ‘the consequences of oil-led development tend to be negative, including slower than expected growth, barriers to economic diversification, poor social welfare performance, and high levels of poverty, inequality and unemployment. Furthermore, countries dependent on oil as their major resource for development are characterized by exceptionally poor governance and high corruption, a culture of rent-seeking, often devastating economic, health and environmental consequences at the local level, and high incidences of conflict and war. In sum, countries that depend on oil for their livelihood eventually become among the most economically troubled, the most authoritarian, and the most conflict-ridden in the world’.
The challenges are certainly not due to the existence of the resource per se but due to the structures and incentives that oil dependence creates. For this reason, it is worth examining some of the assumptions pre-oil economies like Kenya make when they discover such resources. This is important for purposes of averting the proverbial ‘paradox of plenty’ or the ‘resource curse’ so that this ‘black gold’ once exploited, can be benefitial to the country.
The Assumptions
1. Accelerated economic growth will occur due to the oil findsKenya is categorized as a transitional economy whose GDP per capita is lower than the oil led or the diversified economies (see figure 1), but the economy is growing rapidly. Given that by the year 2020, the world oil consumption will rise by about 60% and transportation will be the fastest growing oil-consuming sector, there is rising global demand for oil. Expanding resource exports through oil is therefore an opportunity to ‘turbo-charge’ growth (MGI, 2010, June). However various factors can reverse that opportunity.
Oil exporting countries face the macroeconomic instability that is linked to fluctuations in the global price of oil (Magrin & Vliet, undated). According to Karl (2007, January), the price volatility of oil is usually twice that of international primary commodities. As a result, oil economies are likely to face more frequent economic shocks and are thus susceptible to acute boom-bust cycles. Thus despite significant rises in per capita income, over the past several decades, all oil-dependent countries have seen the living standards of their populations drop, and sometimes drop very dramatically from the initial levels.
During the oil boom, windfall gains provoke a type of “feeding frenzy”. Budgets are based on optimistic projections and therefore the over investment and over spending creates vulnerability to commodity prices. When the never anticipated reversal of circumstances occurs due to the price volatility of petroleum, major economic tensions are created as government finds it difficult to moderate spending (Karl 2007, January). According to Soares de Oliveira (2007), oil states tend to be heavily indebted because they use their oil resources as guarantees during periods of busts. The funds from loans frequently land in private hands while the problem of debt repayment is left to the public thus affecting economic performance.
The loss of fiscal control measured by overspending and soaring debt are among the ingredients that cause unstable macro-economic environments.
2. There will be political will to ensure mutual benefit for all
According to Sala-i-Martin and Subramanian (2003), oil more than any other resource destabilizes institutions and absolutely corrupts. In fact the Corruption Perceptions Index (CPI) created by Transparency International each year ranks the oil states of the Gulf of Guinea among the ten worst. Because windfall gains that arise from petroleum encourage rent-seeking behavior, the state becomes a type of ‘honey pot’ in which competing interests try to capture a significant portion of resource rents by capturing portions of the state. A vicious cycle results in which all actors try to gain parts of the bureaucracy while governments, in turn, reward their supporters by funneling favors their way. This greater spending on patronage, in turn, weakens existing pressures for representation and accountability (Karl, 2007 January).
Karl further asserts that rulers often support policies that produce personalized rents even if these policies result in lower overall social welfare and because they need to share these rents with supporters and subordinates, the level of distortion can be very great. Officials tend to finance mega projects in which payoffs can be more easily hidden and the collection of bribes is easier like infrastructure and defense projects. Oil wealth also creates a class of rulling elite that consolidates power to benefit this small group of individuals. It is therefore not surprising that oil resources are closely associated with military spending and the creation of extensive repressive apparatuses. This is in part due to the fact that the rulling class are wary of letting oil reserves fall out of the control of their allies and into the hands of possible opposition groups.
Natural resources like oil will therefore have a negative impact on both economic growth and income levels of the population if governance institutions are weak.
3. The existence of oil and the internal social and demographic trends will help spur growth
According to McKinsey Global Institute (MGI, 2010 June), Africa’s long term growth will be lifted by the growing labour force, urbanization and a rise in middleclass consumers. With provision of education and skills, this large workforce could account for a significant share of production and consumption.
However, according to Karl (2007, January) most jobs created by the petroleum industry are temporary or seasonal in nature, and because the growth in jobs generally occurs only during the exploration phase as land needs to be cleared, equipment transported, roads, pipelines and other infrastructure constructed, the industry actually offers comparatively few jobs over time than initially anticipated. Thus, while discoveries trigger changes, employment levels tend to decline dramatically when infrastructure construction is complete. These problems are compounded by the expropriation of arable land for resource extraction activity and environmental damage, which promote a shift away from subsistence agriculture especially when the small available male workforce abandons food production to go and get employed in oil fields (Pourtier 1989).The resulting employment, income and food instability stresses the local economy.
The promise of new jobs that new oil exploitation seems to offer typically attracts large numbers of migrants to an exploitation area. The rapid influx of people and the higher relative salaries of oil project workers inflate the local prices of key goods and services, bringing about a significant increase in the cost of living (sometimes up to 300 percent), even for those who do not share in the benefits of the oil project. The exodus often leads to rural crises of desertification as well as urban crises of large concentrations of rural poor with no urban employment opportunities (Karl, 2007 January).
The social fabric of oil localities also changes due to migration as disparities in income emerge and increase in prostitution, HIV/AIDS infection rates and crime also escalate. After the construction phase has been completed and the initial oil boom begins to decline, the original residents who may not have been able to share in oil benefits increasingly clash with ‘newcomers’ as they see their own ways of life greatly disrupted. Resource wars that are secessionist in nature are likely to occur especially during bust cycles when economic opportunities dry up. They may be triggered by longstanding grievances over land expropriation, environmental damage, corruption, or earlier mal-distribution of resources that adversely disadvantage the local communities while all the benefits accrue to non-locals or to the nation. Oil resources are also associated with civil wars that last long durations. Wars are expensive to pursue, and both governments and rebels can use oil rents to finance their armies (Karl, 2007 January; Magrin & Vliet, undated).
The string of discoveries in Kenya’s coastal areas is reigniting historical separatist agitation by the Mombasa Republican Council (MRC) that is demanding a review of the historical agreement binding the coastal region to the central government (Control Risks, undated). The prospect of missing out on a share of lucrative exploration contracts with foreign companies is a major reason for these protests.
4. The oil will help forge new types of economic partnerships that further enhance growth and development
While Africa’s natural resources are attracting new economic partnerships, these agreements may not necessarily lead to growth and development. Exploitation of oil requires more and more sophisticated technologies that are accessible to only a small number of foreign players. The strong competition between oil companies from America, Europe and emerging Asian countries like China and Malaysia to secure access to African oil fields leads to secrecy and non-transparency. The extraction of oil therefore remains in the hands of a small number of large foreign companies and a small group of the rulling elite. This explains why very little information is available about the amount of resources generated (Soares de Oliveira, 2007).
Soares de Oliveira (2007) also asserts that revenues coming from oil exploitation are often siphoned off as a result of non-transparency. This is compounded by the structure of the now widely applied variant of production sharing contracts, the principle of which is first and foremost to reimburse the oil company’s input costs (Shaxson 2005). Squandering oil profits through ostentatious consumption and other types of unproductive spending like military, further cements the unproductive system of the oil economy thus jeopardizing development.
5. The assumption that oil will continue to be the main source of global energy in the future
The world’s population growth will certainly increase the demand for energy hence the increase in demand for oil. However, the coming cycles may certainly not be as simple as imagined. A drop in global demand could occur due to an international economic crisis tied to the increase in energy prices thus accelerating developments in alternative energies that are more reliable, affordable and less volatile. Under such circumstances, oil would be buried as a main source of energy in its own grave.
In projecting the share of oil reserves, it is apparent that oil reserves in non-Middle East countries are being depleted more rapidly than those of Middle East producers. It is projected that by 2020, 83% of global oil reserves will be controlled by Middle Eastern regimes as illustrated in figure 2, particularly Saudi Arabia (25%), Iraq (11%), Iran (8%), UAE (9%) and Kuwait (9%). The dependence on oil from one supplier puts in place an international system that is not sustainable due to the fact that a handful of Middle East suppliers would regain the influence they had in the 1970s and once again be able to dictate the terms on world oil markets and manipulate oil prices and world politics. For national security purposes, this would necessitate a revolutionary change that would lead us all away from depending on a diminishing resource and find more sustainable alternatives.
Figure 2: share of global oil reserves
Source: Based on projection of 2002 production levels, BP Statistical Review of World Energy
6. That oil excavation will not have any environmental consequences
According to Karl (2007, January), localities where oil is actually located over time tend to suffer from lower economic growth and lower per capita incomes than the rest of the country, greater dislocations as well as higher environmental and health hazards.
The environmental dimension of oil exploration is a chief cause of social dislocation. Hazardous wastes, site contamination, and the lack of sufficient protection of surface and subsurface waters, biodiversity and air quality (both in the immediate vicinity of the oil project and in relation to global concerns such as ozone depleting substances and greenhouse gases) have endangered the health of local populations near oil installations and pipelines and destroyed local livelihoods such as farming and fishing. Local communities, for example, report a sharp rise in infantile leukemia near oil facilities.
Conclusion
For Kenya not to repeat the mistakes earlier made by others, it must put in place pre-requisite measures that would enable it to escape the ‘profit-redistribution-consumption structure’ and embrace a ‘profit-investment-structure’ (Pourtier 2005).There would be need to integrate the petro-dollars into other revenue sources like agriculture, service and manufacturing sectors in order to diversify the economy. This is less problematic as it reduces economic and political effects of oil price fluctuations.
The reduction of existing asymmetries between oil companies, the states, and civil society are critical. The central issue of transparency cannot be gainsaid.
The need for extensive capacity building to provide the skills that will be required for driving the oil industry forward (2013 Africa energy year book) is critical in reducing foreign domination in the industry and enhancing opportunities for local labour.
The creation of policies that ensure local involvement in decision making as well as the mutual benefit of these resources between the local people and the national government will be the domestic glue.
Without the implementation of reforms, the consequences of oil dependence will continue to be adverse.
Katindi Sivi Njonjo
Guest Editor
Katindi Sivi Njonjo, a futurist with joy and passion for foresight
Designation: Programme Director (Kenya)
Organization: Society for International Development – East Africa
Read more about the author and her view on being a futurist.
References
Africa Energy Yearbook. (2013). The Africa Energy Yearbook Interview. http://africa-energy-forum.com/webfm_send/200 (Accessed 31st July 2013)Control Risks. (undated). A New Frontier: Oil and Gas in East Africa. http://www.controlrisks.com/Oversized%20assets/east_africa_whitepaper_LR_web.pdf (Accessed 31st July 2013)
Development Initiatives [DI]. (2012, July 3). A 4-Point Policy message to East Africa on the discovery of oil and gas in the region. http://www.devinit.org/wp-content/uploads/A-4-Point-Policy-Messge-to-East-Africa-on-the-discovery-of-oil-and-gas.pdf (Accessed 31st July 2013)
Karl, T. L. (1997). The paradox of plenty: Oil booms and petrostates. Berkeley, CA: University of California Press.
Karl, T.L. (2004). Oil-Led Development: Social, Political and Economic Consequences. Encyclopedia of Energy 4: 661-667. http://politicalscience.stanford.edu/sites/default/files/documents/KarlEoE.pdf (accessed 31st July 2013)
Magrin G. and Vliet G.V. (Undated). ‘The Use of Oil Revenues in Africa’. http://www.ifri.org/files/Energie/MAGRIN.pdf (accessed 31st July 2013)
McKinsey Global Institute [MGI]. (2010, June). Lions on the move: The Progress and potential of African Economies. http://www.google.co.za/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&ved=0CCsQFjAA&url=http%3A%2F%2Fwww.mckinsey.com%2F~%2Fmedia%2FMcKinsey%2Fdotcom%2FInsights%2520and%2520pubs%2FMGI%2FResearch%2FProductivity%2520Competitiveness%2520and%2520Growth%2FLions%2520on%2520the%2520move%2520The%2520progress%2520of%2520African%2520economies%2FMGI_Lions_on_the_move_african_economies_Exec_Summary.ashx&ei=FE75UZPBCImXhQejnoC4BQ&usg=AFQjCNEny4vMjnV3KIs93D0MIF5994PvEw&sig2=_1_9j_JlBe7-w7TPadrG7g&bvm=bv.49967636,d.ZWU (accessed 31st July 2013)
Pourtier, R. (1989). Le Gabon 2: Etat et développement. Paris: L’Harmattan.
Sala-i-Martin, X. and A. Subramania. 2003. Addressing the natural resource curse: An illustration from Nigeria. IMF Working Paper No. 139. Washington, DC: IMF. http://www.imf.org/external/pubs/ft/wp/2003/wp03139.pdf (accessed 31st July 2013)
Shaxson, N. (2004). The Elf trial: Political corruption in the oil industry. In Transparency International, ed., Global Corruption Report 2004, 67–71. London: Pluto Press
Soares de Oliveira, R. (2007). Oil and politics in the Gulf of Guinea. New York: Columbia University Press.
United States Geological Survey [USGS]. (2012). Mineral Commodity Summaries 2012. http://minerals.usgs.gov/minerals/pubs/mcs/2012/mcs2012.pdf (accessed 31st July 2013)
Thursday, 11 April 2013
If you fail to plan, you plan to fail
In this rainy season, KenGen will complain of overflowing dams but a month or
so into the dry season, they will run low on water and KPLC will have to ration
electricity. Budalangi will flood every year in April but the community will wait
to lose lives or property before they can move to higher ground. Many
households will watch the rain water runoff instead of harvesting it for
consumption, only to buy water a few days later. Food will rot in Rift valley while people are dying of hunger in
Northern Kenya.
What is it that makes
intelligent human beings keep running into the same problems year in year out
and not do anything about it? Why don’t we ever prepare for eventualities in
our lives, even the most obvious ones?
The argument goes
that it is hard to spend time thinking about the future when the world around
us seems to be falling apart. In the
midst of overwhelming concerns like scarce resources, rising cost of living,
political upheaval, terrorist scares, ethnic divisions, family challenges or
joblessness, it is more burdensome than beneficial to add to the already long
list, especially speculative problems. What really matters is fixing the here-and-now,
right? KenGen can therefore plan to build more dams so that it harvests more
rain water for KPLC to provide uninterrupted electricity supply to its
customers for longer periods.
While this solution sounds logical and viable, it
is short term and irrelevant in the long term. Why do I say so?
If Kenya is to become a middle income country as
aspired by vision 2030, providing reliable and efficient power supply for all
Kenyans both for domestic and industrial use is going to be critical. With an
increasing population, a declining water table and drastically changing weather
patterns, hydro power is certainly not going to be a sustainable source of energy.
Alternative sources like solar and wind might be more strategic options in a
more globally warm environment.
Through policy interventions and incentives, mass
installations of solar panels in all new buildings and wind masts in
appropriate locations today, would be a strategic decision that would provide a
more reliable source of energy and result in reduced expenditure on this
essential commodity in the long run. Besides, KPLC definitely needs to style up!
Some competition would be good in forcing it to be a more efficient service provider.
Structured thinking about the future means putting
both the problems we face today and the solutions we might try in a larger
context. One is able to expand their understanding of the extent
of the situation and see how different issues are interconnected. As we have
seen time and again, it is all too easy for actions that seem reflexively correct
in the short term to lead to far greater crises in the long term. Thinking
constructively about the future allows us to begin to see the path we would
need to take in order to get to a better world or, at the minimum, the paths we
need to avoid in order to forestall a worsening of the situation. By thinking
about the future, we can clarify the responsibility and capacity we have to
create a tomorrow worth living in. It is the reasonable and responsible thing
to do. Ignoring the future is undermining the present.
Tuesday, 12 March 2013
Experts Fault County Funds Sharing Recipe
The Constitution of Kenya, 2010 created
a devolved system of government. The 47 county governments are responsible for
socio-economic development partly through resources allocated from the National
Government. A Commission for Revenue Allocation (CRA) was set up to come up
with a formula of how these resources would be allocated. The first formula
proposed allocations in the following manner: 60 per cent according to the
population size; 12 per cent according to poverty levels; six per cent
according to land size; and two per cent according to fiscal responsibility.
Society for International development
hosted an experts forum to interrogate this formula and determine if it would
enable counties to achieve equitable development especially in addressing the
needs of marginalized groups / regions as stipulated in clause 201; as well as
allocate the resources according to the developmental needs of counties and
factor in the economic disparities within and among counties, the need for
affirmative action and economic optimization of each county as stipulated in
clause 203.
A
summary of the proceedings of that meeting are captured in the article below
Author:
PETER NG’ETICH
Contacts:
pngetich@ke.nationmedia.com
Posted
Wednesday, May 2 2012 at 22:30 and can be accessed from http://www.nation.co.ke/News/Experts-fault-county-funds-sharing-recipe-/-/1056/1398406/-/74p96a/-/index.html
Population
experts want the formula for sharing county funds changed. The experts said the
formula which the Commission on Revenue Allocation (CRA) should use must be
based on poverty, rather than population.
Speaking
in Nairobi at a workshop organized by the Society for International Development
(SID), the experts, including University of Nairobi population scientist Dr
Alfred Agwanda, said a formula based on population will perpetuate poverty in
less endowed counties. “The lower end will not develop in tandem with the high
end like Nairobi,” Dr Agwanda said.
He
said some counties do not have an inch of tarmac road and basing the formula on
birth rate would not bring equality, which the Constitution stipulates.
SID
programmes coordinator Katindi Sivi-Njonjo said the 60 per cent allocated
according to population should be reduced to 40 per cent and the difference
redistributed to poorer end counties. “The formula should be pro-poor and funds
for poverty increased from 12 per cent to at least 25 per cent,” she said.
Another
expert, Dr Charles Karisa, said over-emphasis on the size of a county was
wrong.“Size was over-emphasized. Area as a factor in allocating resources
cannot stand alone. Inequality is the key to growth and poverty reduction,” Dr
Karisa said.
But
CRA director of legal affairs Sheila Ayieka said the formula was only a
proposal that needed approval by Parliament. Last week, CRA chairman Micah
Cheserem said money would be allocated to the 47 counties based on population (60
per cent), poverty levels (12 per cent), size (six per cent), and fiscal
responsibility (two per cent).
Thursday, 7 March 2013
Youth in East Africa: Infinite possibility or definite disaster?
Article first featured on the Foresight for Develpment website on Saturday, 02 February 2013 17:21
Hits: 626
The Future of Youth
Following a disputed election in 2007, Kenya experienced spontaneous violence in reaction to the election results mainly in opposition areas, organized attacks mainly in Rift Valley Province against certain ethnic groups that supported the incumbent, organised retaliatory attacks as well as opportunistic sexual and gender based violence. Findings of the Commission of Inquiry into the Post-Election Violence enumerated the growing population of poor, unemployed youth, educated and uneducated, who agree to join militias and organized gangs as part of the major root causes of the conflict. According to a youth advocacy organization, Youth Agenda, young were responsible for 7.32% of all incidents of pre-planned violence. 54.88% of those who executed the violence were youth.
It is this phenomenon and the fact that youth bulges (which are large youth cohorts relative to the adult population) are widely becoming recognized as a considerable resource for national development but also as a significant source of challenges that led Ms. Katindi, then working at the Institute of Economic Affairs-Kenya, to begin investigating youth trends in Kenya and their future implication.
This work brings out glaring concerns beyond education and unemployment - the most worrying trend being the risky sexual patterns, abuse of alcohol and drugs. However, general health and reproductive health challenges of young people do not feature in government’s top policy and budget priorities.
A further investigation of the issue in the region led to the following conclusions about the future.
Demographically, nearly all of Sub-Saharan Africa has a child rich population, majority of who are below the age of 15. Two thirds or more are young people under the age of 30, and only three to six percent of the population is above age 60. However, in light of the widespread reductions in fertility and mortality rates, women are giving birth later, to fewer children and spacing them more. As a result, there are changes occurring that will alter the current population structure. In the next two decades, it is anticipated that the 0-14 age cohort will shrink while the 15-29 age cohort will bulge.
This shift presents various opportunities. In countries where most youth and young adults (defined here as those aged 15 to 29 years) have been well educated and where their energy and ingenuity are sought by employers, such a large proportion of young people is seen as an asset. In economies where their numbers, productivity, savings and taxes support smaller subpopulations of children and elderly, they provide a “demographic dividend” to economic growth. However, these large youth populations if relatively well educated but unemployed become a social challenge and a political hazard. Young men in particular are the main perpetrators of conflict as they are frustrated in their search for status and livelihood.
First, a large youthful population will inevitably increase the regional population due to the fact that 15 to 29 year old women are at the peak of their reproductive age. In Kenya, this group is currently responsible for 60% of the 1.5 million Kenyans born every year. Due to high teenage pregnancies, one out of every four children born was not planned for (36% of girls are mothers by age 19) and therefore the reproductive decisions that young people makes will determine their lifetime fertility rates and, subsequently, rate of population growth in the region. It is projected that the region’s population will grow from 139 million to 237 million by 2030. 82 million will reside in Tanzania, 66 million in Kenya, 60 million in Uganda, 18 million in Rwanda and 11 million in Burundi.
Second, this population increase will inevitably increase the population density and without proper planning will result into overcrowding. A high population will also increase the demand for natural resources such as water and land thus aggravating food insecurity and increasing resource conflicts in the region. It also places a bigger demand on social amenities such as education, health care and sanitation infrastructure.
Third, most migrants go to cities as young adults to look for employment and other opportunities. A bulging youth will increase the rate of rural to urban migration in the region. If the development transformation necessary to support urban growth is not occurring at the same speed as the migration rate, the region will witness a faster increase of informal settlements and the challenges that come with slum dwellings.
Fourth, out of the current unemployed working age population, about 70% are under age 30. Female unemployment rate is much higher than that of their male counterparts in the region while unemployment among urban youths is much higher than that of their rural counterparts. Continued exclusion of youth from a productive role in the economy will inevitably exacerbate crime, drug abuse, vandalism and escalate the vicious cycle of poverty if no holistic approach is initiated to alter the situation. With a global financial crisis that only serves to exacerbate this already grim reality, the challenge for the region is to adequately address the increasing demand for employment in an environment where the number of youth joining the job market is faster than the jobs being created.
It is this phenomenon and the fact that youth bulges (which are large youth cohorts relative to the adult population) are widely becoming recognized as a considerable resource for national development but also as a significant source of challenges that led Ms. Katindi, then working at the Institute of Economic Affairs-Kenya, to begin investigating youth trends in Kenya and their future implication.
This work brings out glaring concerns beyond education and unemployment - the most worrying trend being the risky sexual patterns, abuse of alcohol and drugs. However, general health and reproductive health challenges of young people do not feature in government’s top policy and budget priorities.
A further investigation of the issue in the region led to the following conclusions about the future.
Demographically, nearly all of Sub-Saharan Africa has a child rich population, majority of who are below the age of 15. Two thirds or more are young people under the age of 30, and only three to six percent of the population is above age 60. However, in light of the widespread reductions in fertility and mortality rates, women are giving birth later, to fewer children and spacing them more. As a result, there are changes occurring that will alter the current population structure. In the next two decades, it is anticipated that the 0-14 age cohort will shrink while the 15-29 age cohort will bulge.
This shift presents various opportunities. In countries where most youth and young adults (defined here as those aged 15 to 29 years) have been well educated and where their energy and ingenuity are sought by employers, such a large proportion of young people is seen as an asset. In economies where their numbers, productivity, savings and taxes support smaller subpopulations of children and elderly, they provide a “demographic dividend” to economic growth. However, these large youth populations if relatively well educated but unemployed become a social challenge and a political hazard. Young men in particular are the main perpetrators of conflict as they are frustrated in their search for status and livelihood.
First, a large youthful population will inevitably increase the regional population due to the fact that 15 to 29 year old women are at the peak of their reproductive age. In Kenya, this group is currently responsible for 60% of the 1.5 million Kenyans born every year. Due to high teenage pregnancies, one out of every four children born was not planned for (36% of girls are mothers by age 19) and therefore the reproductive decisions that young people makes will determine their lifetime fertility rates and, subsequently, rate of population growth in the region. It is projected that the region’s population will grow from 139 million to 237 million by 2030. 82 million will reside in Tanzania, 66 million in Kenya, 60 million in Uganda, 18 million in Rwanda and 11 million in Burundi.
Second, this population increase will inevitably increase the population density and without proper planning will result into overcrowding. A high population will also increase the demand for natural resources such as water and land thus aggravating food insecurity and increasing resource conflicts in the region. It also places a bigger demand on social amenities such as education, health care and sanitation infrastructure.
Third, most migrants go to cities as young adults to look for employment and other opportunities. A bulging youth will increase the rate of rural to urban migration in the region. If the development transformation necessary to support urban growth is not occurring at the same speed as the migration rate, the region will witness a faster increase of informal settlements and the challenges that come with slum dwellings.
Fourth, out of the current unemployed working age population, about 70% are under age 30. Female unemployment rate is much higher than that of their male counterparts in the region while unemployment among urban youths is much higher than that of their rural counterparts. Continued exclusion of youth from a productive role in the economy will inevitably exacerbate crime, drug abuse, vandalism and escalate the vicious cycle of poverty if no holistic approach is initiated to alter the situation. With a global financial crisis that only serves to exacerbate this already grim reality, the challenge for the region is to adequately address the increasing demand for employment in an environment where the number of youth joining the job market is faster than the jobs being created.
Fifth, researches conducted on population structures point to the fact that 80% of civil conflicts occurred in countries where 60% of the population or more were under the age of thirty. In another study, demographers argued that countries with more than 40 percent of young adults (aged 15 to 29 years) in the population of adults (aged 15 and older) were typically in the early or middle phases of the demographic transition. These countries are 2.3 times likely to experience an outbreak of civil conflict than countries with smaller proportions. East Africa’s youth are currently about 51.63% of the total adult population. The risk of civil conflict is further aggravated when these large youth cohorts are relatively well educated but unemployed in areas that generally have low levels of development.
Primary Gross Enrolment Rates in the region are currently at 123.6% while secondary schools Gross Enrolment Rates are at 29.6%. This figure though indicative of low transition rates from primary to secondary schools, also shows the mass production of young men and women who have acquired only minimal skills along the way and therefore cannot meaningfully participate in a work environment that requires high skilled individuals and is globalizing.Sixth, studies also show that 90% of countries with very young population structures had autocratic or weakly democratic governments at the end of the 20th century. As a result, their young people tend to perpetuate cycles of political instability, ethnic wars, revolutions, and anti-regime activities. Low political will and inadequate resources to effectively integrate them into meaningfully participate in decision making also makes them feel excluded thus exhibiting open aggression and conflict through self organization or by being exploited and manipulated mostly by politicians.
Seventh, many of the countries with young and youthful populations also have among the world’s weakest economies. They also have political and institutional constraints that discourage economic activities and private investments needed to generate jobs. Lack of jobs among young people escalates dependency. According to research these countries experienced an average annual economic growth rate of 3.6 percent. This growth can increase if young people are economically empowered to allow greater personal savings and investments. However, continued denial of economic opportunities to them will lead to a shrinking per capita income. Unemployment eventually leads to frustrations that trigger political instability, making it even more difficult for poor countries with large youth populations to generate economic growth and encourage the foreign and domestic investment needed to generate new jobs.
United Nations forecasts that the plight of young people is likely to be one of the main challenges of the century. Owing to the fact that Sub-Saharan Africa will experience a bulging youth population in the next two decades, understanding the region’s population growth, structure and distribution will provide incites that help minimize the challenges of a growing youth population and maximize on the opportunities that youth bulges present.
Katindi Sivi Njonjo
Guest Editor
Katindi Sivi Njonjo, a futurist with joy and passion for foresight
Designation: Programme Director
Organization:Society for International Development
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