Ghana Prepares for Oil Boom



13 July 2009

Environmental and regulatory concerns surround Ghana's plans to start producing offshore oil.

Ghana's President John Atta Mills (undated photo)
Ghana's President John Atta Mills (file photo)
With more than 600 million barrels of proven reserves, the International Monetary Fund says oil and natural gas from Ghana's first off-shore field could bring the country as much as $20 billion by 2030.

But Ghana need look no farther than Nigeria to see how squandered oil wealth can bring violence that destroys pipelines, takes hostages, and consumes the central government.

"Let me say loud and clear that the oil and natural gas in this country is for the benefit of the people of Ghana," said Ghanaian President John Atta Mills.

In an interview with VOA, Mr. Mills says his government is mindful of Nigeria's example.

"You want to learn from the experiences of others. You want to be guided by things which have worked and also take note of things which have not worked," Mills continued. "If at this stage we in Ghana can not learn from the experiences of our neighbors and colleagues on the continent, then we have no business being in politics."

President Mills' election earlier this year in the fifth successive vote since 1992 is the chief reason U.S. President Barack Obama made Ghana his first stop in Sub-Saharan Africa since taking office.
US President Barack Obama, left, walks with Ghana's President John Atta Mills, at the Presidential Palace in Accra, 11 Jul 2009
US President Barack Obama, left, walks with Ghana's President John Atta Mills, at the Presidential Palace in Accra, 11 Jul 2009


"Dependence on commodities or a single export has a tendency to concentrate wealth in the hands of the few and leaves people too vulnerable to downturns," Mr. Obama said.

He told lawmakers in Accra that countries thrive when they invest in their people and in infrastructure, when they promote multiple export industries, develop a skilled workforce, and create space for small and medium-sized businesses that generate jobs.

"Oil brings great opportunities. And you have been very responsible in preparing for new revenue. But as so many Ghanaians know, oil cannot simply become the new cocoa,"
Mr. Obama said.

After years of steady growth, Ghana's economy has slowed, in part due to over-spending by the previous government. A budget deficit that was nine percent of gross domestic product in 2007 now tops 15 percent of GDP. Inflation in May reached 20 percent. The value of Ghana's currency fell 13 percent in the first quarter.

"Every politician is making claims on this oil. Everyone is banking too many hopes on the oil, and that in itself is a threat," said Abdulai Dramani, environmental program officer for the Accra-base advocacy group Third World Network-Africa.  

Mr. Dramani is concerned about the environmental impact of a possible oil spill and how the offshore platforms will affect the local fishing industry.

"It has been fenced-off against the fisher folks, and therefore their access to fish is impaired. And that is their livelihood source. So for them, that is the danger. Even though the oil might generate some revenue, that revenue is not likely to come to them because they have no skills of being employed," said Dramani.

Since reserves were discovered in the Jubilee field, more than 40 companies have applied for licenses to explore for oil. Dramani wants a moratorium on new licenses until Ghanaian law catches up.

President Mills says he will not allow Ghana's oil boom to get out of hand.

"I have seen all sorts of people flocking into that area. People knocking on our doors making all sorts of proposals. But we are firmly resolved to do what is right," said Mr. Mills. "We have got our blueprint. We have got our guidelines. And we will go strictly in accordance with these guidelines. There are some who are not prepared to go in accordance with the lay-down procedure. There are some who want to be favored," he continued.

Oil could bring President Mills' government $1 billion dollars in annual revenue by the start of next year. Ghana's Integrated Social Development Center says past experience with African oil booms shows that the transparent management of oil funds not only improves public spending but gives the public greater confidence that their money is being handled properly.