Ghana begins to tap oil, but can it avoid the 'resource curse'?

“Aid makes rulers accountable to donors, tax makes rulers accountable to citizens, and oil makes rulers accountable to nobody,” says Mr. Shaxson.

Alex Vines, head of the Africa program at the Chatham House think tank in London, worries that Ghana is unprepared for the flow of oil. He points out that Ghana still relies on the 1984 Petroleum Exploration and Production law.

“It still has no new law, no regulations, and no regulator. It's not too late to deal with these shortcomings, but muddling through is inefficient and could be very costly,” he said in a statement on the Chatham House website.

In its 2010 report, the Revenue Watch Institute in New York said that Ghana has “scant revenue transparency,” in the extractive industries, ranking it alongside such stragglers as Angola and Equatorial Guinea.

Reasons for optimism

Despite the anxieties, the World Bank highlights reasons for optimism, shared by politicians and some analysts in Accra.

Unlike many other oil-producing African nations whose oil sectors dominate the economy, making them prone to conflict and corruption, oil proceeds will account for just 6 percent of domestic government revenues in 2011. The oil sector will be dwarfed by established cocoa and mining industries and managed by one of the region's most stable governments.

“It’s a bit of oil, not a whole lot. So it’s not enough to give you the 'Dutch disease' and a curse,” says Ishac Diwan, country director of the World Bank, referring to a Dutch discovery of gas in the 1960s that boosted the currency, undermining other exports.

"Oil is not so big that it could just shift this country into a different political path. It's not a tsunami," he said.

Mr. Diwan says Ghana’s strong institutions, vibrant civil society, and relatively good record on corruption puts it on a firm footing to avoid the resource curse that blights its fellow African economies of Nigeria, Equatorial Guinea, and Angola.

"I just can't see big corruption happening. Hidden bank accounts in Switzerland and lots of money disappearing -- this is not Ghana."

Investment in cocoa offsets oil

Nii Anyetei Ampa Sowa, a research analyst at the Ghanaian think tank Databank, says Ghana’s heavy investment in cocoa should offset the effects of Dutch disease.

Citing the closely fought 2008 election, where the incumbent John Kofi Agyekum Kufuor stepped aside, a rarity in African politics, Mr. Sowa says the country is stable and unlikely to be drawn into conflict over oil.

“The razor-thin margin that the current government won [by in the January 2009 election] – for that not to have caused trouble gives credit to us as Ghanaians," says Sowa. "I would use that as capital to say that the odds of strife happening, or people rigging [the vote] to stay in power, are low.”

Previous

1 | 2