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Ghana’s oil boom: blessing or curse?
By Mark Broad
Economics producer, Accra, Ghana
Deep below the Gulf of Guinea lies the key to Ghana’s economic future. After decades of casting jealous looks at its oil rich-neighbours, the taps of Ghana’s very own oil boom are about to open. As the oil starts to flow, so, Ghanaians hope, will the money needed to move the country into the next economic league. But as many oil-rich African nations have found, oil is as likely to be as much of a curse as a blessing. Gold, cocoa and oilMost countries would settle for an abundance in one lucrative natural commodity. Ghana can now boast quite a collection.
Having built an economy on its rich gold reserves, plentiful supply of timber and extensive cocoa plantations, the country will soon have a new resource to sell. Ghana’s offshore oil wells are set to start pumping in 2010 with predictions that they could eventually produce some 10 billions barrels of oil. And despite the fall in the price of and demand for oil during the global recession, the Ghanaian government remains confident that an oil windfall will deliver all that it has promised. “In 10 years time Ghana will be a very prosperous nation,” says finance minister Kwabena Duffuor. “We will be an oil exporter, doing very well in gold mining and with a strong financial sector – we will have a very buoyant economy’, he says. Oil prosperity To make the most of the new oil fields, the government has transformed the Ghana National Petroleum Company (GNPC) to ensure it can cope with the demands of oil extraction.
GNPC has entered into a joint agreement with a number of foreign oil companies to help extract and deliver the oil. While Ghana may be short on domestic oil industry expertise, it’s not short on people wanting to lend a hand. Earlier this year, Norway sent a government delegation to advise the Ghanaian government to offer their knowledge on dealing with the country’s oil find. The offer came after Kofi Annan, the former UN secretary general, contacted the Norwegian government keen to make sure that his native country avoided the “oil curse”. It is now expected that Ghana could develop a fund for oil revenues similar to Norway’s 322bn (197bn) sovereign wealth fund. Failing neighbours Ghana does not have to look far for examples of “worst-practice” oil industry development.
Just down the coast lies the rich oil region of the Nigerian Delta, one of the most dangerous parts of West Africa. “There are a million lessons that Ghana can learn from Nigeria,” says Duncan Clarke, an oil expert at Global Pacific & Partners. “From the parking of oil funds abroad, to the direct plundering of state resources and simple corruption, Ghana has plenty of things to avoid,” he says. A living for the locals One of the major concerns in Ghana is that the country’s population will not be able share in the oil boom. “An offshore oil business can be designed so that no oil actually comes on shore, limiting the ability of locals to benefit,” says Tutu Agyare, of London-based Nubuke Investments.
“If locals do not have the skills and access to the oil industry, then you end up with a situation where people are very aggrieved.” The Ghanaian government has asserted that its oil find will be of benefit to the whole of the country, but many are concerned that good intentions may not turn into reality. “Spreading the wealth among the population is much easier said than done,” according to Mr Clarke. “There are plenty of examples in developing economies where this has not happened.” Crude hopes? With the oil not set to flow for another year, the government is working hard to manage the country’s soaring expectations. For charity workers in the country, the oil find offers a one-off opportunity to boost the living standards of the poorest members of society. Martin Derry, of the the non-governmental organisation Pronet North, believes that once the oil funds start to flow, people will need to be patient before they see any improvements to their lives. “Once the oil revenue arrives I expect the government to channel it into the deprived Northern area of Ghana, but I don’t see that happening any time soon,” he says. But while the doubts and worries persist, both inside and outside the country, the Ghanaian government remains resolutely optimistic. “We’ve seen what others that have found oil have gone through and we’ve looked at their mistakes,” says Dr Kwabena Duffuor. “Our oil will be a blessing and not a curse.”
Source:BBC