Oil revenue for whom?

By Magbegor Ovie &  Chris Twum

Many Ghanaians are excited about the discovery of crude oil and its expected revenue. The general feeling is that, money is expected to flow to all pockets hence; politicians would be able to fulfill their election promises.

However, many may be thrilled but not majority and those with thinking caps; who know that all African countries with resources especially only turn out worst than when such resources where not discovered. Their reasons for not being excited is not far fetched, who will blame them? For years the benefit of gold, diamond, cocoa and other mineral export has not brought any seemingly benefit to majority of the country.

Rather majority still wallow in chronic poverty, with no access to water, healthcare, education, electricity with transport and other infrastructures crumbling. For years Ghana has received billions of dollars ($) from its gold export including timber and cocoa yet the living standard and lifestyle of its populace with most African countries has failed to improve.

Who then is gaining from its revenue? Probably the politicians, leaders and multi-nationals companies can explain better to the populace on whom resource revenue is benefiting most. Since most sub-Saharan African nations are prayerful Ghanaians inclusive; perhaps an immediate impact would be to pray more to reduce the damage that resources normally bring to its immediate communities. Such as: pollution, creating joblessness instead of gainful employment, the case of the Niger-Delta region in Nigeria a region of predominantly fishermen who have been rendered jobless without alternative due to crude oil extraction by government and multi-nationals companies sets a real example.

The question is will majority of the populace benefit from oil revenue when gold, timber and cocoa has not profited them. Though many forums have been and would still be organized on how to utilize crude oil revenue, yet the ones concluded so far have no blue print on how to maximize oil revenue. It has probably turned into a political maneuverings by politicians and their cohorts at the expense of the majority.

Worrying is that Ghana’s oil producing neighbours in West Africa have not been able to utilize its oil revenue to the maximum. There are shout and cries of massive corruption and human rights abuses in neighbouring Oil producing West African countries like the rest of Africa.

How will the country differentiate itself from the club of nations whose resources have become a curse than a blessing with the latest stealing un-covered in the cocoa sector?

Despite all steps being taken by the government to eradicate corruption/reduce it to the barest minimum. The corruption in most sectors of the country that are yet to be uncovered can set an example as to where the nation will go when oil revenue starts pouring into government coffers.

Nigeria

A country with abundant crude oil and gas resources that has received over $400 billion from the sale of crude oil has over 80 million of its population living on less than two dollar daily. More frightening is the Niger-Delta region which produces 90% of the country foreign earrings has a very large pool of young able-bodied men unemployed hence; militancy has provided a means of gainful employment for them.

This is what Nigeria can show for its oil revenue totaling billions of USA dollars poverty, increased crime and kidnappings including political instability in the country and a very angry population that no longer trusts its political leaders.

The oil producing and exporting countries of Angola, Gabon, Algeria, Libya and Equatorial Guinea are not any better. Millions of people in these 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 safe haven centers in Caymans Islands, Jersey and the rest.
Gabon, Equatorial
Guinea & Congo

The affluence of political leaders from oil producing countries in Africa is amazing and unheard of even among political leaders from developed nations. This prompted a French judge to investigate how some African leaders launder and acquire properties in France. Much noise was made but the final outcome was expected they and their partners in world had their way once more at the expense of millions of starving people in their home country.

Late President Bongo of Gabon was suspected of having 59 push apartments in France while President Obiang of Equatorial Guinea is believed to use of the country oil revenue to enrich himself, family members and close associates.

The President of Congo Sassou-Nguesso fares no better he is believed to have 18 apartments and have 112 bank account and several luxury cars all bought from stolen crude oil revenues. One can only wonder how much each of these leaders has in each bank account.

A US Senate investigation established that late President Bongo and his family spend up to $55 million dollars; these monies are mainly from crude oil proceeds.

Angola

An irony of these mis-placed crude oil revenues are that all these oil producing countries always seek international donors when they rather should be lending to other poor nations. An example is Angola where the threat of starvation was reported by the Independent Newspaper.

This lead to pressure on the government to report how it has spent billions of dollars ($) from oil revenue, nothing has come out of that probe yet; that is expected. Since the end of the war with Unita rebels there are reports that over three million Angolans are on the verge of famine. President , Eduardo dos Santos, has appealed for international help, pleading that his government is broke, this has raised anger from within and outside the country since the oil revenue is expected to rival that of Nigeria any time soon.

Maybe the hosting of this year African cup of Nations is an indication that the country is gradually coming out from its poverty. The competitions lead to the building of three/four new stadiums. The attack on the Togolese national football in a disputed region of the country leaves much to be desired; it goes to show that plenty of people are still angry with how oil revenue is being spent by the government.

Unfortunately innocent footballers had to pay with their lives for the sins of bad political leadership and mis-management of state funds. Reports from the independent.co.uk have attributed the massive corruption of President Dos Santos of Angola to that late and disgraced Mobutu SeSe Seko of Zaire now Congo DR. 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.

United Nations report

There is nothing to show in any of the above mentioned countries that majority of the population has benefited from oil revenue. It’s a fact that citizens of these countries have fared worst off. Gabon has a population of 1.4 million people yet it was ranked 124 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.

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.

Fears for Ghana

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 dependence on has lead to severe consequences in these countries such as: rising food prices, jobs and revenue losses.

There is hardly any diversification in these countries thus; when oil prices fluctuates in the world market there is nothing to cushion the effects making their economy unstable and bringing untold hardship to their citizens, Nigeria is a perfect example to what happens when oil prices fluctuates in the world market; only the ordinary citizen is in the best position to tell what they go through daily.
Multinational Companies

Almost all big oil companies operating on the continent also share the blame in this crisis because they have along history of helping corrupt leaders launder their loot in foreign countries. Elf executives admitted paying late President Bongo of Gabon close to $55 million dollars through almighty Swiss banks, every ready to do a dis-favour to the troubled continent. There has also being allegation by some senior company executive admitting to paying massive bribes to the following leaders 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.

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.

Environmental Problems

There is also the fear of serious environmental degradation that oil activities will cause to its host communities as the case is in Nigeria and other African countries. The price will be huge; wells, lakes, ecosystems, rivers and soil will al be polluted .livestock and manpower would also suffer the same fate. It should interest the Ghanaian public that $1.8 trillion dollars is the estimated destruction caused by multi-national companies yearly to the environment.

Africa suffers from a fourth of that. Nigeria is classical example of this where Royal Dutch Oil giant Shell has refused to effectively take care of its pollution. The answer of this act by Shell and its allays are the cases of unrest that has become the order of the day in the Niger-Delta region. Perhaps their belief in prayer would see them through what is coming.

When Ghana reaches this stage it would have joined the list of countries singing and staging anti-corruption crusades all over the place. The good thing about this is employment would be abundant for already established public relations firms; upcoming ones would also join the fray.
Ghana’s way out

Ghana should be able to avoid these issues that mark the African continent as being unable to rule and manage its resources favourably. This can be achieved by critically studying and analyzing what went wrong in those other countries. It would not be out of place if the government looks to countries that have used its oil revenue better, unfortunately, such countries are not on the continent.

Focus should be taken to the middle east or Gulf states such as United Arab Emirates and Qatar perhaps Saudi Arabia. A notably lesson to learn from most Gulf states is the fact that they have been able to manage oil and the environment better than other oil producing regions of the world. This invariably has lead to increase foreign investment in that part of the world; it has also turned most Gulf States to serious players in world economies.

Focus should be on how most of the revenue has been able to create wealth for most of the population and how it has changed the country into serious trade and business centers of the world.

Emphasis should not be on the gap that exist between the have and have not. Maybe the Israeli should be invited to transform the barren north of the country into an agricultural heaven. As they have done to their own barren country.

Priority Areas for Ghana

It’s a common thing on the continent to use oil revenue to build fantastic projects, this is good but how to manage them has always being the problem hence the government has to keep funding these huge projects at the cost of other important things in their respective countries. Emphasis should be building schools in rural areas, hospitals and providing low cost housing units for the poor in the country.

Further investment should be on advancing technology and training of local manpower to avoid over reliance on foreign expatriate that only leads to scarce foreign exchange leaving the shores of the country. Protection of the environment should be given top priority since it can increase tourism as is being witnessed in most Gulf States; notably Qatar and United Arab Emirates (UAE).

Another priority for Ghana should be how to utilize the excess energy from the oil industry to generate power for plants and machinery. This will reduce the cost of power generation in the country.

Laws
Another important thing for the county to do is to enact laws that would deal with corruption before and during the flow of oil revenue. This would make oil revenue to be accounted for in transparent way. Therefore giving meaning to the nation’s democracy.

Furthermore, all companies involved in the oil sector should be mandated by law to publish whatever royalty/tax being paid to the government. This will make the process of accountability more effective and lessen corruption. Maybe government department/ministry should be made to state how much was allocated to them from the oil proceeds. The law (s) should be seen to be working and devoid of political bickering which only increases corruption and time wasting.

Whatever law (s) formed most look how oil contracts are being awarded and the fashion a way to make the whole process of bidding favorable to all interested parties. The companies should also make protecting the environment of interest maybe a law should be enacted that makes it mandatory for oil companies and the government to use part of their oil revenue to protect and manage the environment.

Media & Advocacy

The media should play its role effectively and should be seen devoid of bootlicking and mischievous writing. This is because when things go wrong in the industry they would also share a large percentage of the blame. Advocacy groups should advocate for better policies to host communities and their people. One thing however is that, in doing this blackmail should not be encouraged because oil corporations have a way of dealing with poor countries for example they can block credit.

Policies being advocated for should be reasonable and realistic and not difficult to implement, this will create a friendly investment climate over the country. As usual investment ultimately leads to more job creation and new areas of employment and research.

This will take the country from the club of oil revenue for whom as with countries such as Nigeria, Angola, Cameroon, and Gabon amongst others.

Focus should be taken to the middle east or Gulf states such as United Arab Emirates and Qatar perhaps Saudi Arabia. A notably lesson to learn from most Gulf states is the fact that they have been able to manage oil and the environment better than other oil producing regions of the world.

This invariably has lead to increase foreign investment in that part of the world; it has also turned most Gulf States to serious players in world economies.

Focus should be on how most of the revenue has been able to create wealth for most of the population and how it has changed the country into serious trade and business centers of the world.

Emphasis should not be on the gap that exist between the have and have not. Maybe the Israeli should be invited to transform the barren north of the country into an agricultural heaven. As they have done to their own barren country.

Priority Areas for Ghana

It’s a common thing on the continent to use oil revenue to build fantastic projects, this is good but how to manage them has always being the problem hence the government has to keep funding these huge projects at the cost of other important things in their respective countries. Emphasis should be building schools in rural areas, hospitals and providing low cost housing units for the poor in the country.

Further investment should be on advancing technology and training of local manpower to avoid over reliance on foreign expatriate that only leads to scarce foreign exchange leaving the shores of the country. Protection of the environment should be given top priority since it can increase tourism as is being witnessed in most Gulf States; notably Qatar and United Arab Emirates (UAE).

Another priority for Ghana should be how to utilize the excess energy from the oil industry to generate power for plants and machinery. This will reduce the cost of power generation in the country.

Laws

Another important thing for the county to do is to enact laws that would deal with corruption before and during the flow of oil revenue. This would make oil revenue to be accounted for in transparent way. Therefore giving meaning to the nation’s democracy.

Furthermore, all companies involved in the oil sector should be mandated by law to publish whatever royalty/tax being paid to the government.

This will make the process of accountability more effective and lessen corruption. Maybe government department/ministry should be made to state how much was allocated to them from the oil proceeds. The law (s) should be seen to be working and devoid of political bickering which only increases corruption and time wasting.

Whatever law (s) formed most look how oil contracts are being awarded and the fashion a way to make the whole process of bidding favorable to all interested parties. The companies should also make protecting the environment of interest maybe a law should be enacted that makes it mandatory for oil companies and the government to use part of their oil revenue to protect and manage the environment.

Media & Advocacy

The media should play its role effectively and should be seen devoid of bootlicking and mischievous writing. This is because when things go wrong in the industry they would also share a large percentage of the blame. Advocacy groups should advocate for better policies to host communities and their people. One thing however is that, in doing this blackmail should not be encouraged because oil corporations have a way of dealing with poor countries for example they can block credit.

Policies being advocated for should be reasonable and realistic and not difficult to implement, this will create a friendly investment climate over the country. As usual investment ultimately leads to more job creation and new areas of employment and research.

This will take the country from the club of oil revenue for whom as with countries such as Nigeria, Angola, Cameroon, and Gabon amongst others.