Ghana’s Oil Boom – Will it Fuel Conflict?
February 21, 2011 | 12:24pm
In a grim aside in the 2007 movie Blood Diamond, a villager in war-torn Sierra Leone remarks that “It’s a good thing we don’t have oil”. Ghana, as is often said, is a stable country in a “rough neighborhood”. Over the last two decades, West African countries such as Liberia, Sierra Leone, Cote d’Ivoire, Nigeria and Equatorial Guinea have been rocked by conflicts, civil wars and coups. In many cases, there is a natural resource dimension to the conflicts. Diamonds, diamond smuggling and illegal logging in Sierra Leone and Liberia. Oil in Nigeria’s Niger Delta. Cocoa revenues in Cote d’Ivoire.
In June 2007, Ghana announced that it had discovered a major new oil find – the “Jubilee” field – and would soon start producing oil in commercial quantities. Ghana’s then-President, John Kufuor, said that the country’s new “black gold” would enable Ghana to become an “African tiger”. “Oil is money, and we need money to do the schools, the roads, the hospitals. If you find oil, you manage it well, can you complain about that? Even without oil, we are doing so well already. Now, with oil as a shot in the arm, we’re going to fly.” Some, Ghanaians, though, were apprehensive – would Ghana’s discovery lead to large scale problems with conflict and corruption experienced by Nigeria, their neighbor to the east?
Fast forward to the end of 2010. After much debate over the appropriate safeguards and legal frameworks in parliament and society at large, Ghana started producing oil in December without completing new laws to regulate the sector and manage and allocate the more than $1 billion per year expected from oil revenues in the coming years. While President John Atta Mills said “I want to assure the people of Ghana the oil revenue will be used for their benefit” in his “State of the Nation” address to Ghana’s parliament last week, the oil revenue management law is still not in place.
In 2009 an Oxfam America report, Ghana’s Big Test: Oil’s Challenge to Democratic Development, had warned that “the needed institutions, regulations, and transparency measures should be in place early on to avoid the corrosive effects of oil booms seen elsewhere in Africa.”
The debates in Ghana over new laws to regulate the sector and manage the money highlight the risks that Ghana faces. Competition over oil resources could exacerbate existing regional tensions. Already, traditional chiefs from the Western Region, nearest to the offshore Jubilee field, have demanded Parliament earmark 10 percent of oil revenues for development of the region. Parliament has not agreed to this earmark but the issue is still in play as the oil revenue management law is still being debated in Parliament. Many are concerned that if Parliament agrees to an earmark, regions and communities producing gold, timber and cocoa will demand special earmarks, fracturing the “national cake” and creating a recipe for conflict.
Some members of fishing communities in the Western Region – living in poor conditions and facing declining stocks – see oil development as a new threat to their livelihoods. There have also been unconfirmed reports in the Ghanaian media, and suggestions by Nigeria’s ambassador to Ghana, that militants from the Movement for the Emancipation of the Niger Delta (MEND) in Nigeria are planning to target the Ghanaian oil industry – reports MEND has denied.
With presidential and parliamentary elections coming next year, Ghana’s political parties must find ways to manage expectations and to depoliticize the important national debates in order to find peaceful ways to manage Ghana’s oil “blessing”. If the “oil curse” can’t be beaten in Ghana, many fear that there will be little hope for Sierra Leone – which, unfortunately for the fictional villager, has now discovered oil.