Oil Wealth
The high price of oil in the international markets is providing many developing nations with lots of petrodollars. Ironically, most of these country’s citizens continue to live in gliding poverty because authorities have not used the oil money well enough; most governments have continued to spend money on projects that have not benefited the masses. But Libya is one country that is planning to radically change the way oil wealth is spent or distributed to the public. According to the Economist Magazine, President Mohamed Gaddafi of Libya has proposed new ways of using oil wealth, which amounts to UK₤90 million daily, considering that the country produces 1.8 million barrels (see graph) daily at the price of US$100 per barrel (U.S Energy Information Administration).
Focus on Service Delivery
First, the president plans to eradicate government bureaucracy by downsizing his cabinet. He sees some of the ministries as a pure waste of public money. He actually claims that the money that is supposed to help in social services ends up being utilized by the ministry personnel. The focus of his new cabinet will be to enhance delivery of services targeted to helping to alleviate poverty in the country. Second, the distribution of oil wealth will be decentralized, that is, send directly to the people at the grassroots as opposed to the current ministries that are prone to bureaucratic tendencies that create inefficiencies.
The money will now be sent straight to families on monthly basis. These families will be at liberty to spend the money as they see fit. The government will however encourage the masses to start income-generating activities. In fact, people will be asked to join groups that can start micro-industries in agriculture and manufacturing sectors. However, Libya’s president expressed fears that too much spending power on people’s hands will fuel national pressures.
Investment in Infrastructure
The government will further take advantage of Libya’s newly earned international goodwill after it dropped its nuclear goals. This international friendship will be used to attract foreign investors to take part in the country’s economic development. An enabling business environment will also be enhanced so that Libyans can take part in their country’s private sector. Significant potions of the oil wealth will be invested in the country’s dilapidated capital infrastructure, such as roads, telecommunication networks, and education facilities among others. In addition to favorable entrepreneurial environment, the improved infrastructure will be another magnet to attract both local and foreign investors into the country’s economic system.
The president however warned that infrastructure development could only be enhanced when authorities and regulators of relevant sectors do their job well. These two bodies stand accused of slowing down the development of important infrastructure. Their counterparts in the energy and oil sectors have helped relevant companies develop important infrastructures that have continued to increase production and revenue.
It would be hard for the Libyan president to undertake all those measures given the drastic reforms that must be undertaken. They however represent epic attempts by a poor oil-producing country to instill physical discipline in its government, expand infrastructure, and improve business environments for both local and foreign investors. It is also an epic moment for all these measures to happen at the same time. A keen observer of economics of development can therefore conclude that it would require serious efforts to make those goals come true. Mare tough talk can’t go far.
Works Cited
Energy Information Administration. 2006 “Libya Oil Production.’’ United States Energy Information Administration. Web.