For Lessons on How Not to Handle Its Oil-Rich Future, Guyana Can Look to Africa

For Lessons on How Not to Handle Its Oil-Rich Future, Guyana Can Look to Africa
Black Star Square in the center of Accra, Ghana, June 8, 2015 (AP photo by Sunday Alamba).

Last month, Guyana seemingly overnight joined the ranks of oil-rich countries when Exxon Mobil and Hess announced one of the most significant oil discoveries in years in the waters off the tiny South American nation. One offshore field is estimated to hold 1.4 billion barrels of oil alone, as much as South America’s largest existing fields.

A relatively poor developing country, Guyana currently has no domestic crude oil production, although being Venezuela’s neighbor has warranted intermittent exploration for nearly a century. That is about to change, with oil revenues expected by 2020. But this good news comes with a warning.

The experiences of suddenly oil-rich countries are similar to those of lottery winners, many of whom end up bankrupt or worse. The corrosive effects of oil wealth in countries such as Venezuela, Nigeria, Equatorial Guinea and Angola are well known, from corruption to inequality. However, other developing countries, such as Botswana and Chile, have managed their resource wealth wisely.

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