African business, politics and lifestyle
Can Ghana avoid the oil curse
With a democratic touch rare in a region better known for dictators, Ghana is asking its citizens what it should do with the windfall from oil production due to start later this year.
In a questionnaire entitled “The Use and Management of Oil and Gas Revenues – A Survey of Public Choices” posted on the finance ministry website this week, Ghana says oil-producer nations face three major questions:
a) How much to spend now, and how much to save?
b) How to use what is to be spent now?
c) How should the savings, if any, be managed?
Given the experience of near-neighbour Nigeria, whose oil riches have not only failed to haul its people out of poverty but helped spark political unrest, the questions are pertinent.
For Ghana, the stakes are high: oil from its Jubilee field could be the game-changer that weans it off foreign aid and ushers it into the club of lower-middle-income countries.
According to World Bank definitions, that would mean it leaving the low-income division of the likes of Afghanistan, Haiti and Chad to join a new club whose members include Albania, Iran, Egypt and (yes) Nigeria.
But while the International Monetary Fund believes Ghana can win its promotion in about 10 years’ time, the figures released alongside the questionnaire show this is not a certainty.
Estimating it can produce 500 million barrels of oil over the next 20 years, and can sell it at an average $65 a barrel, Ghana forecasts it can on average expect an extra $800 million for the public purse each year until 2029.
If distributed directly to the Ghanaians would work out at a mere $20 a head next year, rising to $75 in 2017 at the peak — hardly an oil bonanza by anyone’s standards.
By contrast, moving into lower-middle-income status would mean almost doubling its current gross national income (GNI) per capita to around $1,000.
Hence the push to make sure every last dollar — or Ghanaian cedi — is used effectively as possible.
Ghanians are asked in the questionnaire to rank spending priorities such welfare programmes, education, roads and health in order of preference, and to say how much of the revenues should be spent and how much be saved.
They can also have their say on who should have oversight of the revenues and whether any should be reinvested on the world’s bond markets for a rainy day.
The survey results will be an interesting bellwether of how Ghanaians view their post-oil future — and it will be equally interesting to see whether their views become official policy.
In a sign the government already has its own ideas on what to do with the money, the finance ministry just a day before published draft proposals which in some cases bore a strong resemblance to the options put before citizens.
They included creating an independent account to handle the revenues and channel funds into farming, education, education and other projects. A “Ghana Heritage Fund” would reinvest surplus proceeds in investment-grade international securities.
“We have been keenly aware of the so-called ‘oil curse’ that has come to be associated with oil rich, developing countries,” the draft notes.
“The overarching concern for many Ghanaians is that petroleum wealth should be a blessing, not a curse.”
So can Ghana and its people rise to the challenge?