INTERVIEW-AfDB head cautions on use of Africa's newly-found oil cash

Wed Apr 4, 2012 3:26pm GMT

* Says nations with oil and gas can avoid "oil curse"

* Urges investment in education, transport systems

* Sees higher investment in infrastructure

* Warns against lack of closer economic ties

By Duncan Miriri

NAIROBI, April 4 (Reuters) - African nations joining the elite club of oil and gas producers should invest in education and roads while supporting traditional sectors to avoid the "oil curse" trap, the head of the African Development Bank said.

Ghana, Kenya, Mozambique, Tanzania and Uganda have all discovered oil and gas in recent years, thrusting them into a crossroads between following the likes of diamond-rich Botswana into prosperity or the likes of Nigeria into over-dependence on oil.

Donald Kaberuka said governments should resist using windfalls from oil and gas exports to pursue populist policies like sharply raising public sector wages.

"(They should) avoid using the resources to rapidly increase recurrent expenditure. That is what people will be expecting but that would be the wrong thing to do," he told Reuters in an interview late on Tuesday.   Continued...

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