CAN THE CRUDE OIL REFINE GHANA'S ECONOMY

CAN THE CRUDE OIL SAVE GHANA?

(Appiah Kusi Adomako, Leaders of Tomorrow Foundation, Kumasi

Ghanaians were excited last year when Kosmos Energy Group announced that it had identified crude oil in commercial quantities. The economy is yet to take off with greater momentum. Perhaps, it is now the greatest time to be alive if you are Ghanaian. We stand on the threshold of becoming one of the fastest emerging economies in the sub-Saharan Africa if not in the world. However, this will not move on the wheels of inevitability. The oil is like the knife that can either serve us or sever us depending where one holds it. If we hold the oil by the handle we can use it. On the other hand, if we hold the knife by the metal part it would injure us as it has done to some countries like Nigeria, Angola, Iraq and Sudan.

We have every right to celebrate the news of the oil discovery in the country particularly when the nation had just wallowed in the darkness of energy crisis for nearly a year. Moreover, with crude oil prices reaching record high, we ought to rejoice as the great book says ‘again, I say rejoice’.

However, whilst rejoicing on the discovery of the oil we should not allow our heart to override our head in this matter. Crude oil is not the solution to our problems. It is like the bitter bile on the liver. One ought to be careful when attempting to take the liver as it might result in bursting the bitter bile.

Although not all Organization of Petroleum Exporting Countries (OPEC) countries are corrupt, an historical symbiosis exists between oil and corruption. Oil, corruption and failed states seem to be synonymous. However, some countries have been able to address this threat; most of them are located in North Africa. Producing countries such as Algeria, Egypt, Tunisia and even in some respects Libya, have managed to resist the temptation of sleaze. While temptation may have been countered by most North African producers, the threat of falling into the same trap remains.

The economic record of mineral-exporting countries has generally been disappointing. Oil exporters, in particular, have done far less well than resource-poor countries over the past few decades, especially when one considers the big revenue gains to the oil-exporting countries since 1973, when oil prices soared. Why is this the case? Perhaps it is because of the way oil economies are run. Managing oil revenues well is much the same as managing any budget well, but some issues are more important for oil exporters. These include how much to save for future generations, how to achieve economic stability in the face of uncertain and widely fluctuating oil revenues and avoid "boom-bust" cycles, and how to ensure that spending is of high quality, whether in the form of large investment projects, public consumption, or subsidies.

THE CASE OF NIGERIA

It is incontrovertible that Nigeria suffers from a resource curse as we have little or nothing to show of as a country despite several years of oil exploration. Most of the proceed of their oil wealth has ended in the pockets of their leaders (gulf oil windfall and looting of the nation’s treasury by the late despotic ruler General Abacha).

Resource curse is the economic notion that countries with large endowment of natural resources perform worse than countries that are less endowed. Yet some countries with abundant natural resources do perform better than others, and some have done well.

Nigeria is a heart rendering paradox. A rich country with desperately poor people. Despite its massive earning from oil, 70% of its estimated 140 million people live below the poverty line. Attempts to explain this contradiction have repeatedly identified the resource curse as the major cause of the disconnection between the country’s wealth and people’s well being. More than 80 million Nigerians live on less than US$1 a day, with Nigeria being ranked 144 out of 146 by Transparency International Corruption Perception Index (CPI) 2004.

In Nigeria, oil wealth has failed to generate development and has instead generated deep-seated corruption, kidnapping and war in some parts like the Niger Delta.

THE SOLUTION IS NOT IN THE OIL

In this world, energy, agriculture, medicine, clean water and air, transportation, crime prevention and detection, and business are all driven by technology not in oil. Since technology and knowledge are the key factors of production we cannot be idle on this aspect and hope that Ghana can progress on the inevitable wheels of the crude oil. We can earn US $100 billion per year in oil revenue yet we can still be poor. . How can we explain the fact that country such as the Netherlands, whose land area is less than the Central Region of Ghana, most of it below the sea level, has virtually no natural resources and still has its GDP twice that of the African continent? It has now been established that the widening gulf between the rich North and poor South is as a results of technological divide.

In the past the strength of a nation depended on the number of its natural resources and the strength of its military force. Today this has changed. Now the strength of a nation lies in the human resources of its people. This tells us why European nations, Japan and America with no or little resources have done far better in every aspect of economic indicators than that of African nations with all the legions of resource, yet we are still poor. What is missing from our dinner table as Africans is science and technology. Without this we would be sitting on gold but always be begging for silver. We can be endowed with all the oil deposits in the world yet without putting the revenue into the right equation we will never get solution to our problems.

The only way can Ghana move from its present stage of perpetual recipient of high doses of foreign aid to a strong and vibrant economy capable of meeting of all its needs- from Abraham Maslow’s physiological needs to self actualization is through quality education and more importantly science and technology. We would need to take a serious look at the kind of education which we give to the Ghanaian from the primary to the university. Education that does not allow people to ask questions like: why, how and what is of no education at all.

If we want to become a successful nation then we need to take education, science, technology and good governance seriously.

Essentially if Ghana is poised to make giants feats in achieving a strong scientific and technological advancement there some specific things which Ghana must do in order to be a successful and prosperous nation. We need to fix the oil revenue into the right equation so that we can get the desired solution.

SCIENCE AND TECHNOLOGY FUND

I want to propose that 20 percent of the oil revenue be used as SCIENCE AND TECHNOLOGY ENDOWMENT FUND. Funds accumulated by this account would be given to universities, research institutions to do research. Everything that we are enjoying now has come out through the painstaking research done by someone. In this world you cannot be great if you are seen as end users of every product.

Through science and technology we can make use of the by-products of the crude oil and turn everything to productive use. Take for instant our cocoa, there are more than thousand and one uses of cocoa by-product. However, due to our inability to carry research into them we through the cocoa everything away. Funds accrued should be made available to the Council for Scientific and Industrial Research (CSIR), KNUST, other universities, private research scientist and a host lot of agencies that needs to be funded by the state. Proper funding would help the nation to make giant feats in science and technology.

CONCLUSION: OIL IS NEITHER CURSE NOR BLESSING

Oil is neither the blessing nor curse, it's simply a resource. The nations without oil but with commercial endowment of gold and or diamonds have same problems as those with oil. The problem of persistent poverty can be partly attributed to lack of visionary leadership coupled with inept management of state resources. Sub-Saharan Africa must solve its leadership problems and improve the management capabilities of its administrators; only then would we effectively reduce poverty. Crude oil has become like knives that either serve us or cut us, as we grasp them by the blade or the handle. Let us make the oil a tool of blessing not as clutch of curse.

Appiah Kusi Adomako is an international freelance and speech writer and the president of Ghana Chapter of Leaders of Tomorrow Foundation. He can be contacted through: e-mail; appiahkusiy2k@yahoo.com,