Thursday, December 25, 2008

Lessons for the Oil Rich Ghana: 2010 and Beyond

Much has been written of late about Ghana’s oil discovery and the impact that this will have on its economy. However, this perceived positive impact should not be taken for granted because this has not been the story of other oil rich African countries. The government and the people should have a clear vision on how best to utilize the proceeds to the benefit of all. In this regard, there is the need to set out clear goals, strategies, plans and policies that will serve to boost the economy, create the environment for sustainable development, investment and to lift the masses out of poverty. Sustainable development particularly needs to be attained from such exploitation, so that the ideals of economic, environmental and social upliftment (job creation, and others) are attained in Ghana. After 50 years, this country should not be at the point where many of its parts have no clean drinking water, adequate education facilities, suffer from energy shortages and ecological problems.

The discovery of oil in itself is not enough to promote development in any given economy. Rather, it is the strategies, the economic framework and policy decisions that the government institute, creates the environment for investment, noting that governments by themselves do not create wealth, but the private sector is the engine of wealth creation. Hence, the discovery of oil reserves in Ghana should now enable the government to create economic policies that can help the economy to improve. It is incumbent on the government to provide the security, infrastructure and a tax regime that encourages investment as well as entrepreneurship. This should start with good governance, accountability and a sense of duty and the politicians not seeing this as an opportunity to enrich themselves at the expense of the nation and its people The government should ensure that agreements entered into with investors and multilateral organizations are not to the detriment of the country (so far as somebody gets a per centage, policy makers sometimes sell their conscience). They should also adopt a participatory approach to decision-making, bearing in mind the consequences of their decisions. As Ghana contemplates exploiting its newly discovered oil reserves from its Western Region in the post 2010 years, there are some fundamental issues for consideration. The extent to which such production should be effected to resolve relevant socio-economic problems of the country including unemployment must also be borne in mind. This can be done through the development and implementation of prudent fiscal policies human resource strategies and incentives for businesses to flourish .

The government of Ghana should ensure that in the post-2010 era, contractual obligations for the expatriate companies include a good percentage of local Ghanaians who will be hired in the oil industry. In the past, Africa has generally had such problems as far as implementing such obligations are concerned. Such situations also help prevent conflicts as has occurred in Nigeria’s Niger Delta region, Equatorial Guinea, Congo Brazzaville and Gabon, where local groups have manifested their anger at the way oil has been unequally distributed. This has sometimes resulted in a great deal of violence and loss of lives.

In the exploitation of the oil, the government should further ensure that there is direct benefit to Ghanaians, through employment and wealth creation. For the past few decades, this country has experienced high levels of unemployment. A case in point is the unprecedented degrees of unemployment when students complete their university studies. One solution they find is to leave the country in search of high salaried jobs and good standards of living in developed countries. This compounds the brain drain problem which confronts this country.

The extent to which employment and career opportunities can be made sustainable is through the revitalization of its educational institutions. The universities and higher education institutions should ensure that the courses taught are relevant to the current market needs of the globalised economy, so that we have the right skills to match the country’s development needs. In this regard, skills which are relevant to the oil industry and its ancillary industries must be incorporated into to the educational curricula, so as to make Ghanaian students employable in this industry. These skills include Petrochemical Engineering, Environmental Engineering and Information Technology. Lecturers and Education Officers at these institutions might need to review the existing curricula and re-train people so as to match them to the new skills of study, as far as such courses are concerned. For those who have already completed some of these courses, it is necessary to upgrade their skills so as to make them more marketable.

Ghana’s government also needs to ensure that companies adhere to ecological principles, for the avoidance of the Niger Delta situation, where oil exploitation in Nigeria has caused some incidents of pollution in this region, and the area still remains under-developed. Furthermore, in Ghana itself, areas such as Ahafo, Prestea, Tarkwa and some mining towns have been polluted by careless disposal of mining wastes and chemical accidents. These areas have still not been developed with schools, hospitals, adequate infrastructure and similar facilities. Hence, it is time for Ghana to avoid repeating this unfortunate trend. In its oil industry, governmental strategy should require that foreign firms provide standard facilities to benefit people in their areas of operation. These facilities should include schools, hospitals, pipe borne water and safe recreational grounds. These firms should also dispose of their waste and chemicals responsibly. These are essential tools which could help Ghana overcome some of its poverty problems, and meet the requirements of MDG1, on the eradication of extreme poverty and hunger, and MDG 7 on environmental sustainability. In the event of non-adherence to its obligations, Ghana’s laws also need to clearly stipulate which punitive measures will be made available and how these measures will be implemented for any firms-local and foreign.

The drilling of oil does not mean that Ghana should solely rely on this resource, only to be disappointed when prices fluctuate and the reliance on the use of fossil fuels over the next twenty years declines. If history teaches us anything at all, we should use the past to make informed decisions for the future. Oil might not be the only energy source over the next two decades. The country should not be lured into a false sense of economic security in terms of its sole reliance on this so-called cash bonanza. The oil industry should therefore be used as a platform or a means to diversify the economy by investing in other sectors such as ecotourism which can generate income and create jobs, bearing in mind that the proceeds from oil fluctuate from time to time.

Ghana should be mindful of the insecurity that the discovery of “black gold” can generate. This is because the moment money is gained and not spread equally, it creates a environment for conflict, where people take up arms because they feel that the proceeds of such resources do not have a trickling down effect on their lives.

In effect, Ghana should learn from past experience and ensure that the oil does not become a curse. Ghanaians should no suffer from the curse of the “black gold”. We should have a more mature outlook on how to utilize the proceeds. Our oil level might not be the same as the Gulf Corporation Countries (GCC). However, we could learn from how these countries have used the proceeds from the petrol dollars in a rather shrewd manner, to develop and diversify their economies, to the envy of the developed world. The citizens of Ghana deserve a much better deal that what they have been subjected to, since independence. This is a chance in a lifetime to correct the mistakes of the past and the world at large is watching that the black star of Africa will rise again and shine brightly by showing vision, and prudence in the allocation as well as the utilization of resources.


Ebow Idun