May 30, 2000

Le Monde

By Michel Rocard

Michel Rocard is currently a leading Member of the European Parliament. A Socialist, he was Prime Minister of France from 1988 to 1991. He served from 1997 to 1999 as chairman of the European Parliament Development Committee and has extensive experience with development issues in Africa.

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Over the past few weeks, distressing, sometimes horrifying images, have come from Africa: Ethiopia, Eritrea, Sierra Leone, Zimbabwe. However, this continent is also experiencing changes on which the European press's headlines do not spend much time. Conflicts are still too common in a great part of Africa. However, 80% of African's live in peace. Half of them also live in extreme poverty.

It is generally agreed that the rate of economic growth over the past five years (an average of about 4% per year per country) has not kept pace with the demographic growth rate, and that it is not high enough to have an effect on the standard of living. This growth must be significantly accelerated, through the adoption of good policies, the development of exchanges, and especially through investments.

Aid will not solve Africa's problems, even though well-targeted aid can strengthen the institutions, as well as abilities and trust which countries need to improve the conditions of living of the people and to become full members of the international community.

The financing needed for the development of the continent will come from the private sector for the most part, from big and small African farmers and heads of companies. Foreign investment will also play an important part.

Private contributions to developing countries have decreased over the past three years, following the Eastern Asia crisis. However, there is a recovery, and, to the great surprise of certain observers, not including myself, Africa is now receiving some of these private funds. Three great infrastructure projects have recently seen the light of day on the African continent: Maputo's major transit road, between Mozambique and South Africa, the Western African gas pipeline and the Chad-Cameroon oil development and pipeline project.

The Chad-Cameroon project is a striking example of the way the governments and the international private sector can work together with multilateral institutions to completely transform a poor country's prospects. Three oil companies - ExxonMobil (United States), Chevron (United States), and Petronas (Malaysia) - have agreed to develop oil fields in the south of Chad and to transport the oil to Cameroon's Atlantic coast through a 1,070-km pipeline.

These fields were discovered over thirty years ago. Then, during a period marked by political unrest, Chad waited until international oil prices combined with the private sector's interest made it possible to develop these reserves. The investment ($3.7 billion) will be the biggest private investment planned in Africa over the next five years. It could radically transform Chad's prospects and enable the country to escape tragic poverty. The revenues generated by the project would increase the State budget by 45% to 50% during the next twenty-five years. The state could then finance basic health and education services and rural services, which are currently desperately inadequate.

And yet, this project is highly controversial. Certain environmentalists suggest that the advantages generated by a great project of this kind do not make up for the risks. In addition, disillusioned observers of the political scene refuse to believe that the government, the first to be democratically elected in forty years, is able to use the oil revenues appropriately. These objections deserve to be seriously considered. But in three years, they have been the subject of public analysis and debates in Chad and Cameroon and, in fact, in the whole world.

One of the reasons for this is that the governments and the oil companies invited the World Bank and the International Financial Corporation (the World Bank institution which deals with the private sector) to supply 5% of the financing ($200 million). Since then, environmental and social impact specialists from the Bank have been helping the governments and the companies to create a well-designed project.

The pipeline route was significantly modified. The pipeline will be buried, and not open, and will roughly follow existing infrastructures. The tropical forest will only be slightly affected. Two vast national parks will be created in Cameroon with the project's funds, as compensation. The people will not be displaced on any part of the pipeline route. Farmers will be able to access their land like they used to, except during construction. They will be compensated for their loss of earnings.

In order to manage the oil revenues, Chad adopted a law, which provides for the country to deposit 10% of the oil revenues in a special fund for future generations; 80%of the revenues will be used to finance development and social programs for impoverished people. In addition, Chad created a surveillance committee made up of government officials and parliamentarians, as well as civil society members.

Of course, people wonder if these agreements will be respected. In fact, Chad's situation over the past four years is rather encouraging in this respect. It joined World Bank and IMF reform programs. It already devotes 70% of its current revenues to development. Despite the military threat in the north, it decreased its army's strength by half.

The Chadians and the international community will be vigilant. They will make sure everyone benefits from the oil windfall, and not a few privileged people only. Besides, Chad will need external aid when the oil starts flowing, four years from now.

In the meantime, it is comforting to see that the situation in the heart of Africa is favorable enough for a project of this importance to see the light of day. Let us hope other countries and investors will be encouraged by this example.