Utilizing Oil Revenue: Can It Be Different From The Gold

Mishaps are like knives that either serve us or cut us, as we grasp them by the blade or the handle.

James Lowell Russel

Ghanaians were excited last three years when Kosmos Energy Group announced that it had identified crude oil in commercial quantities. The economy is yet to take off with greater momentum. Perhaps, it is now the greatest time to be alive if you are Ghanaian. We stand on the threshold of becoming one of the fastest emerging economies in the sub-Saharan Africa. However, this will not roll on the wheels of inevitability. The oil is like the knife that can either serve us or sever us depending where one holds it. If we hold the oil by the handle we can use it. On the other hand, if we hold the knife by the metal part it would injure us as it has done to some countries like Nigeria, Angola, Iraq and Sudan.

History gives an eloquent testimony that oil has not helped most of the sub-Saharan African nations. Although not all Organization of Petroleum Exporting Countries (OPEC) countries are corrupt, a historical symbiosis exists between oil and corruption. Oil, corruption and failed states seem to be synonymous. However, some countries have been able to address this threat; most of them are located in North Africa. Producing countries such as Algeria, Egypt, Tunisia and even in some respects Libya, have managed to resist the temptation of sleaze. While temptation may have been countered by most North African producers, the threat of falling into the same trap remains.

The economic record of mineral-exporting countries has generally been disappointing. Oil exporters, in particular, have done far less well than resource-poor countries over the past few decades, especially when one considers the big revenue gains to the oil-exporting countries since 1973, when oil prices soared. Why is this case? Perhaps it is because of the way oil economies are run. Managing oil revenues well is much the same as managing any budget well, but some issues are more important for oil exporters. These include how much to save for future generations, how to achieve economic stability in the face of uncertain and widely fluctuating oil revenues and avoid "boom-bust" cycles, and how to ensure that spending is of high quality, whether in the form of large investment projects, public consumption, or subsidies.

THE CASE OF NIGERIA

It is incontrovertible that Nigeria suffers from a resource curse as they have little or nothing to show off as a country despite several years of oil exploration. Most of the oil revenue ended in the pockets of their leaders (gulf oil windfall and looting of the nation’s treasury by the late despotic ruler General Abacha).

Resource curse is the economic notion that countries with large endowment of natural resources perform worse than countries that are less endowed. Yet some countries with abundant natural resources do perform better than others, and some have done well. Nigeria is a heart rendering paradox. A rich country with desperately poor people. Despite its massive earning from oil, 70% of its estimated 140 million people live below the poverty line. Attempts to explain this contradiction have repeatedly identified the resource curse as the major cause of the disconnection between the country’s wealth and people’s well being. More than 80 million Nigerians live on less than US$1 a day, with Nigeria being ranked 144 out of 146 by Transparency International Corruption Perception Index (CPI) 2004. In the light of all of these, Ghana has two challenges: The first one is to make sure that the oil revenue does not become a malignant tumor. The second thing is to make sure that the revenue from oil should not be treated as revenue from the way cocoa and gold has been treated. To be able to achieve this, there requires a strong policy direction propped by an act of parliament which would seek to define clearly how the money should be spent.

More than three hundred years of lifting gold from Obuasi and other parts of the country, nothing has been done to actually to transform these geographical areas into a world class cities. A juxtapose of Obuasi, a gold mining town in Ghana and Johannesburg , a city in Republic of South Africa which is also endowed with gold brings tears to the eyes of any patriotic and level headed Ghanaian. Obuasi and Johannesburg have one thing in common, gold, but differ in many regards - good and beautiful roads, sterling infrastructure, good schools for inhabitants, good drinking water, good healthcare for its people, and comparatively availability of job opportunity for the youth in these named gold towns. This sharp contradiction is probably due to someone been a politician and another one been a statesman. Winston Churchill eloquently reminds us that: a politician is someone who is concerned about the next election whilst a statesman is someone who is concerned about the next generation.

Indeed, with all the trillions of cubic feet of natural gas that has been discovered in Saltpond and Tano Field, if we do not do the right thing, our fate shall not be different from the past and we shall be enrolled in the coterie of nations like Nigeria, Angola, Sudan and DR Congo where the abundance of natural resources has become more of a curse than a blessing.

As I draw to my conclusion, though it is trite but urgently true: The oil proceeds should be put into areas such as provision of free education for all children of school going age, provision of good health care, provision of portable water, provision of electricity, provision of good roads and other social amenities. This way many, if not all citizens will benefit directly or indirectly and will go a long way to help improve the lives of Ghanaians of all spheres of life. Like Great Britain did when they discovered oil a long time ago, Ghana should train its nationals to become experts who will be able to work in these new areas. Fortunately, Kwame Nkrumah University of Science and Technology (KNUST) and University of Ghana have led the way in mounting programs that would be relevant for the emerging sector. The law should make it mandatory to consider a Ghanaian who has an experience and the qualification before the vacancies can be advertised in the international media. This is standard recruitment practice in many developed countries. Nationals of the countries are considered first before expatriates considered for any job.

This would cause more of the oil revenue to be retained here than allowing foreigners and expatriates workers monopolize all the trades in the industry. Ghana’s oil money should not be ‘spent’ like that of the Gold! The onus lies on every citizens to open our eyes widely and ensure that the right thing is done. God bless Ghana!

By. Elvis Akwasi Acheampong, Freelance writer and the president of Green Ghana Foundation. [email protected]