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. 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?

For decades billions of dollars have been realised from the sale of gold, diamond, bauxite, cocoa and timber 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 of these valuable assets are the corrupt politicians, the coup makers, 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 and creeks that will render many farmers and fishermen jobless.

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 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 and cocoa sectors and the history of her neighbours give 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 the nation receiving over $400 billion from the sale of oil. All that Nigerian leaders could 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, fancy cars 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 39 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 proceeds. Police investigations in 2007 revealed that Mr Obiang Nguema of Equatorial Guinea has an apartment and eight luxury cars in France. And it is only God knows how much money sits in those accounts. Bongo is reported to have $86 million dollars in one of his numerous US bank accounts and a combined total of his personal assets in France alone is estimated at $125 million. 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. The fact that two teenage kids who have not worked before could own company in Luxembourg shows how the Bongos have plundered the resources of the country.

So far there is nothing to show that the 1.4 million Gabonese have benefited from the oil. In fact they have become worse off as the following 2008 Human Rights Report by US State Department shows: “The country's human rights record remained poor. The following human rights problems were reported: 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 and Nigeria with citizens subjected to torture, killings and inhumane treatment by the security apparatus which remain loyal to the leaders.

The fear of democracy getting a boot in Ghana cannot be treated mildly. This fear is reinforced when Ghana’s own dark history is taken into consideration and then put in context with the rest of the oil producing countries in the continent. Ghana has her own dark history of army intervention, human rights abuse, murder, torture and civilian mistreatment. Like her neighbours in the region there is a probability that the flow of oil money into Ghana may encourage unscrupulous army officers and unelected persons to take over the administration of the nation by force 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 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 to Ghana 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 in Gabon has had very devastating consequences in terms of food prices, jobs, revenue losses with almost all her basic needs imported from abroad notably France. 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 is the role of multinational corporations who exploit the oil in these poor countries that is of a major concern. They also have a history selling arms to destabilise African countries and keep the people fighting while they steal the resources. They have a history of under declaring their profits and non-payment of taxes. They are known to declare only 40% of profits that they make in countries where they operate and then hide the rest in their save haven accounts around the globe.

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 on June 9, 2009 agreed to pay $15.5 million to the family of Ken Saro-Wiwa and the Ogoni eight for her complicity in their execution during 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. Such fraud behaviour on the part of the corporations is what awaits Ghana.

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 as well as the health hazards that will emanate from the pollution that have forced environmentalists to gear up for a long battle. Already the global environmental destruction caused by these corporations is estimated at $1.8 trillion 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 her own history of corruption in the mineral, cocoa and timber sectors there is no doubt that a serious challenge awaits the country as she prepares for oil money. There is no doubt that without strong monitoring and accountability system backed by fiscal prudence, Ghana will join her neighbours in the chorus of poverty, violence, pollution and corruption. Already the Ghana National Petroleum Corporation has been embroiled in corruption and mismanagement allegations with its former head Tsatsu Tsikata been sent to jail on the grounds of corruption and mismanagement.

However, Ghana can avoid the calamities of her neighbours by learning 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 tyrants 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 technology and agriculture so as to avoid being over dependence on oil revenue. Again some of the proceeds should be used to invest in viable companies abroad like what Gulf States have done reaping a lot from profits for their investments. In short we should not put all our eggs in one basket.

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 nation as has happened in other places. 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 the drilling, marketing, distribution or export of oil must be made by law to publish what they pay. 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.

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.

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.

The law must propose for stiffer penalties for officials and companies who will misconduct themselves. There should be no leniency for corrupt officials if we are to avoid a repetition of what has happened to our neighbours. Therefore, a financial court should be created to investigate and prosecute entities who may try to enrich themselves overnight and severely punish them.

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. For now we can be cautiously optimistic that Ghana would be different from the rest of the continent.

By Lord Aikins Adusei

*The Author is a political activist, anti-corruption campaigner and a Columnist for American Chronicle. He blogs at www.ghanapundit.blogspot.com