Monday, October 24, 2011


Former Libyan leader Muammar Gadaffi went out with whimper last week. One more leader who found himself on the wrong side of western interests and paid the ultimate price.

That aside we could take a leaf from how Libya managed its oil resources for the benefit of the people.

Libya with Africa’s largest proven oil reserves Gadaffi’s government was able to spread the wealth around affording its less than 10 million population a better than average living.

Before all hell broke loose earlier this year all citizens had access to water, health care and education services. As a result the average Libyan had a life expectancy of 70 years, and literacy levels are nearly total while infant mortality – children dying before the age of five is comparable with some of the best numbers in the west at 20 per 1000 births.

This largesse was easily affordable for a relatively small population in a $100b economy and annual tax revenues of $25b. The size of Uganda’s economy is just over $10b.

The economy has much potential for growth with power production of 20billion Kwh (kilowatt hours) annually, a modern road and rail transport network.

Oil money – receipts from the export of 1.5 million barrels a day, can subsidise the development of an agriculutural sector and ensure the country’s food sufficiency.

"In fact the great man made river, the largest irrigation scheme in the world which comprises 3000km of underground pipes and 1,300 wells and whose final bill was $25b, has the potential to help regenerate thousands of acres of desert....

In terms of social services its arguable that Gadaffi set a high bar for how public funds should be utilized to finance public goods.

One may argue that what else would he do with all that money and so few people. One need not look any further that Equatorial Guinea. This oil rich country on Africa’s west coast has population of under a million with a per capita GDP of $20,000 has some of the world’s worst Human Development Indicators – a measure of a population’s access to health, education and other social services and personal freedoms. In fact Uganda with a per capita GDP Of $400 is ranked much higher than Guinea Bissau.

However based on flawed economics Gadaffi stifled the private sector; flawed because it’s the private sector that is best able to harness the individual efforts of people. History also shows that country’s are only as viable as their private sectors.

"As a result government dominates economic life and resources were concentrated in the civil service. However it worked politically because without a viable private sector no alternative power center emerged in the country. In developed economies the power of the private sector acts as a counterweight to government omnipresence....

The net result of this is that the Libyan economy is generally inefficient, with its flaws being papered over by the oil billions.

This is an issue because reconstruction while being driven by the state relies largely on the initiative of the people, as the Ugandan experience has shown, so this maybe a sticking point in coming years.

Gadaffi’s United States Africa like many things about the man may have been sound in principle but his means of bringing them to fruition were suspect.

Africa would do itself a lot of good if it tore down the artificial boundaries that separate us. Africa as a continent accounts for less than five percent of world trade. This is bad enough as it is but it is more scandalous that trade with in Africa accounts for less than a fifth of all the trade the continent does with the world. Our infrastructure retains its colonial character channeling raw materials to our ports and onward to Europe.

"If we can reorient our transport networks more inwardly our producers can better benefit from our own markets and develop new ones where there were none....

Gadaffi the last word in his country for nearly half a century, failed dismally to sell his pet project to Africa’s leaders and an oble project will may take a lot longer to materialize.

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