News / Africa

Oxfam: Ghana's New Oil Law Leaves Room for Financial Mistakes

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)

Multimedia

Audio
TEXT SIZE - +
Drew Hinshaw

Oxfam says Ghana's new oil law will not protect it from making the same financial mistakes as established oil producers such as Angola and Nigeria.

The Petrol Revenue Management Bill that Ghana's parliament ratified on March 2 is to regulate how the country spends and saves the $1 billion in oil money it expects to reap this year alone, an amount that is equal to two-thirds of the government's total anti-poverty spending.

The new law will require Ghana's government to publish a breakdown of all the oil-related money it receives and where it goes.  It establishes watchdog groups to keep an eye on the oil money.

But policy group Oxfam International says those rules alone are not enough to prevent this region's newest oil exporter from repeating the mistakes of its oldest oil giants.

Nigeria, Angola, Cameroon, Equatorial-Guinea, Republic of Congo, and Gabon - all west and central African states - have been pumping hundreds of millions of dollars worth of oil a day for decades. But that oil windfall has typically failed to bring even mundane improvements in the lives of people in those states, the majority of whom live on less than $1.25 a day.

Ghana could suffer a similar future, Oxfam Policy Manager Ian Gary says, if the country does what its neighbors did and uses oil revenue as collateral for government loans.

Unfortunately, he said, the final law stripped a provision that would have prevented Ghana from doing just that - taking on risky debt with the false sense of security that petrol profits will one day pick up the tab.

"In many cases such as Angola, Congo-Brazzaville, and others, the condition under which they took oil-backed loans were very opaque," said Gary.  "The terms were not known to the public and the interest rates were really high.  So without any public discussion, the officials were basically mortgaging the future at very bad terms."

Ghana, he said, may be already inching towards that fate.

The state has taken out a staggering $750 million loan in the form the eurobond in 2008.  Ghana's state-owned National Petroleum Company is also looking to borrow $500 million in start-up cash - a loan Gary fears, will be backed with the promise that some future oil windfall will pay off the loan if the company can't.

"There's concern that before Ghana even starts to really produce significant quantities of oil that it will have mortgaged a lot of that money," added Gary.

There are other, more intransigent concerns, too, he says for this country that may be an example against corruption within its region, but is still ranked 62nd in Transparency International's rankings of how 178 countries fare against corruption.

A series of 2009 investigations on how the country's nascent petrol proceeds were being spent found "leakage," Gary said, between the oil wells and the schools and clinics they were meant to fund.

"It's a question of how quickly Ghana can build its capacity to not just spend money, but spend money wisely," explained Gary.

In his state of the nation speech this year, Ghana's President John Atta Mills said his government will account for 100 percent of the country's petrol proceeds.

You May Like

Wikipedia Proves Useful for Tracking Flu

Technique gave better results than Center for Disease Control (CDC) and Google’s Flu Trends More

Turkish Law Gives Spy Agency Controversial Powers

Parliament approves legislation to bolster powers of intelligence service, which government claims is necessary to modernize and deal with new threats Turkey faces More

Video Face of American Farmer Changing

Average American farmer is now 58 years old, and farmers 65 and older are the fastest growing segment of the population 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.
Face of American Farmer is Changingi
X
Mike Osborne
April 18, 2014
The average American farmer is now 58 years old, and farmers 65 and older are the fastest growing segment of the population. It’s a troubling trend signaling big changes ahead for American agriculture as aging farmers retire. Reporter Mike Osborne says a new report from the U.S. Census Bureau is suggesting what some of those changes might look like... and why they might not be so troubling.
Video

Video Face of American Farmer is Changing

The average American farmer is now 58 years old, and farmers 65 and older are the fastest growing segment of the population. It’s a troubling trend signaling big changes ahead for American agriculture as aging farmers retire. Reporter Mike Osborne says a new report from the U.S. Census Bureau is suggesting what some of those changes might look like... and why they might not be so troubling.
Video

Video Donetsk Governor: Ukraine Military Assault 'Delicate But Necessary'

Around a dozen state buildings in eastern Ukraine remain in the hands of pro-Russian protesters who are demanding a referendum on self-rule. The governor of the whole Donetsk region is among those forced out by the protesters. He spoke to VOA's Henry Ridgwell from his temporary new office in Donetsk city.
Video

Video Drones May Soon Send Data From High Seas

Drones are usually associated with unmanned flying vehicles, but autonomous watercraft are also becoming useful tools for jobs ranging from scientific exploration to law enforcement to searching for a missing airliner in the Indian Ocean. VOA’s George Putic reports on sea-faring drones.
Video

Video New Earth-Size Planet Found

Not too big, not too small. Not too hot, not too cold. A newly discovered planet looks just right for life as we know it, according to an international group of astronomers. VOA’s Steve Baragona has more.
Video

Video Copts in Diaspora Worry About Future in Egypt

Around 10 percent of Egypt’s population belong to the Coptic faith, making them the largest Christian minority in the Middle East. But they have become targets of violence since the revolution three years ago. With elections scheduled for May and the struggle between the Egyptian military and Islamists continuing, many Copts abroad are deeply worried about the future of their ancient church. VOA religion correspondent Jerome Socolovsky visited a Coptic church outside Washington DC.
Video

Video Critics Say Venezuelan Protests Test Limits of Military's Support

During the two months of deadly anti-government protests that have rocked the oil-rich nation of Venezuela, President Nicolas Maduro has accused the opposition of trying to initiate a coup. Though a small number of military officers have been arrested for allegedly plotting against the government, VOA’s Brian Padden reports the leadership of the armed forces continues to support the president, at least for now.
Video

Video More Millenials Unplug to Embrace Board Games

A big new trend in the U.S. toy industry has more consumers switching off their high-tech gadgets to play with classic toys, like board games. This is especially true among the so-called millenial generation - those born in the 1980's and 90's. Elizabeth Lee has more from an unusual café in Los Angeles, where the new trend is popular and business is booming.
Video

Video Google Buys Drone Company

In its latest purchase of high-tech companies, Google has acquired a manufacturer of solar-powered drones that can stay in the air almost indefinitely, relaying broadband Internet connection to remote areas. It is seen as yet another step in the U.S. based Web giant’s bid to bring Internet to the whole world. VOA’s George Putic reports.
AppleAndroid