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Chad, the Challenge of Development: Policy Implications of the Chad-Cameroon Petroleum Project

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Chad, the Challenge of Development: Policy Implications of the Chad-Cameroon Petroleum Project

Published: December 23, 2010

In the prelude to the current scramble for natural resources in Africa, several leading global oil companies and the World Bank (WB) got engaged in 2000 in a large oil extraction and export project in Chad, with a pipeline built across Cameroon to the Atlantic. The revenue management system then adopted by Chad under WB advice, designed to ensure the Chadian gains from this project would effectively support development could not entirely resist policy interests and domestic pressures to spend the proceeds in other ways than pre-accorded, including for security. The World Bank eventually pulled away from this venture but the human and social development impact of Chadian-determined uses of these resources has marked progress over comparable situations elsewhere. The lessons brought by this case, even after all its particularities are accounted for, are most significant and counter-intuitive. First, a country will develop its natural resources whether it is “institutionally ready” to administer the benefits or not. Second, sustainable social and environmental practices play a crucial role in the long-term success of energy projects, serving the interests of the promoters and of the host populations. Third, revenue governance criteria are useful but if overly strict or externally imposed, cannot survive changing bargaining strengths and external conditions. Fourth, even under authoritarian regimes, natural resources’ revenues can improve social and economic conditions when compared to the situation before their exploitation.

The corollary for multilateral agencies and other development actors is that they will need to adapt to this new reality where developing countries might still need advice with revenue management but their own perception of their preferences will have to be taken much more seriously than before.

Author: Jacques Gérin and Céline Houdi

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