Economic And Social Impact Of The Emerging Ghana Oil Industry

Kojo Arthur, Yaw Adu Otu, and Peter Intsiful

Discovery of crude oil off-shore in the West Coast of Ghana, specifically at Cape Three Points has been public knowledge since around the early 1990s. However, as the country gets closer to drilling for the oil find in actuality, discussions among active citizens of issues related to the enterprise have tended to take on rancorous undertones, with lack of civility, sometimes. A symposium is to take place at the Howard University Blackburn Center, Washington D. C. The symposium is an initiative of the CPP in the Washington DC – Baltimore Metropolitan Area, USA with the collaboration of the Department of African Studies, Howard University. The symposium is to offer all-comers a forum for public discussion of relevant issues of contention hoping to arrive at a consensus to inform government decision making in Ghana.

There will be a number of panels on which ambassadors to Washington from experienced oil drilling countries such as Norway, Trinidad and Tobago, Nigeria and Equatorial Guinea, will discuss their respective country's experiences in the oil production industry, focusing on the nature of dealings with foreign oil businesses. There will also be a panel discussion on how Ghana could avoid the pitfalls of oil production-related violence and social conflict. In the context of rising globalization, economically and technologically powerful non-state private corporations dominate the crude oil industry business with implications for foreign policy action decision-making involving the nations where the corporate actors are based. In short, the oil business has become highly globalized irrespective of the geographical location of the oil find. In some instances, the globalized oil business entities have not been seen to have acted in a fair manner towards people in the communities where they drill for oil. In this instance, it is germane to ask whether participation of foreign of foreign oil companies in Ghana have helped or harmed development of the oil industry in the country. Fuel wood is the most used energy source in the country. Fuel wood consumption and commercial logging for timber pose an energy and environmental crisis as a result of wood forest depletion. Since 1981, the annual rate of deforestation in Ghana has been two percent/year or 750 hectares each year. Ghana's tropical forest area is now just 25 percent of its original size. Deforestation has claimed an enormous toll through the ages in environmental damage, economic deterioration and human misery. This especially affects rural and urban poor communities that have no access to fuels such as liquid petroleum gas (LPG) and who depend substantially on burning collected local biomass for their energy needs. Currently, only about 6.2 per cent of the entire population used Liquefied Petroleum Gas (LPG), and about 94 per cent or more than 16.8 million people used traditional fuel such as charcoal, firewood and crop residue, despite their inconvenience and inefficiency. There has been rising expectation by active citizens regarding potential for enhanced economic development and upward social transformation of Ghana since public announcement of discovery of crude oil in commercial quantities off-shore in the country’s West Coast. The manner in which revenue from Ghana’s oil find could be utilized for positive economic benefit has been the persistent dominant focus for conversation among significant number of Ghanaians. At one extreme, there are Ghanaians who have tended to see the expected revenue from the oil find as the ultimate engine for instant economic development of the country. Corollary, There are Ghanaians and foreign observers who have cautioned against over-expectation of the amount of revenue from the oil find and the potential economic benefit for Ghana. The latter group tends to see the expected revenue as a means for preparing the ground for economic transformation going into the future. At the time of self-government in 1951, 82% of the labor force in the country was engaged subsistence agriculture/cocoa farming or petty trading while 18% was employed on a wage/salary basis. Two-fifths of those in wage/salary employment were in the public sector. After short-lived attempts by the CPP administration under Kwame Nkrumah to transform the economy through industrialization, the structure of the economy is no different from what it was in the pre-independence years. After over 25 years of World Bank/IMF prescribed programs of ERP, SAP and HIPC, one of the over-riding consequences of these programs in Ghana has been a shrinking of the formal sector and the expansion of the informal sector.

Between 1991 and 2002, the informal sector including agriculture accounted for 83.6% of total employment. By 2005/2006 the informal sector employment reached 86.7%. In these informal sector employment opportunities, poverty levels have remained high, productivity levels low, and decent work deficits are widespread. Under SAP and HIPC programs persistent unemployment, under-employment, and growth in precarious forms of employment have remained the central features of the Ghanaian economy. How might the oil and gas revenues help reverse such trends?

Other questions the symposium will address include, but not limited to the following: 1. What good governance practices exist or need to be put in place in Ghana for the emerging oil and gas industry? 2. Will the emerging oil and gas industry in Ghana help transform the Ghanaian economy? 3. Will Ghana use the oil and gas revenue in order to achieve the structural transformation of the country’s economy away from over-reliance on primary production, and the reduction of the massive size of the informal sector? 4. What lessons have been learned from the existing EI in the country? 5. Will the emerging oil and gas industry offer a solution to the impending energy crisis in the country?

We plan to publish the proceedings of the symposium as our contribution to the public discourse on the emerging oil and gas industry in Ghana. We, therefore, welcome papers from those who might not be able to attend in person. Contact us as soon as possible – Kojo Arthur - adinkraba2@yahoo.com (Tel. 301-592-7615); Yaw Adu-Otu - aduasare1@hotmail.com (Tel. 703-615-1821) and Dr. Peter Intsiful - pintsiful@howard.edu.