News / Africa

Ghana Faces Multiple Warnings Over High Oil Growth

An oil rig for oil exploration is pictured at the Port of Takoradi, Ghana, December 4, 2008 (file photo)
An oil rig for oil exploration is pictured at the Port of Takoradi, Ghana, December 4, 2008 (file photo)

While Ghana's oil-fueled economy is now forecast to grow as much as 16 percent this year, the highest rate in the world, economists are warning there remain serious risks the current boom will not be beneficial to most Ghanaians.

An expected 2011 growth figure of 16.3 percent for Ghana's gross domestic product was stated in the recent "African Markets Revealed" report by South Africa's Standard Bank.

A more moderate estimate of 13.6 percent growth for the year was issued last month by Ghana's government.

Whatever the exact number, the jump in growth, which was at five percent last year, is due to Ghana's emergence as an oil producer.

Economists warn there are many risks in this sudden growth, including the so-called "Dutch disease". This can happen when exploiting natural resources leads to a stronger national currency and a subsequent decline in other economic sectors. The name was given after economic problems in the Netherlands followed that country's discovery of a large natural gas field in the late 1950s.

Chris Jackson, a senior economist with the World Bank, repeated the warning at a Thursday Washington event focused on Ghana's future.

"We have got oil, (so) we have got the potential implications of Dutch disease with exchange rate appreciation and the damage that that can do the non-oil booming sectors," Jackson said.

Jackson gave the example of export-crop farmers, whose goods, such as pineapple or cocoa, would become more expensive and less competitive globally.

Ian Gary, an oil expert with Oxfam America, warned Ghana's Jubilee oil field, which went online in December 2010, is underperforming and producing about 80,000 barrels a day, rather than the expected 120,000 barrels.

Gary also expressed concerns that new laws, which took years to craft, are being ignored, such as saving current oil profits to absorb future shocks in world oil prices.

"Instead of putting the surplus into a savings account, the way that the revenue management act called for those were put directly into the budget for spending this year. Another issue that has arisen is the $3 billion loan with China for infrastructure and that loan violates the provisions of the revenue management act.  The revenue management act allows oil to be used as collateral for loans up to 10 years but this would be a 15-year loan," Gary said.

Economists also worried about the so-called oil curse, whereby large oil revenues lead to an abandonment of other economic sectors, environmental degradation, conflict and large-scale corruption.

David Throup, with the Center for Strategic and International Studies, said Ghana's current political structure may not be suitable to ensure a fair distribution of oil wealth.

"It is a highly centralized political system with an excessively strong presidency.  The president is the center of all patronage and I think the pervasiveness of patronage politics in Ghana does corrode political institutions," Throup said.

The panelists stressed next year's scheduled presidential election, with control of a bigger economy at stake, could be, in their words, fierce.

They also warned the oil boom has not led to much job creation so far, with estimates of more than 80 percent of young people in urban areas still working in the informal sector.

You May Like

Ebola Death Toll Nears 5,000 as Virus Advances

West Africa bears heaviest burden; Mali toddler’s death raises new fears More

Jordan’s Battle With Islamic State Militants Carries Domestic Risks

Despite Western concerns that IS militants are preparing a Jordanian offensive, analysts call the kingdom's solid intel a strong deterrent More

Asian-Americans Assume Office in Record Numbers

Steadily deepening engagement in local politics pays off for politicians like Chinese-American Judy Chu More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Talks to Resume on Winter Gas for Ukrainei
X
Al Pessin
October 25, 2014 4:21 PM
Ukrainian and Russian officials will meet again next week in an effort to settle their dispute over natural gas supplies that threatens to leave Ukraine short of heating fuel for the coming winter. VOA’s Al Pessin reports from London the dispute is complex, and has both economic and geopolitical dimensions.
Video

Video Talks to Resume on Winter Gas for Ukraine

Ukrainian and Russian officials will meet again next week in an effort to settle their dispute over natural gas supplies that threatens to leave Ukraine short of heating fuel for the coming winter. VOA’s Al Pessin reports from London the dispute is complex, and has both economic and geopolitical dimensions.
Video

Video Smugglers Offer Cheap Passage From Turkey to Syria

Smugglers in Turkey offer a relatively cheap passage across the border into Syria. Ankara has stepped up efforts to stem the flow of foreign fighters who want to join Islamic State militants fighting for control of the Syrian border city of Kobani. But porous borders and border guards who can be bribed make illegal border crossings quite easy. Zlatica Hoke has more.
Video

Video Comanche Chief Quanah Parker’s Century-Old House Falling Apart

One of the most fascinating people in U.S. history was Quanah Parker, the last chief of the American Indian tribe, the Comanche. He was the son of a Comanche warrior and a white woman who had been captured by the Indians. Parker was a fierce warrior until 1875 when he led his people to Fort Sill, Oklahoma, and took on a new, peaceful life. As VOA’s Greg Flakus reports from Cache, Oklahoma, Quanah’s image remains strong among his people, but part of his heritage is in danger of disappearing.
Video

Video China Political Meeting Seeks to Improve Rule of Law

China’s communist leaders will host a top level political meeting this week, called the Fourth Plenum, and for the first time in the party’s history, rule of law will be a key item on the agenda. Analysts and Chinese media reports say the meetings could see the approval of long-awaited measures aimed at giving courts more independence and include steps to enhance an already aggressive and high-reaching anti-corruption drive. VOA’s Bill Ide has more from Beijing.
Video

Video After Decades of Pressure, Luxembourg Drops Bank Secrecy Rules

European Union finance ministers have reached a breakthrough agreement that will make it more difficult for tax cheats to hide their money. The new legislation, which had been blocked for years by countries with a reputation as tax havens, was approved last week after Luxembourg and Austria agreed to lift their vetoes. But as Mil Arcega reports, it doesn’t mean tax cheats have run out of places to keep their money hidden.
Video

Video Kobani Refugees Welcome, Turkey Criticizes, US Airdrop

Residents of Kobani in northern Syria have welcomed the airdrop of weapons, ammunition and medicine to Kurdish militia who are resisting the seizure of their city by Islamic State militants. The Turkish government, however, has criticized the operation. VOA’s Scott Bobb reports from southeastern Turkey, across the border from Kobani.
Video

Video US ‘Death Cafes’ Put Focus on the Finale

In contemporary America, death usually is a topic to be avoided. But the growing “death café” movement encourages people to discuss their fears and desires about their final moments. VOA’s Jerome Socolovsky reports.
Video

Video Ebola Orphanage Opens in Sierra Leone

Sierra Leone's first Ebola orphanage has opened in the Kailahun district. Hundreds of children orphaned since the beginning of the Ebola outbreak face stigma and rejection with nobody to care for them. Adam Bailes reports for VOA about a new interim care center that's aimed at helping the growing number of children affected by Ebola.

All About America

AppleAndroid