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The economic impact of Ghana’s oil industry

The bur­geoning oil industry in the African nation of Ghana has the poten­tial to create wide­spread gen­tri­fi­ca­tion, according to Kwamina Pan­ford, an asso­ciate pro­fessor of African Amer­ican Studies at North­eastern University.

In one major city in the country’s western region, rental prices have sky­rock­eted and housing com­plexes have been con­verted into com­mer­cial prop­er­ties, forcing working-​​class fam­i­lies to relo­cate to more afford­able neigh­bor­hoods. It’s not uncommon for a three-​​bedroom con­do­minium in an upscale harbor city to cost $4,000 per month or for an inter­na­tional ship­ping com­pany to lease an office building for more than $400,000 per year.

“The social ten­sions are rising because the cost of living is esca­lating,” Pan­ford explained, noting that the price of a pop­ular canned coco drink has increased 50 per­cent. “There has been a sub­stan­tial pop­u­la­tion rush to Ghana’s western region because every­body is trying to get a piece of the action.”

Pan­ford spent a year in Ghana on a Ful­bright schol­ar­ship, the goal of which was to con­duct research and find out whether oil pro­duc­tion would lead to socio-​​economic devel­op­ment or create new social and polit­ical ills.

He gath­ered infor­ma­tion from min­is­ters of state, top-​​level civil ser­vants and leaders of non­govern­mental orga­ni­za­tions, and then pre­sented his find­ings at public forums, on national tele­vi­sion and in Ghana’s leading daily news­paper. He even wrote a report on petro­leum rev­enue man­age­ment on behalf of the Public Interest and Account­ability Com­mittee, which over­sees the country’s use of oil and gas revenues.

“You get the feeling that every­thing you say and do has an impact on human life,” Pan­ford said, adding that he recently pub­lished a schol­arly article on his find­ings in the Ghana Policy Journal.

Ghana’s oil and gas rev­enues recently exceeded $1 bil­lion, Pan­ford said, and the country is on the verge of becoming the sev­enth largest oil pro­ducer in Africa. Last year, Ghana’s par­lia­ment passed the Petro­leum Rev­enue Man­age­ment Bill, which gives the gov­ern­ment per­mis­sion to use 70 per­cent of oil rev­enues to sup­port its budget and save 30 per­cent in “her­itage and stabilization” funds.

Policy makers and elite busi­ness leaders appear to be fol­lowing the rules and reg­u­la­tions of Ghana’s oil industry, according to Panford’s watchful eye. As he put it,“I don’t see any foul play or corruption.”

But Pan­ford sug­gested that rep­re­sen­ta­tives of Ghana’s min­istries of energy and finance demand a more prof­itable deal with for­eign oil com­pa­nies, none of which are cur­rently paying cor­po­rate taxes. “Ghana’s oil is high quality and is being pro­duced in a fairly stable polit­ical envi­ron­ment,” he explained. “This should help Ghana improve its bar­gaining posi­tion and con­trol the rela­tions with for­eign companies.”

The country, he added, should view its billion-​​dollar oil industry as a cat­a­lyst for eco­nomic growth and devel­op­ment, using rev­enue to invest in green energy and jobs in the oil and gas sector.

“Ghana should use this money to diver­sify its economy and finance eco­nomic trans­for­ma­tion,” Pan­ford said.

– by Jason Kornwitz

Published On: November 15, 2012 | Tags: ,,,
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