Oil that did not get in the head
In the very northern part of the north of Europe lies a country that we should take note of not just for what it does but also for the things it avoids. That country is Norway and as if to prove a point, nature shaped and endowed it in a way to show the rest of us offshore how to live and cope with a lot of contradictions the rest of the world can only imagine.
Unlike most European countries, Norway is an amazingly rich place in natural resources. The country is not just one of the largest exporters of seafood, it is also rich with oil, natural gas, hydroelectric power, forests, and minerals that can make most developing known as rich with natural resources look rather poor.
And though it ranks high amongst the top 15 producers and exporters of crude oil, amazingly, most people offshore do not think of Norway when one thinks of natural resources. Media and other analysts that enjoy labelling do not term or introduce Norway as an “oil-rich” country the way they do with other countries that then turn out to be poorer than Norway. Rather it is considered and grouped as a developed, advanced high economy as defined by the world bank and IMF.
Like a sober lucky winner, Norway goes about its business with natural resources as if it has drunk from a cup of oil that must not get into its head. Just like the people of Norway like to go about their lives in a very simple fashion from their dressing to their language and their coyness about displaying wealth, the country itself goes about acting as if their oil is not there.
To avoid falling into the trap of boom and bust that comes with fluctuating and unpredictable revenues typical of countries and systems reliant on the commodity market, Norway has taken three major linked steps that seem commonsensical and even obvious to many. Knowing is one step, doing the known is another step, doing it successfully is yet another step higher than the first two.
For Norwegians, diversification and expansion of the economy are neither shifting goals nor dreams, they are a shared live reality that can be tested and that yields cogent fruits for all to see both at home and offshore. Their gas industries, wherein value is added and skills required employ more people and generate more revenue than the oil sector.
Norway is not a country no one can describe a grassland, rather it is plagued with shockingly short summers and very cold winters to be passed on high mountains and steep hills. Yet they are sober enough to take agriculture seriously in all shades from their farms and ranches to their schools and research centers or is it the other way round? Over 90% of their domestic demand for beef and sheep is met nationally, they also produce their own grain and potatoes then go on to sell the rest of the world fish and other seafood.
Innovation and manufacturing are two other majors areas Norwegians seem to soberly take delight. As if they don’t trust the luck oil can bring, Norway is also the country that produces for itself and exports to others pulp and paper, large power and office machineries, telecommunication, and computer equipment. They also make and export medicines, chemical products, and fertilizers as well pharmaceutical products and plastic raw materials. They even build and sell ships.
Just to make sure this oil does not get into their head it would seem, Norwegians decided to invest a big chunk of even the money they get from oil into other sectors and even countries. They created a fund into which proceeds from their oil will go and earn clean money from other sectors. The reason behind that decision, Norwegian leaders and fund managers explain with subdued glee to the rest of us offshore, is to ensure responsible and long-term management of revenue from Norway’s oil and gas resources, so that this wealth benefits both current and future generations. The consequences and results of that policy are worth noting. Today that fund earns more money than the revenue they get from their oil. They call it the oil fund and it controls 1.4% of the value of the world’s listed companies with investment in over 9000 companies in 73 countries.
It is important to quickly state here how transparent the management of this fund is. Every Norwegian and even those of us offshore interested can see how the funds are invested in every sector, country, and company. Information about the performance of the fund is regularly updated and available at a single click of a mouse.
The Norwegian government is no Father Christmas and Norwegians are one of the most taxed in the world, the people not the oil pay for their superb school, healthcare services, and other public infrastructure and services. The average single worker in Norway is taxed about 39%. The advantage of this tough love, no hubris, no free lunch attitude is that the government is there truly accountable. When Norwegians say taxpayers’ money or commonwealth they really mean it. No public administrator, elected or nominated politician donate gifts or money. Their politicians don’t help, they serve and they do so by providing the service they are elected and paid to do: governance.
Since the people are stakeholders and the system works for all equally across the country, no one talks about resource control and there is no fear of civil war or uneasiness from of the excluded. There is no fear of foreign aggression, invasion or manipulation take their oil because they have built a solid foreign affairs unit that does not shout or flash but is always on the table at the right place when things matter.
Soberly and successfully continues to move on from progress to prosperity making sure its oil does not get in its head.
Kila is Director at Centre for International Advanced and Professional Studies (CIAPS) Lagos.
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