Stretched across the front page of The Daily Graphic (Ghana’s leading national newspaper) yesterday was the headline “Ghana Joins Oil Giants in December.”
Yesterday, Vice-President John Dramani Mahama announced at the Daily Graphic Business Roundtable that commercial production of oil will commence as soon as November. The article wasn’t clear as to what is scheduled to happen in December, the month in highlighted in the article's title. That aside, the (other) question on many people’s minds is: is Ghana ready?
Remarks made by the VP seemed to address the catalogue of concerns that have arisen from the public over the years. But personally, I am not entirely sure whether this was an example of well-researched political lip service or genuine effective planning. Has Ghana really listened to its citizens?
Well, let’s give Mr. Dramani Mahama his due diligence for now and recap some of the problem-solving strategies Ghana plans to implement.
Concern #1: There has been much anticipation of a huge influx of employment opportunities with the oil and gas industry. Will Ghanaians be the ones to benefit from the supposed mass job creation?
Solution #1: Ghana promises that it will adhere to what it calls a “local content” policy. This means that it promises that 90% (this is the latest figure I’ve heard in the news but should be fact checked) of the jobs created will be held by Ghanaians.
Criticism of Solution #1: At the meeting I attended at NETRIGHT on oil and gas, a discussion was held on the local content promise. The general consensus seemed to be that this is a big step in the right direction but it is so lofty a promise that it deserves to be met with suspicion. Can this goal realistically be achieved? Skeptics are sure to answer "no." Partly because that is what skeptics do, you know, being skeptical and all... they say no. But also because they believe that Ghanaians are unlikely to be qualified enough to occupy many of the jobs created by oil, especially the well-paying jobs (non-labour intensive jobs).
Another troubling aspect of the local content promise: what exactly is meant by "local"? Folks at the NETRIGHT meeting stressed that most of the jobs would likely go to the educated class from the big cities such as Accra and Kumasi. Great for these cities, yes, but bad once again for the rural poor. Particularly the rural poor in the cities where oil and gas is being extracted. Why them in particular? Because their economy is driven mostly by agriculture and fishing - two industries that have a history of being destroyed by the environmental impact of oil extraction. Their fears of their livelihoods collapsing has thus far been appeased by the excitement around job creation. But will they be the beneficiaries of the new jobs?
Which brings me to...
Concern #2: What about the agriculatural and fishing industries?
Solution #2: The VP insisted that these sectors will continue to receive the funding allotted to them and will remain unaffected by oil spending.
Criticism #2: But will that be enough? As mentioned above, oil exploration often comes at the detriment of the agricultural and fishing industries in the affected area. Now this doesn't just affect the fisherman and the farmers. It affects the chain-of-command, so to speak, of people who make their living delivering these goods to local and national markets. So will a maintenance of the current funding for agriculture and fishing really be enough? Keep in mind Agriculture and Fishing makes up an estimated 60% of Ghana's GDP.
Segue in to...
Concern #3: But what about the environmental impact of oil and gas extraction??
Solution #3: To quote from the article: "Mr Mahama said the government prioritised the importance of safety and environmental protection, citing the lessons of the Gulf of Mexico oil spill as “a signal to us that we must put in place a mechanism to closely monitor safety environmental issues"
So in other words: don't worry, the government will take care of it... one step closer to the most important concern:
Concern #4: Will the government really take care of it? Like REALLY REALLY take care of things? Cause history ain't in our favour. Governments in most oil producing countries have often turned corrupt - YES the GDP rises in oil producing countries, YES the industry booms BUT the standard of living for the majority of the population is known to deteriorate - everything from poorer health and security to ruined livelihoods to civil unrest to depletion of other precious resources. So how serious is the government in being responsible, accountable and transparent with its petroldollars?
Solution #4: Have we mentioned that the IMF and the WB have indicated that current oil reserves could account for 7% of the GDP? And that oil and gas extraction would greatly help the country become self-sufficient in electricity generation? You like electricity right?
Concern #4: That's all fine and dandy, but answer the question.
[side note: yes I have decided to turn this article into a play].
Solution #4: Well, Ghana will be setting up an Ghana Petroleum Account which will be used as a "single destination collection account for all petroleum revenues due and collected on behalf of the state." This will be treated as a savings fund with only part of the value being used and some of it collecting interest.
Ideally this account will be subject to scrutiny and ensure monitoring of petroldollars going out and coming in.
To ensure the utmost transparency, the government has committed itself to extending the transparency act it currently adheres to for its mining activities called the Extractive Industries Transparency Initiative (EITI), to include the oil and gas sector. According to the Daily Graphic, "The EITI, which is currently being applied in the mining industry, encourages the publication of revenues received by stakeholders, such as the government, the communities and mining companies."
Criticism #4: Well you better behave...
End of Scene.
(should the Daily Graphic read this blog I'm sure they are writing my name on a "never hire this person to write a real article" list).
Okay this blog post had high hopes in the beginning but low blood sugar, the heat and my fear of plagiarizing the entire Daily Graphic article is preventing me from continuing. But to end on an optimistic note: There are in fact SOME countries that have handled their oil successfully. Mr. Dramani Mahama cited a few popular examples: Trinidad and Tobago and Norway... Don't Scandinavians have it all??? Wealth, oil, effective social services, art, free university, blonde hair, height... Geeze.
If played well, the oil and gas extraction can obviously adhere to the proverbial "let it be a blessing rather than a curse." But many precautions must be taken to avert disaster.
Link to the REAL article: http://www.graphic.com.gh/dailygraphic/page.php?news=9045
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