As Ghana awaits the first riches from one of Africa’s top oil finds of the decade, expectations on the street are high and rising.
“I believe in the oil,” said grocery vendor Grace Asantewaa from behind her meagre stall of tomatoes and chilli peppers at the Agbogbloshie market in the capital Accra.
“We are sure everything will change in the name of Jesus,” predicted the 36-year-old mother-of-two, echoing widespread dreams of a more comfortable life once production from the Jubilee offshore field gets going in December this year.
With reserves of 800 million barrels of high-quality oil and potential for at least one billion more, the offshore Jubilee field could make Ghana the fifth largest oil nation in sub-Saharan Africa after Nigeria, Angola, Sudan and Gabon.
But first it must avoid the mistakes of others in the Gulf of Guinea, which the US National Intelligence Council expects to provide a quarter of American oil by 2015 and which this year is already shipping record numbers of oil cargoes to Asia.
The International Monetary Fund predicts that if Ghana uses the windfall from the 2007 discovery wisely, it could reach the status of a middle-income country within a decade.
That would lift it from its World Bank rank of poor state alongside Haiti and Liberia to the more comfortable league of the likes of Morocco and Thailand — a game-changer in a country where a third of the 25 million population are in poverty and foreign aid accounts for nearly 10% of national income.
“How do we lift it, transport it, consume it, and finance it?” US emerging markets broker Jonathan Auerbach said on a trip to Ghana, of the questions oil raises.
“Accept it,” he said. “This is the great game for Ghana.”
Mention Nigeria to Ghanaians and there is an instant recoil at their own possible fate: oil-fueled civil strife, rampant political corruption and the paradoxical outcome of declining living standards that they have seen for millions of Nigerians.
Congo Republic and Angola have suffered internal conflicts partly fuelled by jostling over oil. Aid watchdogs say Chad, whose oil is exported through the gulf, broke pledges to use energy revenues to ease poverty and bought arms instead.
Tiny Gabon and Equatorial Guinea have been more peaceful, but their petrodollars have bypassed the people to fund their elites’ luxury real estate and sports cars, according to evidence for a French anti-graft hearing last year (the trial was blocked on a technicality).
Ghanaians fear the “resource curse” — when a find becomes an albatross round the neck of a country as other industries are crowded out, its leaders become corrupt and its public finances fluctuate at the whim of volatile energy markets.
“Country after country make big promises and then go on to make the same mistakes,” said independent consultant Antony Goldman, who has studied oil’s effect on Nigeria and others.
“It would be wrong to underestimate how potentially toxic oil can be to a fairly simple economy,” he cautioned.
With Jubilee’s first oil due to start pumping in December, Ghana still has much to do to ensure it not only avoids its curse but also reaps the full blessing.
Rare in a region where coups, civil wars, disputed elections and strong-arm rulers are the norm, Ghana has distinguished itself this decade with two peaceful transfers of power from one political camp to another through the ballot box.
It has also moved ahead of most African states in fighting corruption, outdoing countries such as Senegal, Zambia and Tanzania on a World Bank scale of anti-graft efforts.
That reputation allowed Ghana to launch a $750 million Eurobond in 2007 and won it the accolade of hosting Barack Obama for his first African trip as US president last year.
From Norway to Trinidad…
But as the petrodollars come closer, so do questions about how successfully Ghana will manage them.
President John Atta Mills’ centre-left government has taken advice from oil states including Norway and Trinidad and Tobago on how to handle the cash inflows, but has yet to present detailed plans to parliament.
Opposition lawmakers complain there is little time for proper debate on the complex oversight arrangements for the oil accounts and how the money should be spent. They fear the government will ultimately rush through weak legislation.
“We are not hurrying — that is the unfortunate thing,” said opposition leader Osei Kyei-Mensah-Bonsu, adding he had seen no sign by end-April of a draft oil revenue and management bill.
Keith Myers of UK-based consultancy Richmond Energy Partners said Ghana should be careful to avoid the fate of other African states which have struggled with regulatory shortfalls and the lack of home-grown expertise.
He noted concerns about the role to be played by state-owned Ghanaian National Petroleum Corporation.
“In Ghana’s case, this means that GNPC at the moment has the role of both regulator and operator,” he said.
Investors were rattled by government moves last year that pointed to a trend for one government to overrule deals struck under its predecessors.
For instance, the current government has said it wants to “re-engage” with British mobile operator Vodafone Group over its 2008 purchase of a majority in Ghana Telecommunications, notably over control of a strategically important fibre-optic network.
Ghana has also defended its resistance to what sources close to the deal said was a $4 billion accord for US giant Exxon Mobil to acquire stakes in Jubilee from privately held Kosmos Energy, insisting on its right to first refusal.
“The resource belongs to the people of Ghana … and we decide how we want that resource to be used,” Vice President John Dramani Mahama said in an April 27 interview.
Mahama rejected suggestions the Kosmos and Vodafone affairs have tarnished Ghana’s pro-investment image, saying the government hoped by end-May to wrap up talks with Kosmos over the future of the stake.
Officials say options include the sale of all or some of the stake to Ghana, which could need to draw on third-party finance.
“A ‘winner takes all’ electoral topography has emerged,” said IHS Global Insight Nana Adu Ampofo, noting that Vodafone’s purchase and Kosmos’ entry into in Jubilee had both taken place under Mills’ predecessor, John Kufuor.
“Measures to improve transparency … are vital, even more so in light of impending oil rents,” Ampofo warned.