Received: 4 March 2021 | Accepted: 6 January 2022

DOI: 10.1111/1467-8268.12622

ORIGINAL ARTICLE

Oil dependence and access to water and sanitation in

African countries: Does the Extractive Industries
Transparency Initiative matter?

Sosson Tadadjeu1 | Henri Njangang2 | Paul Ningaye3 | Mohammadou Nourou4

1
The Dschang School of Economics and
Management, University of Dschang, Abstract
Dschang, Cameroon This paper investigates the effect of oil dependence on access to water and
2
LAREFA, Faculty of Economics and sanitation in 49 African countries, with data covering the period 1996–2015.
Management, University of Dschang,
Dschang, Cameroon Additionally, it investigates as a first attempt how the Extractive Industries
3
CERME, Faculty of Economics and Transparency Initiative (EITI) affects the relationship between oil dependence
Management, University of Dschang, and access to water and sanitation. Using the two‐step system generalized
Dschang, Cameroon
method of moments, the results show that oil dependence is negatively as-
4
University of Ngaoundéré, Ngaoundéré,
Cameroon
sociated with access to water and sanitation, both for the total population and
urban and rural populations, respectively. Considering the difference between
Correspondence oil abundance and oil dependence, we find that both oil abundance and oil
Sosson Tadadjeu, The Dschang School of
Economics and Management, University dependence are negatively associated with access to water and sanitation.
of Dschang, PO BOX: 96 Dschang, Finally, the results illustrate that the EITI mitigates the negative effect of oil
Cameroon.
dependence on access to water and sanitation in resources rich African
Email: stadadjeu@yahoo.fr
countries.

KEYWORDS
Africa, EITI, oil, sanitation, water

1 | INTRODUCTION

In most developing countries rich in oil, economic growth is slower than in less resource‐rich countries
(Gylfason, 2001). In Africa, the case of Equatorial Guinea illustrates the problem. The discovery of large oil reserves in
the 1990s, followed by rising oil prices in the first decade of the new century, has pushed average income to a level
above that of Germany by 2010 (Wigley, 2017). Nevertheless, three‐quarters of the country's population still lives below
the poverty line, and half of the population does not have access to safe drinking water and adequate sanitation. The
same is true for oil‐rich countries such as Angola and Chad, where less than 50% and less than 30% of the population
have access to drinking water and sanitation, respectively. However, other oil‐poor countries such as Botswana have
made remarkable progress as over 80% and about 70% of the population have access to drinking water and sanitation,
respectively. This paradoxical observation, popularly known as the resources curse, suggests that oil‐rich countries are
failing to meet the needs of their populations in terms of access to drinking water and sanitation compared to their oil‐
poor counterparts. Is there empirical evidence to support these facts?
In this article, we combine two important axes of the economic literature dealing with the resource curse and access
to water and sanitation. Concerning the resource curse, the work of Sachs and Warner (1995) laid the groundwork for a
large and conflicting literature on the resource curse hypothesis. Several studies (see Havranek et al., 2016 for a meta‐
analysis) have shown that abundance and dependence on natural resources, through their deleterious effects on the
54 | © 2022 African Development Bank wileyonlinelibrary.com/journal/afdr Afr Dev Rev. 2022;34:54–67.
TADADJEU ET AL. | 55

quality of institutions and risks of conflicts, negatively affect economic growth and therefore validate the resource curse
hypothesis. Other studies, such as Brunnschweiler and Bulte (2008) and Adika (2020), argue that natural resources are
beneficial to economic development and do not validate the resource curse thesis.
Despite the extension of the resource curse to different indicators of development (Tadadjeu et al.,), the economic
literature has devoted little attention to studying the effects of natural resources on the provision of public goods
(Cockx & Francken, 2016; Gylfason, 2001), particularly access to water and sanitation (Mazaheri, 2017; Tadadjeu
et al., 2020). Moreover, no consensus emerges from this literature. Theoretically, natural resources provide govern-
ments with a continuous source of revenue needed for investments in basic social service provision. However, given the
deleterious effects of oil on the quality of institutions and the occurrence of conflicts, this could, all other things being
equal, reduce access to drinking water and sanitation.
Concerning access to water and sanitation, the Millennium Development Goals and now the Sustainable Devel-
opment Goals have enabled some progress to be made. At the global level, the proportion of the population using
drinking water services increased from 61% to 71% between 2000 and 2015. Similarly, the proportion of the world's
population using sanitation facilities increased from 28% to 43% over the same period (United Nations, 2019). Despite
this progress, in 2017, in sub‐Saharan Africa, 39% of the population had no access to a drinking water source, compared
to 69% who had no access to sanitation (United Nations International Children's Emergency Fund and World Health
Organization, 2019). In this part of the world, significant disparities between rural and urban areas also persist as only
45% of the rural population has access to drinking water, compared to 84% of the urban population. Similarly, only 22%
of the rural population has access to sanitation, compared to 44% of the urban population (United Nations Interna-
tional Children's Emergency Fund and World Health Organization, 2019).
This paper analyses the effect of oil wealth on access to drinking water and sanitation, and also determines the role
of the Extractive Industries Transparency Initiative (EITI) in this nexus. Contrary to previous studies that condition the
beneficial effects of natural resources on the quality of institutions, this paper focuses on the role of the EITI. The EITI
is an initiative created in 2003 and comprising 53 countries, 24 of which are African. The aim of this initiative is the
commitment of resource‐rich countries to transparency in the management and ownership of resources in the ex-
tractive sectors. Although most studies agree on the success of the EITI's institutional objectives, the results regarding
operational and developmental objectives are more discordant (see Mawejje, 2019; Papyrakis et al., 2017). In this study,
we assume that given the beneficial effects of this initiative in fighting corruption and improving accountability, it
would promote better collection of natural resource revenues for investments in the water and sanitation sector.
This research contributes to the resource curse literature in several ways. First, this paper adds to the existing
literature by focusing on the effect of oil dependence on access to water and sanitation in Africa. Such an analysis,
therefore, helps to fill the knowledge gap in a region rich in oil but which is paradoxically lagging in the provision of
these basic social services. Second, this paper is the first in the empirical literature to examine how the EITI affects the
relationship between oil dependence and access to water and sanitation. Third, this study conducts a comparative
analysis of the individual effects of oil dependence and oil abundance on access to water and sanitation. Such a
distinction is of particular importance since these two terms are often used interchangeably and misleadingly when
assessing the resource curse hypothesis (Badeeb et al., 2017).
The rest of the paper is organized as follows: Section 2 presents the theoretical framework; Section 3 describes the
methodology and data; Section 4 presents and analyses the results, and Section 5 concludes.

2 | TH E O R E TI C A L F R AM E W O R K

Theoretically, oil dependence reduces access to water and sanitation through political mechanisms, including gov-
ernance, democracy and conflict, and economic mechanisms, such as oil price volatility and poverty (see Figure 1).
There is an extensive literature showing the negative effect of oil rent on governance and democracy (Anyanwu &
Erhijakpor, 2014). Isham et al. (2005) illustrate how countries dependent on point resources are predisposed to
increasing economic and social divisions and weakening institutional capacity. However, several studies show that the
quality of institutions and democracy are essential conditions for the provision of public goods (Deacon, 2009).
Consequently, through its deleterious effects on governance and democracy, oil dependence hinders access to drinking
water and sanitation. Regarding the conflict‐based explanation, it has been established that oil‐dependent countries are
more vulnerable to conflict (Anyanwu, 2014). The occurrence of conflict causes significant material damage and
consequently reduces the provision of basic goods, such as drinking water (Gates et al., 2012).
56 | TADADJEU ET AL.

FIGURE 1 Oil dependence and access to water and sanitation: potential channels. Source: Authors’ construction

Moreover, although oil rent offers great opportunities for development, including through tax revenue mobilization
throughout the exploitation chain from exploration through production to export (Ndikumana & Abderrahim, 2010), it
is recognized that oil wealth can lead to particularly volatile revenues (Van der Ploeg & Poelhekke, 2009). Davis and
Tilton (2005) argue that commodity price volatility leads to pro‐cyclical fluctuations in government and export rev-
enues. Thus, the lower the price of resources, the less revenue a resource‐dependent country will have and the more
difficult it will be to plan public revenues and expenditures (Badeeb et al., 2017). All other things being equal, this
decline in revenue will reduce the provision of public goods such as drinking water and sanitation.
Similarly, the second economic mechanism through which oil dependence affects access to drinking water and
sanitation is poverty. Ross (2001) provides a brief and comprehensive rationale suggesting that ‘Oil and mineral exports
do not simply fail to alleviate poverty; they appear to make it worse’ (Ross, 2001, p. 5). Apergis and Katsaiti (2018)
summarize several arguments justifying the positive effect of oil rents on poverty. Indeed, oil‐dependent economies
engage in a completely different development model than economies that rely on manufacturing sectors. In particular,
the extractive sectors are predominantly capital intensive and use little or no unskilled labour, providing few work
opportunities for the poor. However, the economic literature seems unanimous that poverty reduces access to safe
drinking water and sanitation. For example, Mkondiwa et al. (2013) find that poverty is positively related to the lack of
access to drinking water and sanitation in rural areas. Adams et al. (2016) share this point of view when they argue that
inequalities in access to safe water and improved sanitation facilities are strongly correlated with household wealth. In
other words, household poverty reduces the likelihood of using safe drinking water and improved sanitation facilities.
Regarding the role of the EITI, we assume that transparency improves accountability and reduces corruption,
mitigating the resource curse in access to drinking water and sanitation. Specifically, transparency through the EITI
will enable citizens to get information about the management of natural resource revenues, which will enable them to
take part in the debate on natural resource governance issues and demand better accountability. This improved
accountability increases the provision of clean water in resource‐rich countries. Similarly, transparency, which is seen
as ‘timely and reliable economic, social, and political information…accessible to all relevant stakeholders’ (Kolstad &
Wiig, 2009, p. 522), discourages corruption in resource‐dependent countries. This reduction in corruption also leads to
improved access to clean water and sanitation.

3 | METHOD OL OGY A ND D ATA

3.1 | Model specification and methodology

To investigate the relationship between oil dependence, EITI and access to water and sanitation in African
countries, we start with the direct impact of oil dependence on access to water and sanitation. Our empirical model is
borrowed from Tadadjeu et al. (2020), who themselves drew on the highly influential work of Ndikumana and
TADADJEU ET AL. | 57

Pickbourn (2017). In this work, access to drinking water and sanitation is considered in terms of the total population,
the urban population, and the rural population, alternatively. Our model is specified by the following dynamic panel
equation:

Accessit = α + β1 Accessit −1 + β2 Oil rentit + β3 Xit + μi + vt + εit , (1)

where Accessit is the share of the population (total, rural and urban, alternatively) for country i in year t that has access
to improved drinking water or sanitation. Oil rent is the main explanatory variable that measures oil dependence, X is
the vector of control variables, μi is an unobserved country‐specific effects, vt is the time‐specific effects, and εit is the
error term.
Beyond the direct impact of oil rent on access to water and sanitation, several factors can magnify or mitigate the
effect of oil rent. As mentioned above, this paper investigates the role of the EITI on the relationship between oil
dependence and access to water and sanitation. For this purpose, we interact oil rent with the EITI variable
(Oil rent × EITI ) and test for the significance of the interacted coefficient. The specification of the equation is the
following:

Accessit = α + β1 Accessit −1 + β2 Oil rentit + +β3 EITIit + β4 (Oil rent × EITI )it + β5 Xit + μi + vt + εit . (2)

Estimating the above equations with the ordinary least squares (OLS) estimator could lead to inefficient estimates
as the OLS does not account for country fixed‐effects, and may suffer from omitted variables bias. Additionally, the
presence of the lagged dependent variable in the model puts our model inside the context of the dynamic panel model.
In the presence of a lagged dependent variable, Nickell (1981) argues that while OLS estimators may be biased
upwards, fixed effects may be biased downwards. Anderson and Hsiao (1982) suggest a first‐differenced transformation
to eliminate fixed effects. However, the correlation may remain between the differenced error term and the differenced
endogenous regressors, and thus a difference generalized method of moments (GMM) estimator could be used to
mitigate those problems, where the differenced endogenous explanatory variables are instrumented with their suitable
lags so that the instruments are not correlated with the error term (Arellano & Bond, 1991). However, Blundell and
Bond (1998) argue that the lagged level of the endogenous variables may be poor instruments for the first differenced
variables. They propose the well‐known system GMM estimator that combines the regressions in differences and levels
in a system of equations using the lagged differences instruments for the level series and the lagged levels of instru-
ments for the differenced series.1 Given this, we also employ the two‐step system GMM estimator incorporating
Windmeijer's (2005) finite‐sample correction for standard errors.

3.2 | Data

This study uses data from 49 African countries from 1996 to 2015. The periodicity under investigation and the sample
are chosen according to data availability constraints. Our dependent variable is made up of two indicators. The first
indicator is the percentage of the population (total, urban and rural, alternatively) with access to an ‘improved water
source’. Our second indicator is the percentage of the population (total, urban and rural, alternatively) with access to
‘improved sanitation facilities’. Data for these indicators comes from the UNICEF‐WHO database.
Our main independent variable is oil dependence, measured by oil rent as a percentage of GDP from the World
Bank (WDI). As Brunnschweiler and Bulte (2008) suggest, it is more appropriate to consider this ratio as a measure of
dependence rather than abundance. We distinguish between oil dependence and abundance, using the logarithm (plus
one) of oil revenues per capita (in constant dollars, 2014) from Ross and Mahdavi (2015) as a measure of abundance.2
To examine the role of EITI participation, we follow Papyrakis et al. (2017) by creating three EITI (participation)
dummy variables that refer to a country reaching any of the three consecutive stages in EITI implementation, that is,
commitment, candidate and compliant. The EITI dummy takes a value of 1 both for the year during which the country
reaches the corresponding stage in EITI implementation, as well as for all consecutive years. The process begins with
the country's government's public commitment (through an ‘unequivocal public statement’) to join the EITI and
implement the EITI standard. Following the announcement of the commitment, the government must appoint a senior
government official to lead the implementation and establish a national EITI secretariat and a multi‐stakeholder group
to oversee implementation (Papyrakis et al., 2017; Villar, 2020). Once the country has met the initial requirements, the
58 | TADADJEU ET AL.

government may apply to the EITI Board to become an EITI Candidate country. If the application is successful, the
Candidate country must begin publishing the EITI Annual Report and meet the other requirements for an EITI
Compliant country (Lujala, 2018). The validation process to become a fully compliant country comprises the multi‐
stakeholder group and the national EITI secretariat preparing the documents and data required for validation and
conducting a self‐assessment of EITI progress to date (Lujala, 2018).
According to the literature on the determinants of access to drinking water and sanitation (Ndikumana &
Pickbourn, 2017), we select several explanatory variables grouped into macroeconomic, demographic, social and
institutional factors. In line with this literature, we expect a positive effect of economic and institutional determinants
such as income per capita, trade openness, official development assistance (ODA), political stability and primary
education. In contrast, we expect a negative effect of ethnic fractionalization. The effect of urbanization, however, is
mixed.
Table 1 presents descriptive statistics while the full list of sample countries and their respective EITI status is
summarized in Table 2.

4 | RESUL TS

4.1 | Direct effect oil rent on access to drinking water and sanitation

Table 3 presents the results of the effect of oil dependence on access to water and sanitation. The lower part of this table
shows the number of instruments, the results of Hansen's over‐identification, and the Arellano and Bond auto-
correlation test (AR(2)). Overall, the Arellano and Bond test shows that there is no second‐order serial autocorrelation
for all equations. Hansen's tests did not reject the hypothesis regarding the validity of the instruments used for the
estimates. In addition, all equations performed very well on the diagnostic controls. We can therefore state that the
estimated coefficients are valid.

TABLE 1 Descriptive statistics

Variables Observations Mean Std. dev. Min Max
Water 978 67.989 17.572 21.4 99.9
Water rural 979 58.259 19.626 10.9 99.827
Water urban 980 86.404 11.120 41.3 100
Sanitation total 979 35.480 23.772 3 95.506
Sanitation rural 979 27.000 23.593 0 95.184
Sanitation urban 978 47.122 22.372 12.3 97.920
Oil rent 963 4.574 11.167 0 78.541
Oil abundance 912 499.255 2128.233 0 23,926.6
Income 967 2053.93 2718.231 187.516 20,532.95
ODA 951 8.783 9.552 −0.250 92.141
Urban population 980 38.962 16.185 7.412 88.118
Trade 913 68.873 33.474 17.858 311.354
Ethnic fractionalization 960 0.628 0.245 0 0.930
Education 811 101.774 22.071 34.319 159.613
Political stability 833 −0.526 0.875 −2.446 1.219
EITI commitment 468 0.376 0.484 0 1
EITI candidate 468 0.311 0.463 0 1
EITI compliant 468 0.130 0.337 0 1
Abbreviations: EITI, Extractive Industries Transparency Initiative; ODA, official development assistance.
TADADJEU ET AL. | 59

TABLE 2 List of sample countries and their respective Extractive Industries Transparency Initiative status
Countries Commitment Candidate Compliant Countries Commitment Candidate Compliant
Algeria a
‐ ‐ ‐ Liberia a
2007 2008 2010
Angola a
‐ ‐ ‐ Madagascar a
2007 2008 ‐
Benin ‐ ‐ ‐ Malawi a
2014 2015 ‐
Botswana ‐ ‐ ‐ Malia 2006 2007 2011
Burkina Fasoa 2007 2010 2013 Mauritaniaa 2005 2007 2012
Burundi a
‐ ‐ ‐ Mauritius ‐ ‐ ‐
Cabo Verde ‐ ‐ ‐ Morocco ‐ ‐ ‐
a a
Cameroon 2005 2007 Suspended Mozambique 2008 2009 2012
Central African Rep. a
2007 2009 Suspended Namibia ‐ ‐ ‐
a a
Chad 2007 2010 2014 Niger 2005 2008 2011
Comoros ‐ ‐ ‐ Nigeriaa 2003 2007 2011
Congo Dem. Rep. a
2005 2008 2014 Rwanda a
‐ ‐ ‐
Congo Rep. a
2004 2007 2013 São Tomé and Prìncipe ‐ ‐ ‐
Côte d'Ivoire a
2007 2008 2013 Senegal 2012 2013 ‐
Egypt, Arab Rep. a
‐ ‐ ‐ Sierra Leone a
‐ ‐ ‐
Equatorial Guinea a
2005 2008 ‐ South Africa a
‐ ‐ ‐
Eritreaa ‐ ‐ ‐ Sudana ‐ ‐ ‐
Ethiopia 2009 2014 ‐ Swaziland ‐ ‐ ‐
Gabon a
2004 2007 ‐ Tanzania a
2008 2009 2013
The Gambia a
‐ ‐ ‐ Togo a
2009 2010 2013
Ghana a
2003 2007 2011 Tunisia a
‐ ‐ ‐
Guinea a
2005 2007 2014 Uganda a
‐ ‐ ‐
Guinea‐Bissau a
‐ ‐ ‐ Zambia a
2008 2009 2012
Kenya ‐ ‐ ‐ Zimbabwea ‐ ‐ ‐
Lesotho ‐ ‐ ‐ ‐ ‐ ‐ ‐
a
Denotes resources dependent countries.
Source: Authors’ construction from Lujala (2018) and Villar (2020).

The estimated coefficients show that oil rent has a negative and statistically significant effect on the share of the
total population with access to drinking water (column 1) and sanitation (column 4). These results, therefore, provide
evidence suggesting that governments in oil‐poor African countries outperform their oil‐rich counterparts in the
provision of drinking water and sanitation. These results, support the resource curse hypothesis and are in line with
those of Mazaheri (2017), who shows that oil abundance has a significant negative effect on access to drinking water
and sanitation in developing countries. When we look at residential areas, we find that the coefficient associated with
oil rent is negative and statistically significant, suggesting that oil dependence has a negative effect on the share of
urban and rural populations with access to drinking water. Specifically, we note that the effect of oil rent is more
significant on access to drinking water in rural areas. Regarding sanitation services, we also note that oil dependence
has a negative effect on access to sanitation in urban and rural areas. The effect also appears to be more pronounced in
rural areas.
Regarding our control variables, we find that income has a positive effect on access to drinking water for the total
population and access to sanitation for rural populations. In the same vein, we show that ODA improves access to
sanitation for the total and rural population. Our results also show that trade openness is an effective means of
promoting access to drinking water and sanitation for the total population and urban populations. Similarly, better
60 | TADADJEU ET AL.

TABLE 3 Effect of oil rent on access to drinking water and sanitation

Water total Water urban Water rural Sanitation total Sanitation urban Sanitation rural
Dep. variables (1) (2) (3) (4) (5) (6)
Dep. variables (t − 1) 0.955*** 0.928*** 0.957*** 0.997*** 0.936*** 0.969***
(0.014) (0.014) (0.011) (0.003) (0.027) (0.010)
Oil rent −0.035** −0.025** −0.024*** −0.009*** −0.030*** −0.019***
(0.016) (0.012) (0.007) (0.003) (0.011) (0.005)
Income (ln) 0.609** 0.339 0.232 0.027 0.369 −0.251
(0.285) (0.301) (0.279) (0.078) (0.449) (0.392)
ODA −0.019 −0.015 0.001 0.015*** 0.004 0.022***
(0.013) (0.010) (0.006) (0.005) (0.009) (0.007)
Urban population −0.025** −0.027* −0.011 0.002 0.008 −0.061***
(0.011) (0.015) (0.019) (0.004) (0.014) (0.019)
Trade 0.004 0.015** 0.006* 0.005*** 0.017*** −0.00001
(0.004) (0.006) (0.003) (0.001) (0.004) (0.002)
Ethnic fractionalization 0.330 1.440 −0.835 −0.784** −2.242 −2.869***
(0.445) (1.211) (0.788) (0.305) (1.514) (1.027)
Education 0.023 −0.001 0.004 −0.001 −0.004 0.002
(0.016) (0.002) (0.007) (0.001) (0.007) (0.004)
Political stability −0.073 0.055 0.331** 0.017 0.150 0.418***
(0.155) (0.069) (0.136) (0.036) (0.132) (0.149)
Constant −2.269 3.487 2.303 0.494 1.278 2.291
(2.416) (2.388) (1.793) (0.560) (1.675) (2.388)
Observations 488 544 556 456 456 556
Number of countries 47 48 48 46 48 48
Number of instruments 29 33 42 34 47 30
AR(1) 0.084 0.057 0.088 0.082 0.092 0.005
AR(2) 0.237 0.734 0.135 0.327 0.135 0.753
Hansen OIR 0.786 0.818 0.815 0.205 0.916 0.248
Note: Robust standard errors reported in parentheses.
Abbreviation: AR, arellano‐bond test for autocorrelation; ODA, official development assistance; OIR, over‐identification restrictions.
*p < 10%.; **p < 5%.; ***p < 1%.

political stability increases access to these two basic services only for the rural population. However, we find that ethnic
fractionalization reduces access to drinking water and sanitation. This result is consistent with the study by Churchill
et al. (2017) showing that ethnic fractionalization has a negative effect on access to safe drinking water and sanitation.
We also find that urbanization reduces access to safe water and sanitation. This result can be explained because
urbanization in many African countries is done in a relatively anarchic way, which makes it very difficult to provide
drinking water and sanitation in the absence of appropriate urbanization policies.

4.2 | Comparison between oil abundance and oil dependence

Recent studies such as Badeeb et al. (2017) and Lashitew and Werker (2020) show that the distinction between natural
resource abundance and natural resource dependence leads to a new debate on the validity of the resource curse
TADADJEU ET AL. | 61

hypothesis. Indeed, the literature has produced mixed results regarding the effects of abundance and dependence on
natural resources, as the impact is largely context‐dependent. Thus, to contribute to this current debate and also to test
the robustness of our results to the use of an alternative measure of oil rent, we maintain our previous indicator (oil
rent) and use the logarithm (plus one) of oil revenues per capita as a measure of oil abundance. Following Lashitew
and Werker (2020), we first regress the effect of oil abundance on access to drinking water and sanitation (see Table 4),
and then simultaneously estimate the effect of oil dependence and oil abundance (see Table 5).
The results presented in Table 4 show that oil abundance has a negative and statistically significant effect on access
to water and sanitation for both the total population and urban and rural populations. A comparison with the
dependence effects reported in Table 3 suggests that oil abundance has a negative and greater individual effect on
access to drinking water. For access to sanitation, however, the individual effects are roughly the same magnitude. In
Table 5, where we simultaneously include oil abundance and oil dependence in the same regression, only the oil
dependence indicator remains negative and statistically significant from column (1) to column (5). However, oil

TABLE 4 Effect of oil abundance on access to drinking water and sanitation

Water total Water urban Water rural Sanitation total Sanitation urban Sanitation rural
Dep. variables (1) (2) (3) (4) (5) (6)
Dep. variables (t − 1) 0.960*** 0.935*** 0.994*** 0.983*** 0.963*** 0.978***
(0.010) (0.021) (0.019) (0.005) (0.017) (0.015)
Oil abundance −0.087* −0.148*** −0.125*** −0.041** −0.033*** −0.046***
(0.049) (0.041) (0.032) (0.017) (0.010) (0.016)
Income (ln) −0.199 0.491** −0.109 0.174* −0.167 0.036
(0.314) (0.233) (0.221) (0.103) (0.191) (0.236)
ODA −0.015 −0.008 −0.011 0.009*** 0.003 −0.009
(0.023) (0.005) (0.009) (0.003) (0.002) (0.006)
Urban population −0.001 −0.003 0.008 0.005 0.025 0.002
(0.013) (0.017) (0.017) (0.005) (0.019) (0.010)
Trade 0.010*** 0.011*** 0.003 0.005*** 0.003 0.009**
(0.003) (0.004) (0.008) (0.001) (0.004) (0.004)
Ethnic fractionalization 1.492 1.825 −0.135 −2.387*** −6.821** −4.701***
(1.216) (2.008) (0.675) (0.866) (2.711) (1.397)
Education 0.006 −0.000 −0.010 −0.001 0.003 0.003
(0.005) (0.005) (0.014) (0.001) (0.005) (0.004)
Political stability 0.265 0.098 0.232* 0.027 0.029 0.088
(0.204) (0.165) (0.126) (0.062) (0.073) (0.076)
Constant 3.065 1.308 2.958* 0.961 6.128*** 2.878
(2.808) (3.185) (1.517) (0.761) (2.085) (1.872)
Observations 422 567 567 567 568 568
Number of countries 46 48 48 48 48 48
Number of instruments 35 41 40 33 27 26
AR(1) 0.053 0.092 0.087 0.031 0.000 0.081
AR(2) 0.218 0.441 0.895 0.904 0.102 0.978
Hansen OIR 0.894 0.990 0.492 0.848 0.662 0.655
Note: Robust standard errors reported in parentheses.
Abbreviation: AR, arellano‐Bond test for autocorrelation; ODA, official development assistance.
*p < 10%.; **p < 5%.; ***p < 1%.
62 | TADADJEU ET AL.

TABLE 5 Oil dependence and oil abundance in the same regression

Water total Water urban Water rural Sanitation total Sanitation urban Sanitation rural
Dep. variables (1) (2) (3) (4) (5) (6)
Dep. variables (t − 1) 0.966*** 0.958*** 0.944*** 0.983*** 0.958*** 0.982***
(0.021) (0.015) (0.011) (0.007) (0.012) (0.008)
Oil rent −0.104** −0.026*** −0.083*** −0.010** −0.015** 0.004
(0.046) (0.009) (0.012) (0.005) (0.007) (0.003)
Oil abundance 0.416 −0.002 0.080 0.046 −0.056* −0.035*
(0.258) (0.028) (0.059) (0.032) (0.032) (0.019)
Income (ln) −0.130 0.457 0.456** 0.012 −0.046 −0.213
(0.588) (0.305) (0.217) (0.124) (0.230) (0.208)
ODA −0.014 −0.010 −0.001 0.003 0.004 −0.005
(0.012) (0.008) (0.009) (0.002) (0.004) (0.004)
Urban population −0.022 −0.027 −0.002 0.002 0.055*** 0.003
(0.020) (0.017) (0.013) (0.004) (0.014) (0.007)
Trade 0.012* 0.009* 0.003 0.003*** 0.002 0.006***
(0.006) (0.005) (0.002) (0.001) (0.002) (0.001)
Ethnic fractionalization 0.948 2.702 −0.599** −1.543*** −2.191*** −3.981***
(1.957) (1.806) (0.304) (0.401) (0.771) (0.697)
Education 0.009 0.002 0.025*** 0.001 −0.004 0.005**
(0.009) (0.005) (0.005) (0.002) (0.003) (0.002)
Political stability 0.819** 0.181 −0.142 0.283*** 0.086 0.282**
(0.366) (0.140) (0.144) (0.096) (0.091) (0.111)
Constant 2.447 −0.475 −1.400 1.588*** 2.489* 4.016***
(5.308) (2.478) (1.376) (0.590) (1.324) (1.262)
Observations 450 568 530 566 453 568
Number of countries 47 48 47 48 46 48
Number of instruments 39 34 37 34 38 40
AR(1) 0.074 0.085 0.099 0.036 0.069 0.039
AR(2) 0.617 0.256 0.595 0.262 0.191 0.618
Hansen OIR 0.969 0.974 0.660 0.469 0.614 0.746
Note: Robust standard errors reported in parentheses.
Abbreviation: AR, arellano‐Bond test for autocorrelation; ODA, official development assistance.
*p < 10%.; **p < 5%.; ***p < 1%.

abundance has a negative and weakly significant effect on access to sanitation for the urban and rural populations,
respectively. These results imply that only oil dependence has an independent and significant effect on access to basic
services, although both measures individually have a significant effect.

4.3 | Can EITI lift the oil curse?

We analyse whether African countries' adherence to the EITI can break the resource curse. We focus on countries that
are more dependent on natural resources because the EITI aims to improve transparency in this group of target
countries.3 The estimation results are summarized in Table 6. We find that the coefficient associated with the
TADADJEU ET AL. | 63

interaction variable is positive and significant in columns (1) to (5) suggesting that the commitment of resource‐rich
African countries mitigates the negative effect of oil rent on access to drinking water and access to sanitation. The
computations of the total effects of the oil rent, however, are negative. This shows that the effect of the EITI com-
mitment partially mitigates the oil curse. This result is similar to that of Mawejje (2019), showing that EITI countries'
adherence to EITI has had a small positive effect on non‐oil revenue mobilization in sub‐Saharan Africa and only
partially offsets the negative impact of natural resource dependence on non‐resource tax revenues.

TABLE 6 Oil rent and access to drinking water and sanitation the role of EITI commitment
Water total Water urban Water rural Sanitation total Sanitation urban Sanitation rural
Dep. variables (1) (2) (3) (4) (5) (6)
Dep. variables (t − 1) 0.736*** 0.992*** 0.992*** 0.921*** 0.929*** 0.954***
(0.093) (0.024) (0.012) (0.036) (0.033) (0.013)
Oil rent −0.199** −0.109** −0.097** −0.043** −0.028* −0.025***
(0.098) (0.045) (0.049) (0.019) (0.016) (0.007)
EITI commitment 0.690 −1.025 −0.597 0.278* 0.151 0.006
(2.316) (0.944) (0.423) (0.161) (0.247) (0.088)
Oil rent × EITI commitment 0.115* 0.093* 0.072* 0.023** 0.029* 0.0002
(0.069) (0.052) (0.044) (0.010) (0.016) (0.006)
Income (ln) −1.497 1.514 0.754 0.937 0.716 0.712**
(3.102) (1.117) (0.604) (0.637) (0.667) (0.298)
ODA −0.056 −0.039 0.002 0.025* 0.074*** −0.003
(0.093) (0.042) (0.025) (0.015) (0.027) (0.004)
Urban population 0.037 −0.108** −0.042* 0.025 −0.003 −0.041***
(0.143) (0.054) (0.023) (0.027) (0.017) (0.015)
Trade 0.054 0.048** 0.020 −0.002 0.037*** 0.020***
(0.051) (0.022) (0.014) (0.006) (0.012) (0.004)
Ethnic fractionalization −6.821 2.823 −0.317 −10.217*** −6.591*** −6.936***
(9.971) (4.142) (2.036) (3.542) (1.809) (1.385)
Education 0.058 0.028 −0.012 0.005 0.001 −0.001
(0.083) (0.039) (0.008) (0.007) (0.013) (0.002)
Political stability 0.408 0.300 0.534** 0.007 0.123 0.363***
(1.244) (0.599) (0.271) (0.154) (0.276) (0.124)
Constant 23.636 −11.962 −1.212 2.061 0.695 2.130
(26.948) (10.669) (3.852) (4.085) (5.095) (2.109)
Observations 335 333 236 279 262 335
Total effect of oil rent −0.084 −0.016 −0.024 −0.020 0.001 na
Number of countries 36 35 33 32 34 36
Number of instruments 21 21 33 32 34 34
AR(1) 0.086 0.006 0.067 0.011 0.040 0.085
AR(2) 0.850 0.146 0.165 0.845 0.398 0.236
Hansen OIR 0.380 0.306 0.990 0.922 0.977 0.705
Note: Robust standard errors reported in parentheses.
Abbreviations: AR, arellano‐Bond test for autocorrelation; EITI, Extractive Industries Transparency Initiative; na, not applicable because at least one estimated
coefficient needed for the computation of the total effect is not significant; ODA, official development assistance.
*p < 10%.; **p < 5%.; ***p < 1%.
64 | TADADJEU ET AL.

Given that EITI implementation is a process involving distinct successive steps, we now examine whether these
different steps, including candidacy (see Table 7) and compliance (see Table 8), influence the tendency of resource‐rich
countries to experience low levels of access to drinking water and sanitation. The results of Table 7 show that the
coefficients on the interaction variable are all positive and statistically significant (except for columns [4] and [5]). This
suggests that the candidate status of resource‐rich African countries in the EITI mitigates the negative effect of oil rent

TABLE 7 Oil rent and access to drinking water and sanitation the role of EITI candidate
Water total Water urban Water rural Sanitation total Sanitation urban Sanitation rural
Dep. variables (1) (2) (3) (4) (5) (6)
Dep. variables (t − 1) 0.914*** 0.935*** 0.984*** 0.937*** 0.984*** 0.895***
(0.088) (0.047) (0.018) (0.017) (0.054) (0.013)
Oil rent −0.331** −0.055*** −0.081* −0.020*** −0.047** −0.040***
(0.148) (0.017) (0.045) (0.008) (0.022) (0.009)
EITI candidate −1.651 −0.025 0.117 0.069 0.625** −0.067
(1.611) (0.218) (0.467) (0.110) (0.269) (0.082)
Oil rent × EITI candidate 0.220* 0.031* 0.066* 0.003 0.004 0.006*
(0.115) (0.018) (0.037) (0.007) (0.015) (0.004)
Income (ln) 2.107 0.566 0.499 0.501 1.144 1.056**
(2.063) (0.867) (0.791) (0.308) (0.710) (0.473)
ODA 0.095 0.084** −0.032 −0.008 0.086** −0.003
(0.069) (0.041) (0.027) (0.006) (0.038) (0.005)
Urban population −0.017 −0.015 −0.066** −0.002 −0.037* −0.038
(0.152) (0.033) (0.033) (0.019) (0.018) (0.025)
Trade 0.091* 0.010 0.027** 0.009* 0.024*** 0.025***
(0.049) (0.013) (0.014) (0.005) (0.008) (0.006)
Ethnic fractionalization −8.569 2.969 −2.626 −8.095*** −3.835 −11.937***
(6.582) (2.615) (3.341) (2.250) (5.426) (1.794)
Education −0.005 −0.018 −0.004 0.001 −0.009 0.002
(0.021) (0.014) (0.011) (0.005) (0.005) (0.003)
Political stability 1.308 0.466 0.550 −0.035 0.006 0.033
(0.833) (0.440) (0.363) (0.103) (0.245) (0.119)
Constant −6.469 1.785 2.045 3.942 −4.138 3.638
(12.392) (9.689) (7.475) (3.359) (3.743) (3.191)
Observations 281 335 261 309 309 335
Total effect of oil rent −0.111 −0.024 −0.015 na na −0.034
Number of countries 33 36 33 34 34 36
Number of instruments 30 25 22 34 29 34
AR(1) 0.093 0.005 0.067 0.071 0.069 0.044
AR(2) 0.427 0.277 0.121 0.169 0.584 0.694
Hansen OIR 0.953 0.562 0.334 0.585 0.862 0.717
Note: Robust standard errors reported in parentheses.
Abbreviations: AR, arellano‐Bond test for autocorrelation; EITI, Extractive Industries Transparency Initiative; na, not applicable because at least one estimated
coefficient needed for the computation of the total effect is not significant; ODA, official development assistance.
*p < 10%.; **p < 5%.; ***p < 1%.
TADADJEU ET AL. | 65

TABLE 8 Oil rent and access to drinking water and sanitation the role of EITI compliant
Water total Water urban Water rural Sanitation total Sanitation urban Sanitation rural
Dep. variables (1) (2) (3) (4) (5) (6)
Dep. variables (t − 1) 0.881*** 0.978*** 0.977*** 0.940*** 0.915*** 0.996***
(0.058) (0.034) (0.021) (0.051) (0.032) (0.011)
Oil rent −0.133** −0.032** −0.038** −0.059** −0.054*** −0.017**
(0.055) (0.014) (0.018) (0.024) (0.018) (0.008)
EITI compliant −2.108 −0.318 −0.383 −0.410 −0.123 0.329
(1.306) (0.204) (0.413) (0.327) (0.233) (0.209)
Oil rent × EITI compliant −0.431 0.062* 0.078 −0.019 0.041* −0.053
(0.420) (0.037) (0.104) (0.034) (0.025) (0.034)
Income (ln) 3.013 0.318 −0.478 1.627** 0.656 0.824**
(2.157) (0.470) (0.694) (0.736) (0.731) (0.344)
ODA −0.109* 0.006 −0.014 0.037*** 0.053* 0.048***
(0.056) (0.010) (0.009) (0.012) (0.031) (0.011)
Urban population −0.048 −0.018 −0.014 −0.014 0.009 −0.027**
(0.104) (0.017) (0.037) (0.029) (0.030) (0.013)
Trade −0.037 0.003 0.013*** 0.026*** 0.027*** 0.005
(0.029) (0.004) (0.003) (0.008) (0.006) (0.003)
Ethnic fractionalization 5.102 0.513 1.237 −7.088* −10.252*** −3.413***
(7.374) (1.766) (2.242) (4.156) (3.603) (0.878)
Education 0.123** −0.009 −0.021 0.014 −0.011 −0.004
(0.046) (0.012) (0.016) (0.010) (0.009) (0.006)
Political stability −0.543 0.567*** 1.496*** −0.252 −0.225 0.041
(0.875) (0.164) (0.274) (0.212) (0.192) (0.184)
Constant −23.090 1.740 7.988 −6.657 5.339 −2.112
(14.288) (4.930) (4.877) (4.523) (5.111) (2.391)
Observations 335 335 335 287 287 287
Total effect of oil rent na 0.030 na na −0.012 na
Number of countries 36 36 36 34 34 34
Number of instruments 23 32 22 31 30 24
AR(1) 0.098 0.000 0.025 0.065 0.078 0.022
AR(2) 0.245 0.622 0.158 0.203 0.351 0.708
Hansen OIR 0.714 0.901 0.652 0.596 0.892 0.790
Note: Robust standard errors reported in parentheses.
Abbreviations: AR, arellano‐Bond test for autocorrelation; EITI, Extractive Industries Transparency Initiative; na, not applicable because at least one estimated
coefficient needed for the computation of the total effect is not significant; ODA, official development assistance.
*p < 10%.; **p < 5%.; ***p < 1%.

on access to drinking water and sanitation for both the total population and urban and rural populations. Thus, once
the EITI application has been accepted, countries publish annual implementation reports on the initiative. This
implementation promotes transparency in the management of oil royalties to improve investments in sectors such as
drinking water and sanitation. In addition, as suggested by Mawejje (2019), joining the EITI can improve the quality of
spending related to natural resource revenues by improving the social contract between governments and citizens.
66 | TADADJEU ET AL.

Thus, the candidate status of African countries provides a mechanism for improving the management of oil revenues
and increasing the access of populations to basic services.
The results in Table 8 show that the coefficients on our interaction variable are also positive and statistically significant in
columns (2) and (5). This suggests that the compliance status of resource‐dependent African countries mitigates the negative
effect of oil rent on access to drinking water and sanitation only for the urban population. Compared to the candidature stage,
we find that compliance has fewer beneficial effects. This result can be justified by the fact that, given the long lead times for
implementation, the changes and effects of EITI Compliance will only be felt over long periods of time, and the detectable
effects on improving access to safe drinking water and sanitation will only be felt several years after full implementation of the
standard. Moreover, our data shows that most African states achieved compliance status in 2013, and our study period is
limited to the year 2015. Therefore, the effects of compliance may not yet be fully apparent.

5 | C O N C L U S IO N A N D PO L I C Y I M P L I C AT I O N S

This study aimed to analyse the role of the EITI in the relationship between oil dependence and access to drinking water and
sanitation in a panel of 49 African countries, with data covering the period 1996–2015. By applying the two‐step system GMM,
we provide evidence of the negative and significant effect of oil dependence on access to drinking water and sanitation for the
total population and urban and rural populations. In addition, we show that abundance and dependence on oil have negative
effects on access to drinking water and sanitation. These results suggest the resource curse on access to basic services. We
provide important information on the effectiveness of the EITI as a governance tool. Specifically, we show that the com-
mitment, candidacy and compliance of resource‐dependent African countries provides a partial protection mechanism against
the general trend of resource‐rich countries to experience low levels of access to safe drinking water and sanitation.
Two policy implications are drawn from our analyses. First, although countries that derive significant revenues from the
exploitation of natural resources such as oil cannot use them effectively to increase access to basic services for their popu-
lations, EITI implementation is helping to reverse this tendency. We propose that all African countries dependent on or
abundant in natural resources commit to the implementation of this initiative. Second, although the EITI has positive effects, it
is not a panacea for eliminating the resource curse. We, therefore, suggest that governments of countries that have achieved
compliance status continue efforts to improve governance to ensure universal access to drinking water and sanitation.

AC K N O WL E D G E M E NTS
The authors would like to thank the two anonymous referees of the journal, John C. Anyanwu (the editor), for their
helpful comments and suggestions on the earlier version of this article. However, any remaining errors is solely
attributable to the authors.

ENDNOTES
1
We used the first‐ and second‐order lag values of our dependent variables as instruments.
2
Abundance is measured as the quantity of extracted oil and gas multiplied by the unit price and divided by the population (oil and gas value
per capita) (O'Connor et al., 2018). According to previous studies (Wigley, 2017), we use the logarithm of this measure, given its per capita
structure. In contrast, oil rent is not used in logarithm because it is expressed as a percentage of GDP.
3
See Table 2 for the 36 countries retained as dependent on natural resources according to the World Bank.

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How to cite this article: Tadadjeu, S., Njangang, H., Ningaye, P., & Nourou, M. (2022). Oil dependence and
access to water and sanitation in African countries: Does the Extractive Industries Transparency Initiative
matter? African Development Review, 34, 54–67. https://doi.org/10.1111/1467-8268.12622