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

Video VOA Reporter Tours Devastated Peshawar School

Islamist militants wearing military uniforms and strapped with explosives attacked a military run school Tuesday in the northwestern Pakistani city of Peshawar. At least 141 people were killed in the horrific attack, most of them young students. More

Video Sudan School Becomes Target of Aerial Attacks

Dropout rate at an all-time high in South Kordofan state because many schools have been destroyed during 3-year civil war More

Tennessee Songbirds Fly Coop Long Before Tornadoes Arrive

Researchers say birds apparently alerted to danger by sounds at frequencies below range of human hearing 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.
US: Response to Sony Hack Will Be Proportionali
X
Aru Pande
December 19, 2014 1:45 AM
The White House says President Barack Obama considers the cyberattack on Sony Corp. a serious national security matter and that the U.S. will counter with an "appropriate response." VOA correspondent Aru Pande reports.
Video

Video US: Response to Sony Hack Will Be Proportional

The White House says President Barack Obama considers the cyberattack on Sony Corp. a serious national security matter and that the U.S. will counter with an "appropriate response." VOA correspondent Aru Pande reports.
Video

Video Sudan School Becomes Target of Aerial Attacks

The school dropout rate is at an all-time high in Sudan's South Kordofan state because many schools have been destroyed during the three-year civil war between the government and SPLA-N rebel forces. Adam Bailes visited Sudan's Nuba Mountains' region and reports many children are simply too scared to go to school
Video

Video Nigerians Fleeing Boko Haram Languish in Camp Near Capital

In its five-year effort to impose Islamic law in northeastern Nigeria, the Boko Haram extremist group has killed thousands of people and forced hundreds of thousands to flee. Some of those who ran for their lives now live in squalor on the edges of the capital, Abuja. Chris Stein reports for VOA.
Video

Video Putin Says Russian Economy Will Emerge Stronger

Russian President Vladimir Putin has said his country's sinking economy will not only recover but also become stronger, despite falling oil prices and Western sanctions over Ukraine. VOA's Daniel Schearf reports.
Video

Video Detained Turkish Journalists Follow Teachings of US-Based Preacher

The Turkish government’s jailing of critical journalists has sparked international condemnation and is being seen as an effort to undermine the followers of an ailing Turkish preacher based in the United States. VOA religion reporter Jerome Socolovsky has more.
Video

Video ‘Anti-Islamization’ Marches Increase Tensions In Germany

Anti-immigrant rallies in Germany have been building in recent weeks, peaking Monday night in the city of Dresden where tens of thousands of people turned out to demonstrate against what they call the ‘Islamization’ of the West. Germany has offered asylum to more Syrian refugees than any other country, and this appears to have set off the protests. Henry Ridgwell reports from London.
Video

Video Aceh Rebuilt Decade After Tsunami, But Scars Remain

On December 26, 2004 there was an earthquake in the Indian Ocean so powerful it caused the Earth’s axis to wobble a few centimeters. Onshore on the island of Sumatra, the resulting tsunami was devastating. A decade later, VOA Correspondent Steve Herman reports from Banda Aceh, Indonesia, where although there is little remaining evidence of the physical devastation, the psychological scars among survivors remain.
Video

Video Refugees Living in Kenya Long for Peace in the Home Countries

Kenya is host to numerous refugees seeking safe haven from conflict. Immigrants from Somalia face challenges in their new lives in Kenya. Ahead of International Migrants Day (December 18) Lenny Ruvaga has more for VOA News from the Kenyan capital.

All About America

AppleAndroid