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Opinions of Saturday, 15 March 2008

Columnist: Ayisi, Gabriel A.

Oil And Ghana's Future

In the wake of Ghana’s oil find in commercial quantities, the President has stated that “our oil find must be appreciated as a national asset whose management must be above sectional interests.” This is well said and we have to commit to this statement in all sincerity. In addition, Mr. Erik Solheim, the Norwegian Minister of Environment and International Development who recently visited the country also said, “It is important to accept that the revenue from oil belonged to the people and not the politicians or businesses.” In this regard, every Ghanaian must feel the positive blessings of our new found fortune (oil wealth). Even the new born must feel that it has been born into a living environment, where children do not die before their fifth birthday.

Nigeria, a leading producer of oil, is the 10th largest producer of crude oil in the world and the fifth largest supplier of oil to the US since its oil discovery in 1956. As of January 2007 Nigeria had 36.2 billion barrels of proven oil reserves. To date Nigeria has made about $650 billion in profits but has very little to show for it. Despite the oil profits, 70% of the 130 million Nigerians live on less than $1 a day with life expectancy barely topping 50 years (www.zmag.com). In the Niger Delta where most of the oil reserves are found, “the rivers have been polluted. The fish in the local rivers used to be one of the main sources of food for the poor. Now, that is gone. Agricultural land has also been heavily polluted and can no longer grow food.” (www.marxist.com). Research information has it that Shell has shipped oil from Nigeria for over 50 years, leaving the Niger Delta undeveloped and in worst condition than it had found it in. According to Ken Wiwa, the son of the late Ken Saro Wiwa, Nigeria earns about $30Billion a year from oil (from 1990 to 2000), but the country has somehow managed to amass an external debt of $40 billion without much to show for it in terms of capital investment or infrastructure. Sadly, despite being a heavy weight in the oil production, Nigeria’s refining capacity is currently insufficient to meet local demand with queues forming everyday in a country awash with oil reserves. Ironically, Nigeria now imports petroleum products

The above is an indication that Ghana needs to be very circumspect with how it handles the emerging oil boom. Most importantly, the government must make sure that the oil companies take business and social responsibility seriously in order to avoid any social costs, such as pollution and land degradation, accruing to the people of Ghana. A little of the social costs has already taken place in Ghana where cyanide spills have occurred in local rivers as a result of the activities of mining companies. In addition to avoiding social costs, the oil companies must address the provision of social benefits such as the provision of roads, water, clinics, hospitals, schools, scholarships, computer, jobs, etc to improve the lot of the local communities.

From a moral standpoint, in order to safeguard our oil revenue, churches have to preach against the squander of public funds to stem such behavior. The public should also stop adulating those who misappropriate public funds for themselves, their families and their friends. Heavy punishment laws must be enacted to fight corruption. Our justice system must be emboldened enough to bring such crooks and recalcitrants to book irrespective of the person’s social, economic, or political standing. In addition, our national security apparatus must be streamlined and strengthened for the economy to develop within a peaceful atmosphere and ensure maximum stability required for a harmonious socio-economic development, translating into sustained, concrete, incremental, and equitable development.

The expected oil windfall is an opportunity for the government to take pragmatic and concrete steps to reverse the brain drain permanently. The country will need the entire Ghanaian technocrats in all fields in the diasporas to come home and offer their specialized knowledge and services to support the local ones in the harnessing of our capabilities towards the quantum take off of the Ghanaian economy: technocrats in the oil industry, the banking sector, the technology and communications sectors, the medical sector, the management sector, the transportation (roads, ports and harbors), the civil engineering sector, the health sector, academia, environmental specialists, must all be enticed to come home and lend a helping hand as has happened with India and Singapore. We must take advantage of this technology transfer which is readily available at our disposal now and start to train new and additional personnel and technicians in all these fields with immediate urgency.

This is the opportune time to set bold, challenging, but doable benchmarks, barring Sub-standard parameters, by planning religiously within laid down time lines against which we will compare our development progress to make sure we are being effective in our development objectives. But being merely effective may not be enough. We must make sure that that our development progress is also efficient, in that, we use the least resources as possible in achieving our objectives without cutting corners. This means we must eschew waste, apathy, corruption, lack of foresight and lack of accountability.

The recent energy crises that have befallen Ghana smacks of governments that are only reactive instead of being proactive as well. It smacks of governments that fail to be forward thinking and governments without a sound and shared vision. How can we declare Golden Age of Business without making sure, at least, that there will be adequate energy to power the various businesses, let alone entice Direct Foreign Investments? In an age of industrialization, and computerization, we cannot afford power outages. Should this happen, the whole country grinds to a virtual standstill. The author was in Ghana in 2006, September to be precise, when Kotoka International Airport experienced a blackout for more than two hours, leading some foreigners at the departure hall to vow not to visit Ghana again…a dent to tourism. The current power outages have also caused many businesses to lose their equipment and machinery. The mining industry has been hit very hard and there are reports that cat-scan machinery at our hospitals have also been damaged resulting in many untimely deaths. The negative ripple effects of these power outages are nothing to toy with and must be taken very seriously.

Developmentally, how well are we maintaining/managing our hospitals? Our hospitals are badly resourced and maintained and have been few with no new major ones being built despite the quantum increases in the country’s population. Take Accra for instance, its population has increased tremendously because of rural to urban migration, yet Accra can only boast of Korlebu, the Military and Police Hospitals. These hospitals were built when Accra’s population was 50% less than what it is today. The same thing applies to Kumasi. The only major hospitals the city has known for years, despite galloping increase in its population, have been KATH and KNUST hospitals. Unfortunately, all these are being allowed to skew disadvantageously despite increases in the population of the youth and a sizeable increase in the population of the elderly and retired.

Take any other sector of the economy, and you see much of the same. Our economic base has been mainly agrarian, limited to the production of raw materials with very little value added. Why can’t we incorporate some vertical integration into our productivity and venture into adding value to what we produce? Why do we have to export raw gold and diamonds cheaply for them to be made into very expensive jewelry in the west to be sold back to us at very high prices? We need to reduce the percentage contribution of agriculture to GDP by increasing the percentage contribution of industry/manufacturing, thus creating more employment opportunities. If Ghana wants to be competitive in the Global village, we need to broaden the country’s economic base.

Let’s take a look at conditions in the rural areas. The government’s poverty reduction measures have not trickled down to these areas. It appears nobody cares about living conditions in these areas. Most places are not even fit for habitation by humans. Instead of gradual improvements in some of these areas, there has been massive retrogression instead. If we want the rural areas to be attractive to investments, living conditions in these areas must be quantitatively and qualitatively upgraded. For example, major hospitals must be planned and cited in these areas supported by clinics. Our farmers, as for now, play the most important role in Ghana’s economy, yet, they are far removed from adequate health facilities with the majority of them relying on traditional and untested treatments and, in some cases, on quack doctors. Rural industries must be cited in these areas as well to encourage the youth to stay. Some form of economic activity (investment), apart from agriculture, need to be infused in these areas. This will call for the provision of good roads, electricity, water, etc.

Turning our attention to our road and railway networks, we have a situation where we have failed to maintain the road and rail systems we inherited from our colonial masters, much less, construct new ones despite the fact that the number of cars in the country has increased tremendously. At present, there must be super-highways (by-passing minor towns and utilizing tributaries to access them.) linking all major towns and cities in the country. This will not only spur economic activity but also reduce the high incidence of automobile accidents (about 10,000 Ghanaians lose their lives on our roads annually). For example, if one is driving from Accra to Sunyani, with no business in Kumasi, the person does not need to drive through Kumasi. Why haven’t we been able to extend our railway system to the North through Sunyani after 50 years of independence? Ghana’s development efforts must be coherent and sustainable. Ghanaians need to develop the culture of maintenance for sustainability. New and first class highways must be constructed from the north to the south: one in the western corridor, another in the central corridor and a third in the eastern corridor each of which could be accessed from the other at various strategic points. In much the same way, there must be superhighways linking the east to the west at various points: one along the coastal belt, two in the mid-section of the country and one in uppermost section of the country. All the north-south highways must be accessible at strategically selected points by the east-west routes.

Successive governments must maintain development projects started by the previous governments and not discard them, while at the same time being proactive, creative and forward thinking regardless. This is what the writer terms “concrete incremental development”. Governments, upon leaving office, must be able to show to Ghanaians what they have added to our development instead of just being rhetorical and maintaining just the status quo. We need creativity and innovation in our political dispensation. We need new and bold ideas from our political leadership that will move the country forward. Just look at what is happening in The United Arab Emirates. Why can’t we learn from the best and be competitive?

What about sanitation? Why can’t we rid Accra, Kumasi, and other major cities of filth? We have not been able to do this because policy makers and our political leadership have not made it a priority. In this modern day and times, every house in Accra and all other cities and towns must be required to construct water closets employing the use of septic tanks until we develop an elaborate and efficient sewage system. However, we need water to flush the waste. This is something our government must be concerned with. The government, however, has to make sure there is provision of adequate and constant running water before it can enact such a law. Nonetheless, this can be implemented, though, if we encourage the development and use of boreholes in all parts of the country. The author recently read that well water around Suhum area might cause cancer because of fertilizers seeping into the underground water. However, until we are able to treat the underground water for human consumption, we can, at least, use it to flush our waste, thus improving sanitation across the country. In Accra for example, it will stop the Coastal people from using our beaches to ease themselves. That done, we can turn all our beaches into revenue generating enterprises. The government should use its eminent domain powers and buy the coastal lands and develop them into world-class tourist sites as is being done in Dubai and other upcoming tourist destinations around the world.

The dust and flooding situation in Accra, Kumasi and other cities can be improved only if policy makers and the political leadership of the country make it a priority. What is the sense of having open gutters in Accra while the surrounding areas are not asphalted, cemented, or planted? We should do away with all open gutters. We need to stop building flat streets. Our streets should be gently/gradually convexed and asphalted with the edges raised to form curbs (replacing the unsightly gutters) resulting in a natural drainage system on both sides of the street, which empty into underground tunnels, and drainage system. This is what pertains in the western world. When it rains in the cities like New York City, the water running into the curbs and underground drainage systems are as clear as tap water or water that falls on the roofs with no sediments to block the drains. On the other hand, what happens when it rains in Accra? All the silt is washed into the gutters and refills the gutters causing them to overflow and block the drainage system resulting in severe flooding. The gutters are desilted and placed right on the edges of the gutters to be thrown back in again when the next rain comes. However, when it is not raining we experience dessert storms like Iraq, and the whole place gets dusty. As a matter of fact, the whole country is one big dust bowl. Simple solution…asphalt, cement or grow grass and other vegetation in all open areas. The government can enact a law and enforce it for every landlord to do this around his/her property including the space between the property all the way to the curb. We need to improve the look and sanitation of all our regional capitals, just like in the west. In America for example, there is not much of a difference between New York, Chicago, Atlanta, Columbus, Miami, and San Francisco, etc. The same pertains in Europe. Why can’t it happen in Ghana if we use the oil money judiciously?

Before we go globetrotting looking for investors, we must make sure our house is in order. If we do not, either the investors will not come or after they have invested, they will get frustrated, (with our constant power outages, and lack of constant flowing water), pack and leave the country to spread the bad news (word of mouth) around the world deterring other investors from coming to Ghana. The government, must ensure that the necessary infrastructure, constant flowing electricity and water, expanded and reliable communications system, conducive business environment, effective, efficient, and reliable court system, efficient transportation and ports systems, efficient health care delivery system, well equipped schools across the country, to mention, but a few, are in place if we want Ghana to progress towards a middle-income status. Successful economies depend on the above. The ordinary Ghanaian needs to see “concrete incremental development” and some form of improvement in his/her daily life.

The government needs to re-examine the role of the central government in society and pursue a rigorous decentralization to ensure availability and fair distribution of resources for equitable development. The regions must be macro managed from the regional capitals with micromanagement taking place out of the district capitals. The Northern region is too expansive to be managed from Tamale. It needs to be broken up into two regions: North-West Region and North-East Region.

Decentralization will also call for our District Chief executives to be subjected to elections. For our District Chief Executives (DCEs) to be effective, the constitution must be amended to allow them to be elected otherwise they will all become YES men and women who sing the master’s praises to the detriment of the rural population. This needs to apply to Municipal Chief Executives (MCEs) and mayors of all major cities in the country as well. African leadership should discard the idea of winner takes all. It has become the practice of leaders in most African countries to undermine or eliminate those who are not their declared partisans, feeling that those who are not actively for must be presumed to be against, but we can show political maturity if we are able to work with our political opponents without bias or prejudice . African leaders must learn to work with the opposition. Vice-versa, the opposition must criticize positively and provide better alternatives, instead of simply debunking and opposing recklessly every measure that is tabled by the ruling party.

Ghana’s underdevelopment has been the fault of our policy makers and political leadership. The country’s infancy in democratic dispensation has given birth to politics of envy and contempt among our political parties where exclusion is practiced: in the past, sitting governments have claimed sole ownership of economic policies and strategies, which, more often than not, results in successive governments wanting nothing to do with policies and projects started by previous governments. Cases in point in the history of the nation were what became of CPP’s projects under Kwame Nkrumah. Most of them, including the construction of the Bui Dam, were halted or destroyed during the days of political upheavals and adventurisms of some young, restless, very hungry, and misguided military personnel. Another is when the NPP discarded “Vision 2020” because it saw it as an NDC program. Now, the NPP has come out with its own development vision of making Ghana a middle-income economy by 2015. Under the present political climate, should the NDC win the next election, it is very likely that it will also set aside NPP’s 2015 objective.

It is about time we evolved a new system of governance regarding the way the country’s priorities are set, especially, how our economic policies are developed and implemented and how our meager economic resources are utilized. Why do we have to spend hundreds of millions of dollars to build a presidential palace when we do not even have enough power to assist our businesses? The energy situation, if not rectified within the shortest possible time, will prevent Ghana from achieving its stated goal of attaining a middle-income status by 2015.

The foregoing boil down to formulating proactive economic development policies that are followed through for accelerated and sustained economic growth. We need to restructure our development planning processes to reflect the changing times and the changing needs of the country. From the perspective of human capital development and utilization, the major stakeholders in every economy are the government, private industry and higher education. Whereas the government and private industry are the end users of trained manpower and the planners of the economy: the government at the macro level and private industry at the micro level within the constraints of government planning, it is higher education, which is responsible for the development of our human capital. In this regard, it is it is only pertinent that these three stakeholders formally liaise to provide a platform for the formulation of our national development objectives that will lead to a synchronized and sustained development of the economy. The government and private industry’s projections in terms of human resource requirements, as envisaged in their projections, must be communicated to higher education so that higher education can adapt its curriculum and graduation rates to these projections. In effect, they must have a shared vision by thinking together. These government and private sector manpower projected needs must also ensure that that there will be adequate job openings to absorb majority of the students upon graduation, thus stemming the loss of our human resources/intellectual capital and keeping them for an accelerated national development and sustained economic growth.

The country’s economic development processes need to be harmonized. However, the current situation and pace of development is more disjointed than uniform, where pronouncements are made and actions taken by various government agencies without consulting other agencies about their input or analyzing how the pronouncements will affect other sectors of the economy. A few examples of the results of such disjointed development processes are listed below:

How can we increase university graduation with the influx of private universities without correspondingly increasing job opportunities within the country? This results in a situation that fuels hyper-unemployment. Are the various programs being offered at the tertiary level relevant to Ghana’s economy? Are they developmentally appropriate? Who evaluates the relevance of these courses to the national economy? Questions to ask may include whether we, as a nation, are keeping pace with our natural growth. The answer is a resounding NO.

In order to avoid relying solely on oil revenue and to absorb the graduates, the country needs to broad-base its economy by aggressively encouraging entrepreneurship through the private sector to create massive job opportunities. We need to embark on a massive industrialization of the economy and target the export market, especially, the developing economies. Days when the economy depended on a handful of commodities must be a thing of the past. Days when the government, through the civil service, was the largest employer in the economy must be a thing of the past. The government must provide appropriate tax incentives and the provision of the necessary economic infrastructure to spur economic growth. These include, but not limited to, the provision of uninterrupted flow of electricity and water; the provision of excellent communication and IT systems suited for the 21st century across the country; excellent transportation system (roads, railways, and air transportation, including ports) crisscrossing the country from north to south, east to west and diagonally if possible; an reliable, effective, and unbiased judiciary system; excellent and balanced educational opportunities; excellent and effective health care delivery systems; effective and reliable nationwide security system, devoid of corruption, spearheaded by the police and the intelligence body and lastly, an efficient, effective, and corrupt-free civil service to support the private sector.

The aim of the massive job creation must be to reduce unemployment and increase the country’s productivity (producing for both the local and export markets) by using Ghana’s technical, human, intellectual capital cum other natural resources. When the private sector becomes robust, all that the government has to do is put in place sound regulatory procedures for the growth of business and to ensure reliable corporate tax revenue collection. To fuel the cycle of development, the author sees no reason why we should not encourage consumerism so long as people have genuine jobs that provide them with adequate income. This will ensure a demand-based economy, which will, in turn, fuel the supply side (investments). The bottom line is that as incomes increase, consumers will be able to spend more to meet decent living expenses, and have some left over for savings to provide additional loans to the business sector. Consequently, this would lead to improved standard of living for the majority and a fall in the crime wave.

For an improvement in the quality of life, we need to monitor and match the country’s natural growth by concurrently increasing infrastructure to keep pace with our population growth. A new economic planning paradigm based on systems thinking synchronization needs to be researched and used in place of the current National Planning Commission. The new approach must rely on think-tank drawn from government, private industry, and Higher Education. “Systems Thinking” is a framework for seeing interrelationships rather than things, for seeing patterns of change rather than static snapshots… it is also a set of specific tools and techniques originating in two threads: in “feedback” concepts of cybernetics and in “servo-mechanism” engineering theory. Additionally, globalization is making the formulation of a country’s development policies more and more complex. Formulating national economic policies means facing a never-ending procession of hard choices among conflicting objectives. Economic policy involves much more than finding the best path to a clear objective. Some of the many important objectives of policy may be full employment, stable prices, increase in national productivity, and greater equity in distribution of income. These diverse and equally important objectives are related to one another by a complicated system of trade-offs, in that the advancement of one may lead to the sacrificing progress towards others.

Given the complexity of economic policy formulation, and to ensure the efficient use of our material and human resources thus developed through the increased provision of tertiary education in the country, a systems thinking approach which leads to a shared vision to economic development must be initiated by the government. This approach will call for ongoing formal dialogue among the three constituencies (government, higher education, and private industry). It is only through such formal process of dialoguing that the constituencies will be able to complement each other’s efforts. Dialogue is a way of helping people “see the representative and participatory nature of thought”. In dialogue, a group accesses a larger pool of common good. In this regard, government, private industry and higher education should meet at the policy-formulation level as well as the operational level and encourage more fixed dialogue rather than ad hoc good-will sessions. Officials who participate in dialogue must be trained in dialogue procedures for it to be effective. They should be encouraged to make their thinking explicit to be explored by each other through reciprocal enquiry, without personally attacking each other. The participants must view each other as colleagues. They must also avoid leaps of abstraction, which occur when people jump to hasty conclusions and generalizations without effective analysis.

The 21st century will undoubtedly call for greater collaboration among government, private industry, and higher education for complex research and development projects in the fields of technology, agriculture, health, the sciences and engineering. This collaboration, however, must begin with formal networking among individuals in the universities/polytechnics, private industry, and the government, which may eventually create the necessary basis for cooperation between the industrial and academic worlds on specific projects and lead to formal, broader, and continuing collaboration once they are established. These formal initiatives, however, may require an environment, which encourages relations between the three sectors as well as high levels of institutional flexibility and openness to allow the pursuit of different approaches and modes of cooperation.

By including higher education and private industry in the formulation and implementation of economic development policies, the nation will be able to forge a focused shared vision approach to economic development, sustained growth, and stability. An ongoing bilateral and reciprocal collaboration between government and higher education, between government and private industry, between higher education and private industry to find lasting solutions to Ghana’s economic development and growth problems would enable the three constituencies to develop a common front/shared vision approach in tackling national development objectives. The Universities must also take a more direct initiative through research and other means, to identify and anticipate national needs, and bring its influence to bear on government in setting goals and objectives. Through continued dialogue between the three constituents, higher education will be in a better position to respond to economic and market trends through timely changes in enrollment by field and discipline as well as adapt its curricula to current and projected business and national manpower needs. Most African countries lack the necessary national machineries to ensure that educational objectives, such as manpower training and development, as well as research, are adequately assessed and effectively coordinated and harmonized with overall national economic development objectives. This thinking together (systems thinking) may be the beginning of a formal recognition of higher education and private industry as partners in economic development planning.

The government should, therefore, use the opportunity thus provided and replace the National Development Planning Commission (NDPC) with a Permanent Tripartite National Planning Commission (PTNPC) made up of think-tank representatives from government, private industry, and higher education to advise the government on economic development policies and their implementation. Members from private industry and Higher education may serve a term of, say, ten years minimum, after which they may be replaced with new replacements from their departments. The author believes that the shared vision approach will foster commitment to the objectives of national development goals and eventually lead to sustained economic growth. The collaborative approach will ensure continuity of economic development policies and ongoing development projects regardless of changes in the country’s political leadership. When a change in government occurs (through the ballot box), only the incumbent government representatives will be withdrawn and replaced by members of the incoming government. The new members will thus get a briefing as to the state of affairs from the permanent members. This approach to policy formulation will thus lead to multilateral acceptance of policies, hence commitment by successive governments to continue uncompleted prior economic development projects.

This approach of collaboration and inclusion must be extended to the regional and district levels as well. The various ministries and government agencies must also be encouraged to adopt the systems thinking approach to dialogue among themselves. We also need to take the decentralization process seriously and divide the country into manageable units under more focused regional and district level administrators, instead of continuing to rule the whole country from Accra. This means more delegation of authority, responsibility, and accountability as well as the availability of resources to the regions and districts. Currently, the Northern Region is too expansive to be managed from Tamale alone. The incumbent government should not feel shy of reaching out to think-thank members in the opposition party as well as the general populace at large to assign them on special projects.

If the Millennium Challenge Account of a mere $547 million dollars can do so much for the country, then the billions of oil revenue must be used to revolutionalyze the economy to the highest possible standard. We should plan beyond when Ghana’s oil reserve runs out. What type of economy will we want to be in place then and what the national economic mainstay would be? Let’s plan to make Ghana an oasis of development in a desert of underdevelopment by replacing a cycle of poverty with a cycle of investments, job creation, individual and national prosperity.

By Dr. Gabriel A. Ayisi, New York City Honorary chairman, Business Advisory Council for National Economic Stimulus, USA 2006 USA Businessman of the Year Award 2007 USA Congressional Order of Merit Award drayisi@hotmail.com

Views expressed by the author(s) do not necessarily reflect those of GhanaHomePage.