Ghana narrowly averts oil curse

Ghana took a bold step last week to save its name from being added to the tall list of resource-rich countries whose fortunes have slipped into the mire following political upheavals that characterized expected booms from such natural resources.

The peaceful transition followed a nerve-wracking contest between the candidate of the then incumbent National Patriotic Party (NPP), Nana Addo Dankwa Akuffo Addo and the candidate of the opposition National Democratic Congress (NDC), Professor John Evans Atta Mills.

On December 29, after a heated Presidential run-off, Ghana came to a standstill, and many observers, both local and international were eagerly waiting to conclude their notes as to what the country’s oil find was contributing to its young democracy.

Like many of his contemporaries in opposing parties, Kwesi Botchwey, a Former Minister of Finance and Economic Planning and now Lecturer of Economics at Tufts University, Massachusettes, was of the view that the 2008 elections would see Ghana at the crossroads of prosperity and doom.

Speaking at a recent Economic Development Lecture organised by the University of Ghana, Professor Kwesi Botchwey noted that he anticipated a “Dutch Disease in Ghana”, saying that “the mentality developed by some people that they discovered oil and thus should be allowed to manage it served as a breeding ground for disaster”.

This was against the backdrop that many Ghanaians acknowledged that the exploration project had begun over 20 years before the eventual success of the exercise. This thus created grounds for bitterness among opposition parties which eventually fed into the tensions that characterised the elections.

Learning from other country examples, all stakeholders in the oil industry had come together in September 2008 to develop an oil policy. The forum came up with policy propositions to ensure the effective management and utilization of Ghana’s oil resources and revenues.

And indeed, all two major contending parties in the 2008 elections had similar plans on oil management issues such as the setting up of an independent body to manage expected oil revenues and the need to develop other productive sectors of the economy, particularly agriculture and industry, with such revenues to prevent a neglect of these sectors. The contention was thus over which government should start in the driving seat.

The hard work of the independent Electoral Commission, the nation’s security forces, a number of peace loving Ghanaians and the sense of magnanimity exhibited by the immediate past President, John Agyekum Kufuor contributed to the narrow escape from the canker bedeviling most resource rich countries that has been christened ‘Dutch Disease’.

Ghana is now back on track and well poised to see a transformation of its economic fortunes with a push from oil revenue. The country, which is already endowed with enviable natural resources such as gold, diamond, timber and significant cocoa harvests, expects to be a net exporter of oil by 2012.

A number of experts in oil this paper talked to were contented with the turn of events, and pointed out that, the next major hurdle would be to ensure a trickling down of the oil benefits to the average Ghanaian and those in the resource region in particular, to avert the likes of the Delta Region’s upheavals in Nigeria.

The realization of oil, usually referred to as “black gold” has been normally deemed a golden opportunity for the resource rich country’s economic breakthrough, but experiences in African countries such as Nigeria, Equatorial Guinea and Sudan have proven otherwise.

Political upheavals that stem from a ‘winner takes all mentality’ have rather turned back the clock of development in these economies.

It is not surprising then that the African continent that accounts for over 10% of global oil production is home to the largest percentage of the worlds poor.