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Oil wealth and the well-being of the subaltern classes in Sub-Saharan Africa: A critical analysis of the resource curse in Ghana
- For policymakers
- Summary created: 2023
My understanding of development is that it should promote the well being of ordinary people, those at the lower ranks of society. How can Ghana’s oil wealth promote this kind of development?
Bad governance and institutions are viewed widely as the threat to the development prospects of Ghana’s oil wealth. My research demonstrates that good institutions alone will not solve the “resource curse” problem in Africa. It is the dynamics of the capitalist global economy which interact with bad governance to deprive ordinary Africans the benefits of their natural resources. This research shows that the capitalist global economy is ruled by racial capitalism, which is not concerned about the welfare of Africans.
Insights
Ghana has been exporting natural resources like gold, timber, and cocoa since independence 65 years ago.
This hasn't brought about improvement in the wellbeing of ordinary Ghanaians: poverty is still widespread, the infrastructure is poor, and the country hasn't advanced in terms of industrialization. Ghana is still an underdeveloped country.
Oil in commercial quantities was discovered in Ghana in 2007, and production started in 2010.
There was euphoria about the development prospects of oil, and many Ghanaians hoped that they will benefit from it. However, the history of minerals extraction in Ghana shows that this was a pipe dream.
The foreign companies that have been mining gold in Ghana for decades are only interested in making profits.
The gold is exported raw abroad, leaving Ghana as an exporter of raw materials. The oil companies are doing the same thing, so oil will never improve the wellbeing of ordinary people.
What it means
For the ordinary Ghanaians, who are interested in how their lives would be improved by oil extraction, this research shows that they are going to lose their livelihoods due to oil, since most of them are farming around the onshore area where the oil pipes will pass through. The ordinary people (e.g., farmers, fishers), especially women, must exercise their democratic right to hold the government accountable. They have to be politically active, in terms of organizing grassroots movements to hold both the oil companies and their government accountable.
This research also shows that most oil companies are only interested in exploiting Ghana and its resources. By reinvesting their profits, oil companies can strengthen their relationship with Ghana’s economy. This can be done by, for instance, reinvesting in oil refineries in Ghana and selling the oil back to the Ghanaians, instead of exporting raw oil.
Proposed action
The state of Ghana carries a big responsibility because oil wealth is vested in the President, on behalf of the Ghanaians
The government should also make sure that foreign companies do not just extract the oil and export it to the Western world to be processed, leaving Ghana with only a fraction of the oil wealth that it gets through royalties and taxes
Most importantly, the political class must be less corrupt and have the interests of the people at heart
A special fund for promoting the welfare and development needs of the coastal communities close to the oil industry must be established, and both the government and oil companies should contribute 1% each of their revenues to this fund
If all the above cannot be done, the oil and gas should left buried underneath the ocean, unexploited, and thus spare the people leaving close the industry the environmental pollution and dispossession they suffer
Acknowledgements
Special thanks to Smaranda Bob for preparation assistance
We would like to extend a special thank you to Smaranda Bob, for their invaluable contribution in assisting the preparation of this research summary.
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