News / Africa

Ghana’s Oil Wealth Not Reaching Poor

Taxis drivers wait for passengers near an beachfront slum in Accra's Jamestown (VOA/Laura Burke, Sept 2012).
Taxis drivers wait for passengers near an beachfront slum in Accra's Jamestown (VOA/Laura Burke, Sept 2012).
Two years after oil began flowing in Ghana, ordinary Ghanaians are wondering where the oil money is going. The government says there has not been much oil revenue coming in thus far, and analysts say the money that is coming in is not reaching the poor.

Like many Ghanaians, Julie Anum had expectations that oil production, which began in December of 2010, would bring about epic changes to life in Ghana. The 54-year-old housekeeper said Ghanaians like her thought oil money would bring about free electricity, free medical care and more jobs.

High expectations

"Because we’ve been hearing from other countries that when there is oil, they have everything for free. If it’s been flowing for two years, then there should be a change," she said. "There should be an improvement in people’s lives. Because you know we have so many in unemployment. So if the oil has started flowing, then they should employ more people to work on the field, the oil field and maybe in their offices. The ministry should employ many people."

Vast reserves of oil were discovered in Ghana in 2007, and production began almost two years ago in the Jubilee Oil Field off Ghana’s western coast.  In 2011, its first year of production, Ghana brought in about $444 million -  which was half of expected revenue.

The oil revenue gets divvyed up between the national oil company to fund its share of operations in the field, an investment and savings fund, and then the annual budget funding amount, which can be used in the current year.

But Finance Minister Kwabena Duffour says Ghana has not yet been able to get enough revenue from the oil to bring about changes for the wider population. He says the revenue in 2011 amounted to about one percent of Ghana’s GDP.

In 2011, government documents show that some $167 million in oil revenue went into the annual budget - and only a percentage of that into social services.

"Insignificant" impact

Bright Simons, the director of Development Research at IMANI Center for Policy and Research, an Accra-based think tank, agrees the money has not been sufficient.

“The money that’s supposed to go into the funding of social services, etc, has been very miniscule compared to a… GDP of $38-39 billion," said Simons. "You know, probably $13 million or so may have gone into the budget, into social services. That is clearly less than 0.1 percent. So when you look at the impact that oil money on social services has had over the last couple of years, its insignificant." 

The Finance  Ministry projects that Ghana’s oil revenue will not increase significantly until 2014 or 2015 when production should reach peak levels.

Not a simple issue

Even then, economists say there are challenges to making oil production benefit the wider population.

Nicolas Depetris Chauvin, a senior advisor at the Accra-based African Center for Economic Transformation, says the greatest benefits to a local economy are seen when countries don’t just export a raw material, but process that raw good into other products.

"Think - the Arab countries. The Arab countries, when they discovered oil 90 years ago, they were exporting raw oil," he said. "Now, you go to Saudi Arabia or to Dubai or Abu Dhabi and you ask them: Are you in the oil business? They will tell you no, no. I’m not in the oil business. I’m in the energy business. I’m in the aluminium business, I’m in the steel business. So they have used the fact that they have oil as a resource to develop other industries.”

Depetris Chavin says the problem is that Ghana’s oil is only predicted to last about 20 years, and it would take a long time to build up the infrastructure and capacity for new industries.

Another solution, Simons suggests, is for the oil companies to contribute to the local economy. He said they should buy local products and support local industry. Simons said right now even products like bread are imported onto the oil rigs, and only local elites are profiting from oil contracts thus far.

He and other analysts agree that  as long as the oil industry continues to be an enclave industry with very few links to the community, it’s unlikely Ghana’ oil will benefit the poor.

You May Like

How to Safeguard Your Mobile Privacy

As the digital world becomes more mobile, so too do concerns about eroding privacy and increased hacking More

'Desert Dancer' Chronicles Iranian Underground Dance Troupe

Film by Richard Raymond is based on true story of Afshin Ghaffarian and his friends More

Obesity Poses Complex Problem

Professor warns of obesity’s worldwide health impact More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Rolling Thunder Run Reveals Changed Attitudes Towards Vietnam Wari
X
Katherine Gypson
May 25, 2015 1:32 AM
For many US war veterans, the Memorial Day holiday is an opportunity to look back at a divisive conflict in the nation’s history and to remember those who did not make it home.
Video

Video Rolling Thunder Run Reveals Changed Attitudes Towards Vietnam War

For many US war veterans, the Memorial Day holiday is an opportunity to look back at a divisive conflict in the nation’s history and to remember those who did not make it home.
Video

Video Female American Soldiers: Healing Through Filmmaking

According to the United States Defense Department, there are more than 200-thousand women serving in the U.S. Armed Forces.  Like their male counterparts, females have experiences that can be very traumatic.  VOA's Bernard Shusman tells us about a program that is helping some American women in the military heal through filmmaking.
Video

Video Iowa Family's Sacrifice Shaped US Military Service for Generations

Few places in America have experienced war like Waterloo. This small town in the Midwest state of Iowa became famous during World War II not for what it accomplished, but what it lost. As VOA’s Kane Farabaugh reports, the legacy of one family’s sacrifice is still a reminder today of the real cost of war for all families on the homefront.
Video

Video On Film: How Dance Defies Iran's Political Oppression

'Desert Dancer' by filmmaker Richard Raymond is based on the true story of a group of young Iranians, who form an underground dance troupe in the Islamic Republic of Iran. This is the latest in a genre of films that focus on dance as a form of freedom of expression against political oppression and social injustice. VOA’s Penelope Poulou has more.
Video

Video Turkey's Ruling Party Trying to Lure Voters in Opposition Stronghold

Turkey’s AK (Justice and Development) Party is seeking a fourth successive general election victory, with the goal of securing two-thirds of the seats in Parliament to rewrite the constitution and change the country's parliamentary system into a presidential one. To achieve that, the party will need to win seats in opposition strongholds like the western city of Izmir. Dorian Jones reports.
Video

Video Millions Flock to Ethiopia Polls

Millions of Ethiopians cast their votes Sunday in the first national election since the 2012 death of longtime leader Meles Zenawi. Mr. Meles' party, the Ethiopian People's Revolutionary Democratic Front, is almost certain of victory again. VOA's Anita Powell reports from Addis Ababa.
Video

Video Scientists Testing Space Propulsion by Light

Can the sun - the heart of our solar system - power a spacecraft to the edge of our solar system? The answer may come from a just-launched small satellite designed to test the efficiency of solar sail propulsion. Once deployed, its large sail will catch the so-called solar wind and slowly reach what scientists hope to be substantial speed. VOA’s George Putic reports.
Video

Video FIFA Trains Somali Referees

As stability returns to the once lawless nation of Somalia, the world football governing body, FIFA, is helping to rebuild the country’s sport sector by training referees as well as its young footballers. Abdulaziz Billow has more from Mogadishu.
Video

Video With US Child Obesity Rates on the Rise, Program Promotes Health Eating

In its fifth year, FoodCorps puts more than 180 young Americans into 500 schools across the United States, where they focus on teaching students about nutrition, engaging them with hands-on activities, and improving their access to healthy foods whether in the cafeteria or the greater community. Aru Pande has more.
Video

Video Virginia Neighborhood Draws People to Nostalgic Main Street

In the U.S., people used to grow up in small towns with a main street lined by family-owned shops and restaurants. Today, however, many main streets are worn down and empty because shoppers have been lured away by shopping malls. But in the Del Ray neighborhood of Alexandria, Virginia, main street is thriving. VOA’s Deborah Block reports it has a nostalgic feel with its small restaurants and unique stores.

VOA Blogs