Ghana's future after the oil discoveries - Four scenarios

Résumé du document

Ghana seems to be destined for a bright future. According to the Ministry of Finance of Ghana, poverty fell from 52% of the total population in 1992 to 28.5% in 2006. However, challenges remain. Unfortunately, inequalities sustain and the poorest Ghanaian people do not seem to benefit from economic growth. Analyzed by GINI coefficient, inequalities have significantly risen from 3.373 to 3.394 over the 1992-2006 period. In other words, 18.2% of the population still live with less than US $1/day. Nowadays, economy of Ghana is changing since the UK firm Tullow Oil discovered, in 2007 and 2008 new oil offshore reserves in Tano basin's so called Jubilee Fields. Before this surprising discovery, production of oil in Ghana was negligible. The first oil reserve discovered in the 1970s did not provide the country with significant revenues as they yielded only 226 barrels a day. The production increased to 7,399 b/d in 2008, ranking Ghana as the 91st world's oil producer. Even though the extraction from new oil reserves will start in late 2010, the announcement of the discovery has attracted FDI. Indeed, the Ghana National Petroleum Corporation (GNPC), a state-owned firm which aims to promote the production of 'black gold' since 1989, affirmed on its website that FDI reached US $523 million in September 2008. Accordingly, oil is going to become a significant revenue stream as it has been forecasted to extract three billion barrels of oil. We may thus imagine four different scenarios for Ghana following two axes. The horizontal axe will identify the repartition of oil revenues while the vertical one will represent the global and regional focus.

Extraits

[...] Ghana and surrounding countries enjoy its success. Indeed, equal oil revenues distribution within the country allow local population to directly benefit from it in a way of the US and European powerful states do not impose their rules. Government distribute revenues through economic and social development schemes for the country. It also allocates more money to education. Accordingly, Human Development Index is going better. Standard of living and wages of inhabitants increase but not as much as if the country was global-focused. [...]

[...] In addition, oil enables the government to spend more money. These two features matched are likely to increase corruption and other unfair and illegal practices. Indeed, interested parties will attempt to influence government to spend for their own interests to the detriment to the population (Darko Osei, R. and Domfe, 2008). Consequently, political institutions will inspire distrust to population. Again, tensions, state-protests, or even civil war will appear within the country and eventually within West Africa region. Finally, unequal distribution of oil revenues allocation will not allow Ghana to invest in structural works such as education and health. [...]

[...] Ghana's economy is based on its natural resources and registers promising economic outputs compare to the set of West Africa countries performances. Ghana's GDP was in 1990, it exploded to in 2008 (IMF database, 2009). High prices of gold and cocoa over the last years have largely contributed to this positive evolution as they are the major revenue streams of the country. Indeed, Ghana is ranked among the 10 world's gold exporters and this resource reached 33% of its export in 2008 (Meijìa Acosta, A. [...]

[...] Thanks to increased oil export, Ghana's GDP could explode to over 11% from 2011 (Emerging markets monitor, 2009). New oil offshore reserves will significantly increase income of Ghanaian Government as it will become the main revenue stream for the fiscal account. The GNPC affirms that the government will benefit from 40 to 50% of total oil revenue because Ghana has come to agreements with the oil producing countries and international oil companies like Tullow Oil PLC and Kosmos Energy (Connors, W and Emerging markets monitor, 2009). [...]

[...] Ghana will gain its place among middle- income countries. Equal oil revenue distribution will ensure Ghana to get a secure and stable political regim. In other words, it will avoid corruption attempts as every single person will benefit equally from oil windfalls. In 2007, Transprency International ranked Ghana at the 69 position among 180 counted country. This position will go up in the ranking since the government will better manage its oil revenue allocation. Moreover, its stable democratic functioning will guarantee Ghana to keep good political relationships with the rest of the world. [...]