The Paradox; Resource Purse and Curse, Ghana

Over the years, scholars have established that countries whose development is based on revenue from natural resources have developed far slowly than those otherwise. Sudan, Nigeria, Angola, Equatorial Guinea, Libya, Algeria and Gabon are continental icons so far as huge oil revenue and the resource curse are juxtaposed. Resource based development except in a few cases, have not yielded the required results. This phenomenon, also known as the ‘paradox of plenty’ has been the plaque of several African countries for several decades. However, other countries outside Africa have not eluded the plaque.

Experts say the case of Ghana is different. At the onset of oil production in Nigeria, 52 years ago, there were no specific state institutions to oversee exploration and production (E&P) activities, and they had no plan of revenue allocation. Nigeria’s oil policies could be traced back 1971, thirteen years after the first oil cargo was shipped in 1958. Since then the country has made several fragmental policies to ensure that it derives maximum benefit from its oil and gas resources. Ghana on the other hand has a well established institutions including the national oil corporation (Ghana National Petroleum Corporation—GNPC) which oversees all E&P activities. A draft national oil policy is currently on the desk of parliament pending scrutiny, debate and approval. The national oil policy, like many others, is expected to address issues concerning oil pricing, transfer of technology, oil pollution, coordinated policy on energy and counter trade. There are also sound agreements on local content of oil jobs even though they are not sufficiently binding on oil companies. The decision of the government of Ghana to study oil policies and revenue allocation patterns of various countries will furnish the country with a hybrid of experiences.

Ghana has exploited her natural resources since the antiques through independence until now. In this article, I want us to look at the motherland in the light of our natural resources, the revenue accrued to the state, and poverty and human security, which remain key issues in the debate on whether Ghana can manage her oil resources effectively is concerned.
Oil and Gas Resources
The Saltpond Oil Field was the first commercial discovery in the country. It currently produces about 7000 bopd. The production fell due to pressure drop. In July, 2007, the world class giant field, Jubilee Field, named to commemorate the country’s 50th independence anniversary was discovered. At the onset of production, by the end of 2010, 120,000 bopd is expected to be produced. By the end of 2012, peak production of over 250, 000 bopd is expected. At an estimated price of $60 per barrel, royalties, taxes and dividend that would be paid to the government of Ghana stands at $1 billion. Revenue accruing to the state may reach $3 billion as the price of oil increases. Ghana would also enjoy some free gas per the petroleum agreements with Tullow and Kosmos on the Deepwater Tano and West Cape Three Points blocks respectively. The gas would be used to power Aboadze, Osagyefo and other thermal power plants on the drawing board. The Jubilee success story has also paid way for the development of other discoveries which were declared non commercial and relinquished by oil companies by the government of Ghana at a relative cheap cost. So, it is expected that revenue would far exceed that which has been calculated.
Other discoveries which have not yet been fully evaluated lie in the offshore areas of the country including Odum and Dzata. If they are found to be commercial, they would also beef up the oil revenue.
Other Natural Resources
Ghana has been blessed with a tidy sum of natural resources including gold, diamonds, manganese, bauxite, etc. There are geologic reports on the occurrence of chromite, asbestos, andalusite, barite, mica, nepheline, syenite, cassiterite, columbite, monazite, beryl, spodumene, molybdenite, on-shore alluvial ilmenite and rutile, among others; though there are no mines for these minerals.
Gold mining has been known to Ghana for several centuries. In the colonial times and times of slave trade, Ghana was an important source of gold along the trans-Saharan trade routes. Gradually, modern gold mining phased out artisan and alluvial mining in the 1860s. The renowned Obuasi Mine was discovered by some Europeans, who later sold it to E A Cade. He however developed it to Ashanti Gold Fields. Ghana is currently taking turns at the 9th and 10th largest gold producer in the world.
Mining accounts for 43% of gross export revenue. In 2008, total mineral revenue rose 28% to $ 2,303,928,866 from $1,711,511,384 in 2007. Companies which contributed immensely included Newmont and AngloGold. The mining sector contributes about 12% of Ghana's total corporate tax earnings, 34.3% of total exports and 11-12% of government revenue (IMF). Manganese revenue in 2008 stands $62,348,266 up by 69% of $36,831,651 in 2007. In 2008, bauxite revenue stood at $19,810,257.
In the nomenclature of natural resources, I cannot afford to forget the cash crops, including cocoa and coffee, and our timber, which has been explored for time immemorial. In 2008, cocoa revenue that was accrued to Ghana stood at $1.1 billion. Ghana is the second largest gold producer after neighbouring Ivory Coast. In the first three quarters of 2008, Ghana recorded revenue of €144 million from timber and its related products.
It is amazing the amount of mineral revenue that has poured in the coffex of government over the years and the amount of financial depravity that exist in the country.
Poverty Issues
Ghana is considered as one of the few African countries which could achieve the millenium development goal; halving poverty by 2015. Poverty levels have dropped from 52% in 1990 to 28.5% today, according to the World Bank. However, about 80% of Ghanaians live on less than $2 a day. Complains and murmuring by the general citizenry that “there is no money in our pocket” suggest that these figures have not much translated into realities. Indeed we ought to take a glimpse at the number of people homeless, illiteracy ratio, child labour, mileage of roads in depravity, sanitation issues and the rest. Or perhaps, we need to compare now to the days of old where our parents queued to buy basic food items and other things we just walk to any shop and buy now, and say, “we are moving forward”.
Human Security
Human security is a crucial subject so far as the extraction of natural resources is concerned. In most mining communities, mining and local people have never coexisted peacefully. There have been cases where state security machinery is used to brutalise indigenous people. There have also been spillages of harmful chemicals into the environment. Recently, Newmont spill chemicals into rivers in the Ahafo area of their operation. What about ‘galamsay’ mining by local people and technology oriented conventional mining by multinationals? If these challenges are transliterated into the country’s infantile oil industry, what should we expert?—Spillages across the coast, or poisoning of edible fish? How could fishermen and multinational companies also exist peacefully in the area?
Conclusions
Ghana, for most of her past has developed based on revenue accrued from extractive industries and other natural resources, still the country is wallowing in poverty. The country has not been able to manage her mining industry which has been known since the ancient. Weak state institutions and corruption, even though dwindling has created panic as the euphoria of a world class giant discovery dies out.

The situation is at the glare of public examination. Perhaps, Ghana is on a better side than other African countries. We have more institutions in place at our first commercial discovery than any other African country. Well, it all drives down to we allocate petrodollars.

To those of us who believe in prayers, let us continue to pray for our motherland to obtain the maximum benefit from our oil resources. God bless Ghana!

I dedicate this article to members of the megafamily; Mr Phillip Sam Okyere, Ms Gifty Amoakwah, Evans, Benjamin, Yaw, Edward and Phillip. To my sister Linda and my niece, Lordis—all of you, for your support during four years of my university education.

By: Eugene Sam-Okyere

Email: [email protected]