Oil Discovery in Ghana: A mixed Baggage?

Sat, 17 Nov 2012 Source: Asubonteng, Bernard

(By Bernard Asubonteng)

Every indication points to Ghana gearing up to join the oil-producing countries around the world and thus becomes one of the few African nations to have this all-important natural resource. The huge quantity of oil discovered in Ghana is not only heart-warming news for Ghanaians, but also it has probably boosted the morale of the country’s socioeconomic future development and progress. But, having or discovering oil in commercial quantities as it seems to have been the case in Ghana now, comes with a huge mixed baggage, especially, given the dismal track record of the current Africa oil-exporting countries.

Certainly, oil is one of the most important hubs around which the wheels of modern economies revolve. This may explain why the petroleum-exporting countries appear to have relatively much clout both in terms of politics and economic issues in the global theater. However, the salient point that needs emphasis is that exporting or having oil in large quantities is one thing, and ensuring that transparency, proper management, and accountability prevail regarding revenues accruing from the oil sales is entirely another thing. This is undeniable fact: Africa oil-exporting nations’ major undoing is corruption with its twin-evils of mismanagement and lack of proper accountability.

Africans have been on this road many times before. Needless to say, the joy among the people, including the media hype that usually accompanied oil discovery in any African sub-region is all too familiar. Nationals and their leaders in those parts of the region where the “black gold” is found often celebrated in grand style. And yes they have every reason to rejoice.

For starters, Africa is only noted for exporting raw materials whose values in international market are relatively insignificant. Unlike the other raw materials, oil is unique story. Even in its raw state as crude oil, its global market value is highly competitive. Hence, countries exporting oil in commercial amount have bright economic future and encouraging wealth creation. Oil money, prudently managed and evenly disbursed throughout the various sectors of a given country, can surely lift a nation from its socioeconomic doldrums.

But in almost all cases in Africa, there is a sad development after the chips have settled down and the actual drilling of oil and the money starts pouring into the national coffers. At this point widespread corruption, dictatorial rule, mismanagement, and quite often civil wars or strife become the order of the day. While the national leaders mismanage funds, self-amass wealth via the people’s money from the oil proceeds, their respective oil-rich economies paradoxically stagnates and tumbles. This trend has been the sorry state of affairs of all petroleum-exporting countries in Africa.

Angola, Equatorial Guinea, Gabon, Libya, Nigeria, and Sudan, all share common traits one way or the other regarding corruption, mismanagement, lack of internal controls, and in most cases uneven disbursement of oil money in their individual economies resulting in perennial civil wars. Nigeria can be a good case study here. This most populous African nation discovered oil in the 1960s, while its petroleum production with its attendant economic boom peaked in the 1970s onward.

Given the huge monetary returns that come in the heels of oil exports, including massive influx of foreign investments, one may wonder why Nigeria up to date is still struggling with high unemployment, underdevelopment, astronomical budget deficit and

inflation. According to Funmi Wale-Adegbite who is based in Lagos, a managing partner with Antal International, a global search company, Nigeria’s unemployment rate among the youth is somewhere over 30%. This is sad spectacle and unbelievable in a country that has been exporting oil for decades. If nothing at all, Nigeria should be following closely behind the likes of Singapore, Malaysia and other emerging economies. Part of the problem may be that Nigeria’s oil is state-run; and as many of us know bureaucracy, inefficiency, corruption, and back-door deals play a big part in state-managed companies in Africa.

For example, the Nigerian National Petroleum Corp (NNPC) “holds controlling stakes in six joint ventures with Shell, Exxon Mobil, Chevron, Petrofina Elf, Agip and Texaco” (http://news.bbc.co.uk/2/hi/business). Bear in mind that all these oil giants in joint ventures with NNPC are expatriate companies, as opposed to indigenous ventures. Foreign oil entities repatriate their huge profits back to their homelands and in many instances they’re notorious for leaving behind unemployment (the better jobs go to the expatiate workers), polluted waters or damaged environments. The unfortunate result, among others, is oil thefts from pipelines, rampant arsons to oilfields and other violence acts geared toward oil companies from the unemployed local youths, a clear indication that there is an existence of inequitable distribution of the country’s most priceless resource—oil.

This leads us to the question: what useful lessons can Ghana learn from Nigeria and other oil-producing nations in Africa in order not to repeat the same mistakes when Ghana begins to see the petro-dollars flowing in everywhere? While trying not to sound too pessimistic, we cannot also disabuse our minds from this common but pestering phenomenon—entrenched corruption—that has bedeviled African capitals since their independence days.

In that regard, it will come as a big surprise if Ghana political leaders behave anything different, in terms of proper accountability, from their counterparts in other African states blessed with oil resources. It’s not too late, though. The country’s policy-makers can learn a lot from others’ missteps if they let their moral cortexes hold sway. At least, Ghana’s history in Africa has been a trend-setting one. Let’s sit on the tenterhooks, wait and see what will happen in Ghana, for oil discovery comes with a mixed baggage, especially in Africa’s context.

Bernard Asubonteng can be reached at: www.globalpulpit.com

Columnist: Asubonteng, Bernard