As popular expectations rise, Ghana’s
government faces pressure for economic and political reform to ensure
that revenues from its new oil industry are effectively used. Read an extract from the opening of our special report on Ghana.
The optimism in Ghana for the new year is palpable, with commercial oil production due to start in November amid predictions of a wide-ranging economic recovery. On the face of it, the optimists are right: oil revenues will add to Ghana’s fast-increasing production of gold and cocoa, whose world prices have been rising sharply over the past year, and the government is reining in its inherited budget and trade deficits, helped by half a billion dollars of cheap loans from the International Monetary Fund (IMF) and the World Bank.
Ghana’s political and diplomatic standing remains high, helped by its management of a closely and sometimes roughly-fought national election at the end of 2008 and its declarations of liberalism and a free media. Not only was Accra the choice for US President Barack Obama’s first African sojourn last year, but it has also drawn in senior leaders from China, India and Europe in equal measure. The proliferation of Ghanaians in the international system – in the UN, the IMF and the World Bank – has helped steer the country to diplomatic prominence in Africa. Ghana’s economic reforms have been lauded, as have the contributions of its peacekeepers in UN operations across the world.
For all these accolades, many harsh realities remain. After three decades of internationally-backed economic reform, individual incomes have only recently returned to the levels of the 1970s. Successive governments’ economic strategies have failed to promote self-sustaining growth, let alone achieve founding President Kwame Nkrumah’s vision of a diversified industrial economy no longer chronically dependent on selling unprocessed commodities to markets in the West.
Those economic flaws worry Ghanaians, particularly the tens of thousands of people moving to the cities of Accra, Kumasi and Takoradi in search of jobs and opportunities. Voters judge governments and parties more on economic performance than by ideological or ethnic affiliation. According to polling analyst Ben Ephson, Ghana’s last three elections show there is an increasing band of floating voters, about 30% of the national electorate, mainly in the towns. Living standards are the critical issue for these voters.
Two roads diverged
Accordingly, the start of oil exports this year is an economic and political turning point. Forecast revenues of over a billion dollars a year from the Jubilee field alone – there are another three fields reckoned to be as big – could boost Ghana’s economy if they are properly managed. They will not transform it alone; that requires structural change in the economy, massive investment in agriculture and agro-processing industries, and a rapid expansion of power-generation capacity, much of it fuelled by local gas production.
It will also need determined political leadership to resist the temptation of buying support with the oil money, to maintain the maximum accountability for oil revenues and to establish strong sanctions against corruption and fraud. Much remains to be done here. The government is yet to pass its promised Right To Information Bill, and its main anti-corruption agency, the Commission on Human Rights and Administrative Justice, is underfunded and understaffed.
So far, President John Evans Atta Mills has been cautious about the country’s oil prospects: he has
dampened down expectations of massive new revenues and is determinedly trying to channel more state finance to support farmers and the countryside. That is also astute politics because there are more voters in rural areas, and they are less changeable than those in the towns. Read the full article and the full special report on Ghana in
the February-March edition of The Africa Report, on sale now. Other stories in the report examine Ghana's power, agriculture and mining sectors alongside tips on People to Watch from the world of business, politics, culture and sport. See a preview of this article below or subscribe to The Africa
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