On Tuesday, 5th December 2017, Prof. John Asafu-Adjaye, Senior Research Fellow at the Institute of Economic Affairs (IEA), led a roundtable discussion on the theme: “A Decade after Oil Discovery in Ghana: The Economic Impacts and Policy Implications”.
Prof. Asafu-Adjaye sought to shed light on the economic impacts of oil so far and policy recommendations to enhance the developmental impacts of oil and gas production.
Dr. Frankie Asare-Donkoh, Director of Advocacy and Programmes at the Institute gave distinguished guests a warm welcome to the IEA. Following an introduction by Dr. Asare-Donkoh, Adjunct Senior Fellow at the IEA, Dr. Osei-Assibey, gave his opening remarks as Chairman of the discussion, in which he gave guests a brief insight into the theme and introduced Prof. Asafu-Adjaye.
Prof. Asafu-Adjaye began his presentation by giving participants an overview of oil exploration in Ghana. This was followed by a look at the economic impact of oil production so far, the impact on the welfare of Ghanaians and what can be done to enhance the developmental impacts of oil and gas production.
Prof. Asafu-Adjaye also gave an overview of the Ghanaian economy and key factors underlying poor performance including; decline in commodity prices, power supply challenges (dumsor), High business costs (taxes, fuel, utilities, lack of credit, poor public services), Poor fiscal management, Low public investment- partly due to the high public sector wage bill (about 70% of total public expenditure and over 7% of GDP) and corruption which seems to be increasing according to Transparency International.
Prof. Asafu-Adjaye compared the contribution of other sectors to the economy in 2015 with that of the oil and gas sector and it was found that, petroleum contributed less GHS2.076 billion or 6.4% of GDP which was less than that of mining (8.5%), manufacturing (7.4%), agriculture (23.3%), and services (54.1%).
He stated that, although oil has generated additional revenue for government to spend on development projects, the developmental impacts so far are questionable. Some of the revenue has been saved for future generations and oil has increased exports and improved the trade balance. However, oil has added very little to economic growth, and by extension, employment and poverty alleviation.
He also strongly believed that Ghanaians were not getting the best out of oil as minimal impacts on output and job creation due to weak linkages between the oil sector and the rest of the economy.
Prof. Asafu-Adjaye’s comprehensive presentation was ended by some well-thought policy recommendations; the government should make the necessary investments required to facilitate onshore processing of oil and gas as this will enhance the developmental impacts of petroleum in terms of job creation and backward and forward linkages with other sectors. They should also invest in human capital in this area to promote significant local participation. And finally, the strong case for re-negotiating all oil contracts where he gave the example of Norway which began oil production in 1969/70 and has done very well in terms of the management of its resources.
The event was well attended by key stakeholders including senior government officials, academics, representatives of civil society organisations, officials of the main political parties, traditional leaders, members of diplomatic corps and the media. Among the dignitaries in attendance were; Justice Short (Former CHRAJ Commissioner), Sam Okudzeto (Council of State), H.E Claudia Turbay (Colombian Ambassador), Dr. Ben Asante (CEO,Ghana Gas), Prof. Edmund Delle (Chairman, CPP), Brigadier General Albert Adu (Ghana Armed Forces).