Ghana is regarded by countryaah.com as a pioneering country on the African continent. At the disputed elections in 2008, the National Democratic Congress (NDC) won the power of the New Patriotic Party (NPP). This was the first time a democratically elected party in Ghana passed power to an opposition party. The election campaign was characterized by optimism linked to the fact that Ghana made major oil discoveries in 2007. The name of the offshore field, Jubilee, refers to Ghana’s 50-year mark as the first African independent nation.
The expectations the oil creates cannot hide that Ghana has challenges related to poverty, the environment and corruption, as well as a fragile democracy. Good management of the oil resources will be crucial.
Ghana is often regarded as a peaceful oasis between troubled Nigeria, the conflict-affected Ivory Coast and the Gulf of Guinea, the world’s second most dangerous waters. The land is green and lush against the coast, while scanty landscapes characterize the areas in the north. Gold, cocoa and timber have been the most important export goods. With increased economic growth and oil discoveries, Ghana is now aiming to become a hub for trade in West Africa and to achieve middle-income status within ten years.
As the first president, the charismatic Kwame Nkrumah had great visions for Ghana. Unfortunately, he did not succeed in transforming Ghana into the paradise everyone dreamed of after the 1957 liberation. Today, Ghana has as small a share of the population employed in the industry as after the liberation. Large loans were raised to save the economy. In parallel with the debt, the influence of donors grew. In the 1980s, Ghana underwent structural adjustment programs under the auspices of the World Bank. The country is considered a success in terms of this “powerful medicine,” hence the World Bank’s star student. Rarely is it mentioned that the World Bank used more resources in Ghana than in other countries to achieve this,
The rumor as a star student along with relatively stable political governance has made Ghana a success story many donors will participate in. The oil discovery reinforces this trend. The World Bank recently tripled its direct support to Ghana, and the International Monetary Fund (IMF) has agreed on new loans of $ 600 million over three years. Increased cooperation with China and Nigeria is changing Ghana’s international relations and may reduce donor dependence on the West.
Smooth race in historic elections
Ghana has had democracy since Captain Rawlings took power at the military coup in 1981 and introduced multi-party system and elections in 1992. But the country’s political culture with only two significant parties and low turnout weakens democracy.
The 2008 elections tested Ghana’s political institutions and electoral processes. Accusations of electoral fraud flourished and some violent confrontations took place. Prior to the count in the small state of Tain, the sitting party NPP had 48.87 percent of the vote, while the opposition party NDC had 50.13 percent. Prior to this last count, NPP did everything possible to maintain its position. NPP’s radio channel announced that they had won, and the party sued Ghana’s Supreme Court Election Commission on the grounds that the election had not gone well, but later withdrew the lawsuit. With a marginal majority, it could finally be announced that NDC had won.
Business as usual
The impact of the financial crisis was less than feared in Ghana. The biggest effects could be seen on the decline in private cash flows from Ghanaians living abroad and the decline in foreign direct investment. But the price and demand for gold and cocoa remained stable, and the low level of industrial trade made the country less vulnerable to the major global downturn. Ghana’s growth went down from 7-8 percent in 2008 to 4 percent in 2009. The relatively stable growth has been sustained by public investment, but over time the country has to strengthen its sources of income. In order to achieve the goals of economic growth, among other things, infrastructure must be improved, as growth in commercial agriculture depends on better transport opportunities to the coast. Ghana was recently voted by the World Bank as the best African country to do business in.
Despite economic growth, 53.6 percent of the country’s population still has only $ 2 to live per day and the challenges associated with water and sanitation are great. Poverty is greatest in the northern part of the country. Ghana has freedom of speech and diversity of newspapers, but most newspapers receive government support and are not critical of the current government. On the other hand, the ceiling height is great for what can be said on radio and the internet.
Can oil create new opportunities?
Ghana’s oil discovery in 2007 was the largest in the world that year. The oil fields are expected to generate an estimated $ 1.2 billion annually for two decades to come. There are significant sums of money for Ghana, which currently has a gross domestic product (GDP) of $ 16 billion. One goal of the petroleum revenues is to allocate funds to a stabilization fund to support budgets in the event of a fall in oil prices and a legacy fund to use after the end of the oil. The latter has been debated in civil society due to skepticism about the government’s ability to manage such a fund, and that poverty reduction measures should be implemented now.
Ghana’s oil revenues are likely to strengthen the country’s national budget, but it is questionable whether the oil reserves are large enough for export. The discovery of 1.2 billion barrels to date has been modest compared to Nigeria’s proven reserves of 36 billion barrels. It is hoped that the oil will contribute to improvements in infrastructure and competitiveness, which in the long term will provide jobs and increase growth, as well as reduce the high foreign debt and reduce dependency on aid. Ghana is happier than many of its neighboring countries due to increased awareness of resource-related challenges and a more stable democracy in the start-up of oil production. But the legislation for the oil sector is not yet clear. If the country’s oil production starts to generate revenue before the legislation is in place, the chance of corruption increases.
In the process of managing the newly discovered resources, Ghana has, at the request of Kofi Annan, initiated a collaboration with Norway’s development program “Oil for Development”. Ghana has also increased cooperation with Norway on commercial fronts, including the Norwegian company Aker ASA awarded a contract as the main licensee on a deepwater block outside the Jubilee field. Aker is now in danger of losing the license due to uncertainty regarding corruption and registration of the company in Ghana. Norway is now considering setting up an embassy in Ghana, which shows the increased Norwegian interest in Ghana as a young oil nation.
Area: 238 539 km2 (32nd largest)
Population: 23.4 million
Population density: 98 per km2
Urban population: 49 percent
Largest city: Accra – approx. 2.1 million
GDP per capita: 709 USD
Economic growth: 6.7 (percent)
HDI Position: 152