Oil in Africa: Blessing or A curse- Drawing from the Nigerian and Ghanaian Experience

By: Denice Oppong Yeboah

Photo Credit: The Christian Science Monitor

Oil is perhaps the most significant resource drawing competition amongst the international community, with Africa being the final frontier as the world’s energy supplier.

Nigeria is the largest producer of oil in Sub-Saharan Africa with a population of over 150 million people, while Ghana is home to the largest oil and gas discovery made on the continent in the last decade, with a population of over 24 million people.

On June 18, 2007, a UK Firm Tullow Oil, and a U.S based Oil and Gas Company Kosmos Energy discovered this reserve of oil in Ghana, formally named as the “Jubilee Field”. It is estimated to contain reserves of 1.8 billion barrels of oil and 800 billion cubic feet of natural gas. While Tullow Oil and its partners in Ghana marked the milestone for the Jubilee oil field on December 15, 2010, the people of Ghana worry that greed and insatiability could transform Ghana into a smaller-scale Nigeria, where violence, corruption, and underdevelopment has plagued the nearby oil state.

As a result of such fears, I am proposing to examine the last fifty years of the oil phenomenon in Nigeria, assessing both endogenous and exogenous factors in regards to humanitarian development. The research also investigates Ghana’s mining and economic experiences thus far, as an indication of where Ghana’s oil polices may be heading.

In support of this approach, it applies the humanitarian development paradigm, as a theoretical framework to examine the nature of violence, militarization, environmental degradation, poverty and financial negligence in Nigeria, which has spelt misery for the masses of the people. The study accentuates the importance of Ghana potentially finding itself as another tale of neglect in West Africa, noting how the discovery of oil may represent an indication of prosperity; however, the reality of resource control on behalf of a state presents great challenges of wreaking havoc.

In the process, the study proposes an endogamous model for authentic development in Ghana, working towards dismissing the notion of humanity being traded for oil profits. Overall, let every Ghanaian, Nigerian and African contribute to this endeavor.

HOW CAN GHANA AVOID THE OIL CRISIS?

Ghana, a country once known as the “Gold Coast” for its abundant gold deposits, has now joined the lines of oil producing states. Ghana experienced its first commercial pump of oil on December 15th, 2010, formally beginning its commercial exploration and export of its oil resources.

While Ghanaian politicians and their business counterparts are excited and optimistic about the oil discovery, and how Ghana, now the world’s newest oil producer, will soon be swimming in oil money; the people of Ghana are not as enthusiastic, since they are well-informed of the history of oil rich countries on the continent of Africa.

Today, for a country built on gold, Ghana now looks forward to a future with oil, which raises many fears and concerns, since countries like Nigeria have not been able to use their huge oil revenues to improve the lives of their people.

According to various studies, oil in Nigeria has been a curse rather than a blessing, since year after year, foreign oil companies continue to extract barrels of oil, sold at the international market for billions of dollars; yet the people of Nigeria, specifically in the Niger Delta, have seen none of the benefits of this oil exploration.

African researcher Nnimmo Bassey in a recent article entitled “Let’s Leave Nigeria’s Oil in the Soil” describes this culture of oil stating, “Decades of oil extraction in Nigeria have translated into billions of dollars that have spelt nothing but misery for the masses of the people. It is time for Nigeria to step back and review the situation into which it has been plunged. The preservation of our environment, the restoration of polluted streams and lands, and the recovery of our dignity will only come about when we stand away from the pull of the barrel of crude oil and understand that the soil is more important to our people than oil”.

This oil crisis, thus threatens the very outcomes of what many may consider signs of Ghana’s success, with the recent oil discovery. Considered a relative success story, democracy, and good governance are some of the variables associated with the government of Ghana.

Such signs suggest a positive era of oil responsibility; however the history of gold mining in Ghana and the failure of socioeconomic development based on gold revenues threatens such progress as defined by scholar Ian Gary in his work Ghana’s Big Test: Oil’s Challenge to Democratic Development, "The onset of oil production presents Ghana with its next great test. Ghana has an enviable record of good governance and stability. Despite this progress, Ghana is still a poor country of 23 million people dependent largely on primary commodity exports—cocoa, gold and timber. Almost 80 percent of Ghanaians live on less than $2 a day. The country has made some progress on economic diversification, but oil could add to the economy’s overreliance on commodity exports subject to price swings that make development planning difficult”.

Overall, there are major problems that come along with the discovery of oil in Africa, and countries like Nigeria serve as a prime example of the added dangers of oil discoveries, which must be fairly addressed before proposing any type of model or policy framework for future revenues in Ghana.

Given the size of both countries, their regional predominance, and their future significance in international energy markets, the process of economic and political restructuring in both Ghana, and Nigeria are of considerable importance. Overall, the question remains, how will Ghana be able to lead the continent in the right direction of oil production, with a positive impact on humanitarian development, avoiding the calamities of her neighbors such as Nigeria?

Echoed by researcher Ian Gary, “With the discovery of oil, coastal communities, mindful of the experience of mining communities in Ghana and villages in the Niger Delta in Nigeria, are now concerned that they will suffer the same fate and that government revenues will fail to ‘trickle down’ to improve their lives” The heart of the problem of this new oil scramble lies in the fact that with the resource exploration by multinational oil companies how can the resource be beneficial to the people? And how can countries like Ghana overcome the scourges of corruption, environmental degradation, and human rights abuses that have taken the upper hand in countries like Nigeria?

Thus, Nigeria, an African country with a long history of oil production, sounds alarm bells over this recent oil boom, presenting a growing body of evidence to suggest that oil in Africa breeds underdevelopment and poor governance.

These implications are that, when Africa experiences an increased flow of oil revenues, negative effects will conspire to ensure that it feeds into violence and corruption, instead of key development sectors of the economy. Nevertheless, does this mean that new oil discoveries in Africa such as the recent oil discovery in Ghana, will automatically translate into primary internal threats?

It is not a question which demands a straight forward answer, nor is it one that lends itself to a simple explanation. It is, however, a question which cries out, not only for an answer, but for a valid forewarning of the problem, and an authentic development model avoiding the complex dimensions of politics and international linkages that may underpin conflict and underdevelopment in oil rich African countries. Stay tuned as the development of this thesis unfolds, and feel free to share your thougths and comments on this matter.

 

***Deniece is a Master’s of Arts candidate in African Development and Public Policy at Howard University, in the Department of African Studies. Currently, she is also a student employee at the U.S Department of State: Bureau of Oceans, International, Environmental and Scientific Affairs. As a graduate from Syracuse University, her professional career development includes interning for the U.S Department of State: Bureau of African Affairs, and Former Senator Hillary R. Clinton Central New York Office-Syracuse***