14 Years of production: Ghanaians see oil as neither blessing nor curse — Research

The majority of Ghanaians believe that the discovery of oil in commercial quantities, significantly, has neither a positive nor a negative impact on the country and its citizens, a research by the University of Ghana (UG) has established.

The study pointed out that in spite of accruing $11.21 billion in oil revenue for the last 14 years, the citizens had not seen substantial reductions in poverty and inequality.

To reverse the trend, the study’s respondents urged the government to allocate a portion of petroleum revenue specifically towards development projects that promoted equity and social protection programmes.

The respondents want portions of the oil revenue to be invested in programmes such as the Livelihood Empowerment Against Poverty (LEAP) and National Health Insurance Scheme (NHIS).

Sharing findings of the research dubbed “Ghana’s Oil Wealth and Regional Disparities” at a dissemination workshop in Accra, the lead investigator on the research, Professor Abdul-Gafaru Abdullai, said the majority of respondents, representing 53.3 per cent, felt that the oil proceeds were neither a blessing nor a curse.

“The survey shows that a lot of Ghanaians feel that inequality is a major development challenge that the government should pay more attention to — about 91 per cent of the survey respondents considered inequality as a significant development problem which requires attention.

“Is oil a blessing or a curse? Only 21.6 per cent considered it a blessing. The majority of respondents across the country, especially in Takoradi, felt it was neither a blessing nor a curse. Ten per cent explicitly considered oil a curse while 15.1 per cent were uncertain about its impact,” Prof. Abdullai said.

Touching on the key findings, the lead investigator explained that after receiving more than $10 billion in oil revenue, wealth from the natural resource had not significantly altered socio-economic conditions for most Ghanaians.

He said the benefits of oil wealth had been too diffused to produce noticeable improvements in everyday livelihoods, and so it was neither a curse nor a blessing for the majority of Ghanaians.

Prof. Abdullai said the Annual Budget Funding Amount (ABFA)-funded projects were characterised by a visibility bias, aimed mainly at winning votes.

He said the desire to reach many potential voters resulted in resource allocations that prioritised visibility and geographical spread.

In 2020, he said, ABFA expenditures were channelled to approximately 4,088 projects, including 411 projects in the road sector alone, some with allocations of less than GH¢3,000.

“The thin spread of resources results in alarmingly low per capita expenditures.

Across all regions, per capita expenditures have been shockingly low, due to a prioritisation of geographical spread over impact.

Recommendations

Prof. Abdullai, who is an associate professor at the University of Ghana Business School, stated that instead of funding thousands of minor initiatives with insufficient financial backing, the government must prioritise fewer high-impact projects that could be fully executed using ABFA funds.

He proposed that a dedicated ABFA investment plan should be developed, outlining strategic national priorities that would receive exclusive petroleum revenue funding over a five-to-10-year period.

He said the co-mingling of the ABFA with other budgetary sources undermined the transparent and accountable utilisation of oil resources.

“The PRMA should be amended to explicitly prohibit the integration of ABFA with general government funds,” he added.

Govt’s initiatives

The Head of Energy and Petroleum at the Ministry of Finance, Joseph Sarpong, said the government, a few months ago, amended the Petroleum Revenue Management Act, 2011 (Act 815) to ensure that the entire ABFA was dedicated solely to infrastructural development.

The amendment sought to ensure that all ABFA funds are dedicated to infrastructure projects under ‘The Big Push’ programme to deliver significant, high-impact projects that will leave a lasting legacy.

Dissemination workshop

The research which fidings were shared at the dissemination workshop, was conducted by the University of Ghana and funded by the Ford Foundation, with the aim of assessing public perceptions of inequality and the role of oil revenue in addressing the issue.

The study deployed mixed research methods through a national survey with 1,457 citizens from 10 districts in five regions using formal interviews and focus group discussions.

It also analysed various documents on the production and utilisation of oil revenue since 2011.

The workshop was attended by the Dean of UGBS, Prof. Justice Bawole; Programme Officer of Ford Foundation, Emmanuel Kuyole; Director of Advocacy and Policy Engagement at the Centre for Democratic Development (CDD-Ghana), Dr Kojo Asante; the Executive Director of Centre for Extractives and Development, Africa,  Samuel Bekoe, among other officials from institutions within the petroleum sector.