Ghana's Oil, Will the People Benefit?

Much has been said about Ghana's oil and the revenue that is supposed to flow into her coffers by 2010. The politicians and their associates are excited that Ghana will soon be swimming in oil money. But the people are not enthused as they know the history of oil rich countries in Africa. They are also not excited because years of gold, diamond, cocoa, timber and other mineral exports has not brought any benefit to them rather they are still wallowing in chronic poverty with no access to water, healthcare, education, electricity with transport and other infrastructures crumbling. The question is will the people benefit from the oil if they could not benefit from gold and other minerals? Is there any guarantee that the people will benefit from the oil proceeds when it begins to flow in 2010?

For decades several billions dollars has been realised from the sale of gold, diamond, cocoa, timber, bauxite and many more but Ghanaians still wallow in deep poverty without electricity, water, proper housing infrastructure, sanitation. The only people who seem to have benefited from the revenue from these valuable assets are the corrupt politicians, their associates and the multinational corporations and they are the very people who are likely to benefit from the oil. The only 'benefit' the people will have as is the case of gold and diamond, will be paying for the cost of environmental degradation, pollution of soil, rivers, wells, creeks that will render many farmers and fishermen jobless.

Already effort by the government to get Ghanaians to participate in forums to discuss how the proceeds from oil should be used to help the poor has been hijacked by the politicians and the so called elite with the people reduced to mere spectators.

What makes the situation troubling is the fact that Ghana is not the first country in Africa to produce oil or gas. Nigeria, Angola, Gabon, Equatorial Guinea, Libya and Algeria have been oil producing and exporting nations for decades. The reality is that none of these countries has been able to use the huge oil revenue to better the lives of their peoples with poverty and corruption sitting deep in those countries.

How will Ghana be different from her neighbours is still unclear but her own history of corruption in the mineral, timber, cocoa sectors and the history of her neighbours give an idea as to where she might go.

In Nigeria for example 80 million people or even more still live on less than a dollar a day despite nation receiving over $400 billion from the sale of oil. All that Nigerian leaders can show for the billions they have received are the deep poverty, violence crimes, kidnappings, instability in oil producing areas, massive official corruption seen at all levels of government both federal and state as well as environmental degradation and pollution of rivers, wells, creeks and the soil which has rendered millions of farmers and fishermen jobless. The events in Nigeria in the last 40 years since oil was discovered leave much to be desired. There have been more military rulers in that country than civilians with only one transfer of power from civilian to civilian in her 49 years of independence. The stories of Sani Abacha and that of the evil genius Babangida and how they amassed wealth at the expense of the country still resonate around the globe anytime corruption is mentioned.

The oil producing and exporting countries of Angola, Gabon, Algeria, Libya and Equatorial Guinea are not any better. Millions of people in those countries live in abject poverty and in squalor conditions while the leaders live in opulence with luxury villas and numerous fat bank accounts in France, Switzerland, United States, Britain and their colonies of save haven centres in Caymans Islands, Jersey and the rest.

The opulence among the leadership and the unparallel levels of poverty among the population in those countries, prompted a French judge to investigate how these leaders came to acquire the properties that they and families enjoy. The investigation follows lawsuits by the French branch of anti-corruption group Transparency International and rights lobby Sherpa Association. The presidents’ families and their associates have been accused of using government funds to buy luxury homes in Paris and luxury car models such as Bugatti Veyron, Ferrari and Maserati.

They also hold fat bank accounts in France suspected to be theft proceeds, mainly from oil resources. Mr Bongo of Gabon who died yesterday, “the king of bling”, and Mr Obiang of Equatorial Guinea are believed to have used their countries’ huge oil resources to enrich themselves, their families and friends. Sherpa claims the three leaders are using relatives as nominees to hide valuable real estate and cars in France as well as offshore bank accounts with huge volumes of loot.

President Bongo is suspected to be hiding 59 apartments, 70 bank accounts and nine luxury cars while Mr Denis Sassou-Nguesso of Congo is believed to be concealing 18 apartments and holding 112 bank accounts and several luxury vehicles all bought from money stolen from the oil revenues. Police investigations in 2007 revealed that Mr Obiang Nguema of Equatorial Guinea has an apartment and eight luxury cars in France. Only God knows how much money sits in those accounts. A US Senate investigation in 1997 found the spending habit of these corrupt leaders to be very astonishing. The report established that Mr Bongo and his family spend £55million a year, mainly from oil proceeds.

The Independent Newspaper writes of Angola: “As the threat of starvation sweeps across war-ravaged Angola, its secretive government is coming under pressure to explain how billions of pounds in oil revenues have gone missing. A fresh humanitarian crisis has hit Angola since fighting with UNITA rebels ended. Three million people are on the edge of famine. Angola's President, Eduardo dos Santos, has appealed for international help, pleading that his government is broke. But a swelling chorus of diplomats, campaigners and angry Angolans is asking why he is unable to pay his way out of trouble when his government earns billions of pounds from a burgeoning oil exploration business that will soon rival that of Nigeria as Africa's largest. And while only a tiny amount is spent on helping suffering Angolans, every year a large chunk of the profits – between 20 and 35 per cent – mysteriously disappears. Last year, for example, the International Monetary Fund estimated the oil revenues at £2bn, of which £750m simply vanished. Campaigners such as the UK advocacy group Global Witness call it wholesale state robbery. They say that Angola's vast oil profits are disappearing into the pockets of the Futungo – a secret, powerful élite linked to President Dos Santos – on a scale similar to the excesses of the notorious kleptocrat Mobutu Sese Seko of Zaire.” Source: the independent.co.uk

According to the Sunday Times, quoting a police probe report, the Bongos bought a mansion worth 18.8 million euros in Paris in 2007. The 21,528-square-foot home is in Rue de la Baume, near the Elysée Palace, the home of French president Nicolas Sarkozy. A Luxembourg-based company that bought the home is owned by two of Bongo’s children, Omar, 13, and Yacine, 16, and his late wife Edith.

So far there is nothing to show that the 1.4 million Gabonese have benefited from the oil. In fact they have become worse off as the following 2008 Human Rights Report by US State Department shows: “The country's human rights record remained poor. The following human rights problems were reported: limited ability of citizens to change their government; use of excessive force, including torture toward prisoners and detainees; harsh prison conditions; arbitrary arrest and detention; an inefficient judiciary susceptible to government influence; restrictions on the right to privacy; restrictions on freedom of speech, press, association, and movement; harassment of refugees; widespread government corruption; violence and societal discrimination against women, persons with HIV/AIDS, and noncitizen Africans; trafficking in persons, particularly children; and forced labour and child labour.”

The same poor human rights were recorded in the report for Angola, Equatorial Guinea and Nigeria with citizens subjected to torture, killings and inhumane treatment by the leaders. The fear is that like her neighbours in the region there is a high probability that the flow of oil money into Ghana may encourage unscrupulous army officers and unelected Ghanaian leaders to take over the administration of the nation by force and suppress all dissents as happened during gold and diamond discoveries where army officers seized power overnight, stole as much as they could and mismanaged what remained of their loot with Ghanaians and the economy ultimately paying for their reckless corrupt actions. This is what has sadly happened in Equatorial Guinea, Gabon, Angola, Libya and Congo which are all been ruled by corrupt dictators with over 150 years of reign between the five of them.

Apart from corruption, there is the added danger that the flow of oil revenue will lead to the collapse of other vital sectors of the economy such as agriculture and tourism due to over dependence on oil revenue. Nigeria for example used to be major cocoa and other cash crop producing hub but the discovery of oil has led to the collapse of that vital industry. Such a dependence as in Gabon has had very devastating consequences in terms of food prices, jobs and revenue losses. What is more, these countries remain crude oil producers with little diversification, a practice that makes them more vulnerable to the shocks that are associated with the oil market and explains why they continue to remain poor despite years of oil export.

Worst of it all, it is the role of multinational corporations who exploit the oil in these poor countries that leave much to be desired. These corporations acting in their own selfish interest have a history of paying bribes to corrupt leaders to secure concessions. They also have a history of helping the corrupt leaders to steal and hide their loot in foreign banks. In 2003 Elf executives admitted paying Omar Bongo $50 million a year through Swiss banks in order to win concessions. The Elf executives, who were themselves tried for corruption, also admitted paying huge bribes to Cameroon’s Paul Biya and his counterparts in Congo, Angola and Equatorial Guinea. In 2004 Royal Dutch Shell of Netherlands admitted fuelling corruption, poverty and violence in Nigeria and toady June 9, 2009 has agreed to pay $15.5 million to the family of Ken Saro-Wiwa and the Ogoni eight for her complicity in their execution by the corrupt Abacha regime. http://www.guardian.co.uk/world/2009/jun/08/nigeria-usa. Their secretive and non-transparent dealings with corrupt governments are no secrete. In Angola, Western oil companies such as BP, Shell, ExxonMobil and Chevron stand accused of refusing to reveal their annual payments to the Angolan government a charge similar to those in Nigeria, Gabon, Congo, Algeria and E. Guinea.

What is worrying is that these are the very companies that are lining up to exploit Ghana’s oil and nothing shows that they will operate differently in the country.

Also the lasting environmental damage the corporations will cause Ghana and the ultimate price Ghanaians will pay for the destruction of the ecosystem and the pollution of their soils, wells, lakes, lagoons, rivers as well as the destruction of fish stock that have made environmentalists to worry and as a result gearing up for a long battle. Already the global environmental destruction caused by these corporations is estimated at $1.8 trillion with oil and mining countries in Africa sharing about a third of that. In Nigeria as is in many other places Shell has refused to clean up oil spills that have polluted rivers, lakes, lagoons and soil with the people enduring the health hazards posed by it. Anyone who visits the Niger Delta Region will find it hard to come to terms with the poverty, deprivation, collapsed infrastructures, environmental destruction and the billions of dollars Shell and her counterparts make in that country annually. The only thing that has kept millions of poverty stricken people surviving is a belief in God and a hope of a better life after death.

This has been the history of oil rich countries in Africa and guided by its own history of corruption in the mineral, cocoa and timber sectors there is no doubt that without a strong monitoring and strong accountability system backed by fiscal prudence, Ghana will join her neighbours in the chorus of poverty, violence, pollution and corruption. Already the Ghana National Petroleum Corporation has been embroiled in corruption and mismanagement allegations with its former head Tsatsu Tsikata who was sent to jail on the grounds of corruption and mismanagement.

However, Ghana can avoid the calamities of her neighbours by learning from the Gulf States notably Bahrain, Qatar, United Arab Emirates, Saudi Arabia where revenue from oil has changed the once barren and poverty stricken nations into prosperous ones. Even though there is a huge gap between the rulers and the people and corruption, nepotism and tyrants exist, during the last three decades these countries have been able to use revenue from oil to build their infrastructures, develop their industries and diversify their economies by focussing on technology, agriculture, tourism and financial products that is banking with success. More can also be learnt from Norway where sound fiscal management coupled with sound environmental practices has made her an icon in the world of oil production.

Instead of embezzling it or using it for white elephant projects, government of Ghana should use the proceeds to build durable roads, schools, hospitals, irrigation, sanitation, high speed train network linking all parts of the country, provide housing for low income groups and invest heavily in technology and agriculture so as to avoid being over dependence on oil revenue.

Ghana should put in place proper laws that will make the exploitation of the oil sustainable, environmentally and eco-friendly. Therefore environmental impact assessment should be conducted for every project linked to the oil operation.

The laws must also seek to ensure that oil money will not line up the pockets of the elite to the detriment of the people and the economy. Therefore, the utilisation of the proceeds must be transparent and democratic. The best way to do this is to actively involve all stakeholders including the people, the government, opposition parties, NGOs, CBOs, Church and all interest groups. Record must be kept by every institution that receives oil money and the release of those records to anyone with a genuine interest must be made mandatory.

All oil companies directly or indirectly involved in the drilling, marketing, distribution or export of oil must be made by law to publish what they pay. They must also indicate whether they have paid bribe to officials within or outside the country. Every ministry or department which receives oil money for project must publish in detail how it utilised it. The law must propose for stiffer penalties for officials and companies who will misconduct themselves.

Therefore, the law must take care of how the oil should be managed; how contracts should be awarded, how the proceeds should be utilised and how the environment should be protected. A fund could be created where all proceeds from the oil could go into with parliament given the sole power to determine and certify how money could be drawn from the fund. Therefore the proceeds should be removed at all cost from the control of the executive branch of government.

A financial court should be created to investigate and prosecute entities who may try to enrich themselves overnight. Government must hire experienced tax experts and fraud detectives to scrutinise activities of multinational corporations who may want to import their shady deals of theft, tax evasion, bribery and false accounting into the country. Government must do this as a necessity even if that means hiring foreign experts.

The media should play its role as the fourth organ of government any law that will hinder their operation should be repealed. More investigative journalists should be employed by the media houses and their capacities build up to reflect the challenges of the upcoming battle. The position of independent democratic and anti-corruption watchdogs such as Serious Fraud Office, Commission on Human Rights and Administrative Justice should be strengthened and provided with all the resources they need to function effectively.

With this Ghana could be praised again for leading the continent in the right direction as her democratic credential shows.

By Lord Aikins Adusei

*The Author is a political activist, anti-corruption campaigner and a columnist for American Chronicle. He blogs at www.ghanapundit.blogspot.com

Infrastructures investment: A Path to Africa’s Economic Independence

There are three major problems confronting Africans today. The first is leadership incompetence; the second is endemic corruption; the third and most deadly of all is poor state of infrastructure. The health of every nation’s economy is strongly dependent on a reliable infrastructure system because infrastructures are the bedrock, life blood and the engines that drive the economy. The role play by infrastructures in the economy of a nation cannot be overemphasized especially its effect on sustainable development, foreign direct investment flow, GDP growth, inflation reduction, job creation, trade, agriculture, delivery of goods and services, lowering cost of business, improving health and standard of living and poverty reduction. Therefore, efficient and effective provision of infrastructure in a nation underlines all attempts to reduce poverty.

Lack of or inadequate infrastructures tend to slow down the growth potentials of the economy and weaken the sectors such as manufacturing, agriculture and service which heavily depend on it. Without infrastructures such as ports and harbours, roads, rail lines you cannot embark on any meaningful export driven policy. You cannot supply the industries with doctors, architects, bankers, lawyers, planners, engineers, teachers, nurses and technicians if there are no education infrastructure and the support system to deliver it; you cannot move goods from centres of production to centres of consumption if there are no roads, rail lines, ports and inland water infrastructures to deliver it; you cannot increase food production if irrigation facilities, canals, silos, tractors and other accoutrements are not in place; tourists will not be motivated to come to a country if airports, hotels, roads and other infrastructures that go with it are absent; and you cannot run an efficient and vibrant economy if there are inadequate energy and telecommunication infrastructures.

The difference between the major economic powers and the developing world can be measured on the scale and quality of their social and economic infrastructures. A visit to any of these developed economies reveals a well developed networks of surface and underground rail lines, roads, tunnels, trams, power plants, airports, harbours, telecommunication, health, education, housing, shopping malls, canals, inland water system, irrigation facilities, sewerage and sanitation infrastructures which are constantly been upgraded and maintained.

On the other hand, a careful look at the state of infrastructures in any single African country reveals serious discrepancies, deficiencies, decay, neglect and dilapidation. The state of infrastructures in some countries can only be described as catastrophic. The poor state can be attributed to lack of concrete and coherence infrastructure development policies, lack of political commitment and inadequate funding. Public infrastructure development is often neglected because politicians in their short sightedness tend to focus on short term policies and programmes that win votes but that also retard development and keep the people in perpetual poverty. Long term policies are shunned because it is seen as expensive and takes time for benefits to be realised. This explains why the railway and water sectors and other major infrastructures are either none existing or are barely working.

Most nations including South Africa, Nigeria, Tanzania, Ghana, Liberia, DRC, Somalia, and Kenya have been experiencing serious disruptions in the energy sector for years. The problem is that African countries have focused too much on building dams while ignoring other potential energy sources such as solar and wind. The Finnish president on a visit to Nigeria in March 2009 asked, “Nigerian people have so much sun and wind, why don’t they use it for the generation of light for cooking and every other thing”? She queried, and added that “we do it in Finland for our renewable energy”. Source: www.dailytrust.com, 12 March, 2009. Dwindling rainfall has limited the ability of these dams to produce the needed energy to support the economy. As a result investors are repelled and factories are folding up as the dams could hardly cope with the demand. Besides power distribution infrastructures such as transformers and power lines are outdated. According to a recent World Bank report, the price of electricity is a leading factor in making Africa uncompetitive, relative to emerging economies like India, Brazil, Russia and China.  

 In Tanzania, Ghana, Nigeria, Guinea, Liberia, Senegal, Mali, Gabon, Congo, DRC, CAR comfortable high speed train service is still a dream due to the poor nature of tracks. Years of neglect and lack of investment has brought this vital transport sector to its needs. Whereas an express train in Japan takes about an hour to cover 280km, it takes an express train in Zambia 7 hours to cover the same distance. All the trains are locomotive, some of which are 50 years old, slow moving, worn out and run on single gauge tracks with maximum speed of 70km/h. Despite the evidence that rail network development is the quickest, efficient and cheapest way to move people and goods, the sector has received little investment for modernisation. This is one major reason why cost of running business in African countries is higher compared to other regions.   

The roads in our cities are limited in capacity; are poorly maintained; and are choked with cars, trucks, buses with no provision for bicycles, pedestrians and people with disabilities. Daily traffic jams are a common occurrence in Nairobi, Dar es Salaam, Accra, Lagos, Cape Town, Johannesburg, Cairo, Kampala, Free Town, Yaoundé and Monrovia as there are few or no parking lanes and ring roads to direct traffic away from the central business district. This makes cost of running business very expensive as passengers and goods spend hours in traffic especially during the rush hours. Besides, inter and intra city multilane freeways and expressways are still in its infancy in many countries and this has adversely affected travel, business and trade.

About 60% of Africa’s total population live in rural areas. However, in these areas, infrastructures of every kind scarcely exist and those that exist barely function. There are few accessible roads in rural Africa and these few are poor, dirt and unpaved. As a result rickety buses, taxis and tractors dominate rural roads and accidents are high. Most rural communities become inaccessible during the rain season and harvested crops go wasted due to lack of transport. It is estimated that close to 40% of food produced in rural Africa get rotten due to lack of roads and poor bridges. The absence of electricity, water, sanitation, irrigation facilities, silos and other storage infrastructures limit the ability of the people to create wealth and do away with poverty. Currently 250 million Africans mostly in rural areas are cut of from existing power infrastructure and most of them resort to the use of expensive and hazardous fuels such as kerosene and firewood. Increasing access to affordable and clean lighting, water, sanitation, roads, improved seeds and irrigation infrastructures are essential to Africa's development for without them it will be impossible to reduce poverty and improve rural life.

Lack and poor quality of port and harbour infrastructures have poorly positioned the continent to take full advantage of globalisation. Few ports and harbours are able to handle the big oil tankers, cargo and passenger planes that dominate global shipping and air travel, making the continent one of the few places where cost of shipping and air travel are still provocatively expensive. The ports in Tema, Lagos, Durban, Richards Bay, Cape Town, Saldanha Bay, Port Elizabeth, and East London, Mombasa, Djibouti and Suez still struggle to berth some of the big ships due to weak capacity and lack of appropriate technology.

Lack of infrastructures have also affected the manufacturing and production of goods and services in Africa. The export sector is dominated by the export of crude oil, Cocoa, coffee, tobacco, tea which have the disadvantage of not bringing in enough revenue. The same is true for gold, diamond, which are exported to Switzerland, Belgium, Britain and Dubai before Africans go there to buy the wedding rings and bracelets to sell. The necessary infrastructures and technologies needed are often completely absent. There are no gold and diamond cutting firms in Africa because the infrastructures do not exist. As a result the millions of jobs that gold and diamond cutting create are found in Israel, Belgium, Britain, US even though they do not mine these minerals. In Nigeria, Gabon, Equatorial Guinea, Angola, Chad all major oil producing countries, it is sad to note that lack of infrastructure has hampered expansion in the oil sector, leading to shortages of petroleum products, higher prices and queue forming seen in Nigeria, Ghana, Togo, Liberia, Tanzania, Zimbabwe, Somalia, Malawi, Zambia. There are few petrochemical industries in the continent due to lack of infrastructures. As a result most oil exports are in the crude form which brings in limited revenues.

The telecommunication including ICT sector is still struggling to catch up with the rest of the world. Internet connection is absent in the rural parts of the continent and connection is very slow in cities where internet is available. In many areas there are no fixed telephone lines and mobile telephone infrastructure is still at the infancy stage. Absence of telecommunication infrastructure is part of the reason why cost of running business is expensive in the continent compared to other regions. Schools, hospitals, banking and security operations are hampered by the absence of these vital infrastructures.   

The agricultural sector is no exception. Farmers have no access to credits, improved seeds, tractors, irrigation facilities, fertilisers and silos and other storage facilities, and receive no support from government. Farming in Africa is dominated by the use of cutlasses/machetes, hoes and other rudimentary equipments. Despite the presence of major rivers and lakes lack of irrigation infrastructure has deadly hampered the agriculture sector. Farmers still rely on nature for rain in order to plant and farming is still at the subsistence level. As a result the average farmer can only produce to feed himself with little or nothing to sell. The result is the food shortage, high cost of food, hunger and the extreme poverty seen in Zimbabwe, Ethiopia, Niger and Mali, Burkina Faso, Sierra Leone and Somalia.

In most countries there are no proper housing infrastructures such as water, electricity and waste management not even in the capital cities. A visit to any village or town gives the same picture of poor and substandard housing and poor quality of public services and mortgage is a dream. They face constant barrage of water and energy disruptions with high utility bills as these sectors struggle to cope due to lack of infrastructure. The dwindling housing stock has forced people to live in slumps and engage in occupy-build-service instead of build-service-occupy. This explains why most residential areas lack running water, schools, electricity, clinics, toilets, playgrounds, car parks and access roads as there are no central planning authority to enforce building and zoning rules.

The education sector, the foundation of the continent’s development effort has its share of the infrastructure problems.  The institutions lack modern facilities such as state of the art libraries, laboratory simulation facilities, studios, computers, books, staff bungalows, classrooms, students’ accommodation and electricity. In most institutions it is still chalk, paper, and blackboard and there are no internet connections. The infrastructure problem has affected the quality and delivery of education in the continent. Of about 9,760 Accredited Universities in the World that were ranked, only University of Cape Town  and University of Witwatersrand managed to place 179 and 319 positions respectively in the top 500. (Source: topuniversities.com/2008). Without the infrastructures the institutions are unable to produce the high quality of architects, engineers, planners, bankers, lawyers, doctors, teachers, nurses, technicians that Africa desperately need in this increasingly scientific and technological age. This explains why in most countries, major architectural and engineering works are undertaken by foreigners and foreign companies from USA, Japan, China and Europe. The Universities lack well trained lecturers and some of them are amateur in the use of computers, internet and podcasting all powerful tools essential to delivering quality education. In most universities students and lecturers have very limited access to electricity which limits their ability to conduct any meaningful academic work.

Whereas students in advanced countries get their hands on books immediately they are released those in Africa have to wait several years to get the same books due to poor funding. Very few of our universities can boast of a million volumes of books in their libraries. Even the few books that exist are so old that information contained in them are valueless. This explains why there are no breakthroughs in our universities. Our research institutions have achieved very little because they are underfunded and lack the supporting accoutrements to carry out any meaningful research. A case in point is Cocoa Research Institute of Ghana (CRIG) located at New Tafo in the Eastern Region. Despite decades of its existence Ghanaians still export raw cocoa beans for peanuts. This is state of Africa’s premier institutions and the little I say about the Polytechnics and secondary schools the better. The same can be said about research in coffee, tea and tobacco.  

It is obvious that lack of infrastructures are the cause of the poor economic performance and poverty seen everywhere in Africa and there is no doubt that without heavy investment in infrastructures it will be very difficult for Africa to make any progress towards economic independence. Increasing access to water, sanitation, roads, electricity, railways, trams, inland water transport system, airports, harbours, telecommunication, canals, and providing improved seeds, credits, subsidies and irrigation infrastructures are essential to Africa's economic and social development, for without them it will be impossible to reduce poverty and improve both urban and rural lives. Government must engage the private sectorin providing the infrastructures. It is costly but the price is worth paying.

By Lord Aikins Adusei

The author is a Planning Consultant, Political Activist and Anti- Corruption Campaigner. politicalthinker1@yahoo.com