Wednesday, July 7, 2010
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.
For decades Ghana has received several billions of dollars from the sale of gold, diamond, cocoa, timber and bauxite 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.
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? 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 as the country prepares to become oil producing and exporting nation 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 gives 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. The socio-economic condition in the country is attest to the fact that the people have not benefited from the oil revenue.
Despite hundreds of billions of dollars of oil revenue and revenue from resources such timber, and uranium Gabon was ranked 124th out of 177 countries in 2007 by the UNDP report on human development. According to the United Nations Development Program (UNDP), only 14 percent of Gabonese can afford a doctor's consultation.
Gabon's total debt in 2007 stood at $2.5 billion including $ 1.1 billion owed to France, while the country imported more than 60 percent of its food with more than 30 percent of the population living on less than a dollar a day.
Professor Hervé Diata, Dean of the Faculty of Economics at the University of Brazzaville, says the situation in Gabon is not good. "This is a cash economy based on oil and mining. No effort is made to create competition. Gabon's economy cannot survive like this much longer. Source Inter Press Service
In fact the people of Gabon have become worse off both economically, socially and politically. The 2008 Human Rights Report by US State Department shows: “The country's human rights record remained poor [with] 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, Libya and Nigeria with citizens and foreigners subjected to torture, killings and inhumane treatment by the leaders and their security agencies. 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 drown democracy, breach human rights 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 a year 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 the nation faces a serious challenge as it prepares to become oil producing country. 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 corruption, poverty, violence, pollution, nepotism and murder. Already the Ghana National Petroleum Corporation has been embroiled in corruption and mismanagement allegations with its former head Tsatsu Tsikata being sent to jail on the grounds of corruption and mismanagement.
However, Ghana can avoid the calamities and the experience of her neighbours by investigating what went wrong in those countries and try to avoid a repeat. The nation can also learn 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 tyranny 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 education, 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 companies directly or indirectly involved in drilling, marketing, distribution or export of oil must be made by law to publish what they pay to government. 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 utilises 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.
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