Business News Fri, 7 Oct 2016

CSOs propose better management of oil revenues

Participants at a policy dialogue on the utilisation of oil revenues on selected priority areas have urged the government to ensure the optimal use of the Annual Budget Funding Amount (ABFA) to achieve the needed socio-economic development.

The participants, drawn from different Civil Society Organisations (CSOs) with interest in the oil sector said, for instance, the selection of the priority projects and programmes for the next three years should be closely aligned to the 40-year national development plan being developed by the National Development Planning Commission (NDPC) to ensure continuity in the funding of selected priority projects.

In a communiqué issued at the end of the dialogue session, organised by the Kumasi Institute of Technology (KITE) in collaboration with the Africa Centre for Energy Policy (ACEP) and the Centre for Democratic Development, Ghana (CDD-Ghana), the CSOs suggested that serious consideration should be given to using significant proportion of the ABFA to transform key sectors of the economy such as agriculture to forestall the occurrence of the Dutch Disease in Ghana.

Other proposals by participants included the fact that the projects and programmes funded by the ABFA over the past six years 2011 to 2016 should be evaluated and the outcome used to inform the selection of new priorities or the retention of existing priority areas for the next three years.

Other proposals

According to the communiqué, the scope of future priority areas should be narrowly and tightly defined so as to leave little room for ambiguity and abuse of the process. And that if necessary, the priority programme areas listed in Section 21(3) of the PRMA should be reviewed or revised in order to achieve this objective.

“That upon review or revision, fewer priority areas should be selected for the next cycle of ABFA funding and resources allocated to fewer projects within each priority area so as to accelerate the rate of economic development and maximise the impact of petroleum revenues,” it said.


It also explained that the selection of the flagship projects should be underpinned by rigorous economic analysis of a number of potential projects and programmes and the intervention that yield the highest economic internal rate of returns selected.

“That all priority projects must be fully funded by the ABFA so as to enable the evaluation of the impacts of the projects, as well as the effectiveness of the ABFA mechanism in ensuring prudent management of petroleum revenues,” it added.

Current utilisation

The ABFA is currently spent on four priority areas; agriculture modernisation, capacity building, amortisation of loans and roads and other infrastructure.

According to the participants however, the ABFA has been spread so thinly across sectors/ sub-sectors thereby watering- down its potential impacts on the socio-economic development of the country.

“The CSOs noted with concern that the thin spreading of the ABFA has persisted over the past three years even though the Public Interest and Accountability Committee (PIAC) has since 2014 been drawing governments attention to such less-impactful and inefficient way of using petroleum revenues,” the communiqué said.

Source: Graphic.com.gh