Demand by chiefs is legitimate, says Prof Aryeetey

Accra, Nov 23, GNA - Professor Ernest Aryeetey, the Vice-Chancellor of the University of Ghana, has declared support for the demand by the chiefs of the Western Region to have 10 per cent of the country's oil revenue for the development of the region.

Prof Aryeetey, a Development Economist, explained that his support was not based on the fact that the oil was found in that Region but purely on development enhancement mechanisms because the people of the Western Region would be the losers as a result of the exploration.

He said "in every economic activity, there would be gainers and there would be major losers" adding there was therefore the need to develop an intervention that would offset the losses of those to be affected. Prof Aryeetey said this when delivering the Keynote Address to open the 14th National Banking Conference of the Chartered Institute of Bankers, Ghana, (CIB, Gh) in Accra on Tuesday.

The conference, themed: "Ghana's Oil Find - a Catalyst for Attaining Middle Income Economy?" was to enable members of the CIB,Gh to share experiences and identify the challenges that are likely to confront the country as she began exploitation of the oil resources from next month. He said the country should learn from the antecedents of exploitation of other mineral and natural resources on their catchments areas and guard against repetition of such effects including environmental degradation, loss of livelihoods among other things which was the basis for the demand by the chiefs from the Western Region. Last week the chiefs from the Western Region presented a petition to Parliament which is currently debating the regulatory regime for oil revenue management in the country to set aside 10 per cent of the revenue from the sector towards development of the region. Prof Aryeetey said the country's overnight attainment of a middle income status presented many issues such as reduction in aid from development partners and called for the investment of the oil revenue in strategic sectors of the economy to ensure that she continued to remain at the status.

He said the country must see the oil exploration as an opportunity to diversify as well as change the structure of the economy to enable it to attain and remain at a middle income status, adding that even though the services sector had overtaken the agricultural sector, the structure of the economy still showed that Ghana was not a middle income economy. He proposed that instead of saving the oil revenue as contained in the Petroleum Revenue Management Bill, government should rather spend 70 per cent of the revenue to build roads that linked mineral and natural resources areas because such roads were important in driving the country's economic activities. Prof Aryeetey cautioned against the emergence of a new-class of people who he described as rent-seekers who would be patrolling corridors of power behaving as if they had answers to issues arising from the oil sector. He said such people would do nothing but only enjoy a substantial portion of the revenue accruing from the sector. He also called for more investment in the educational sector to help equip the youth with the relevant skills to enable them to take advantage of opportunities saying it did not make economic sense to be an apprentice for three years to learn hairdressing.

Nana Frempong Anokye Ababio, Paramount Chief of Agona Asante Traditional Area, who chaired the opening session, called on all to be realistic about their expectations of the oil industry saying it (oil) would not be the panacea for the country's challenges. Mr Isaac Owusu-Hemeng, President of the CIB, Gh said "For the new oil find to propel us to attain the expected middle income status, the financial sector has to shift from its role as a catalyst for growth, to become an active participant of growth".