Ghanaian Gold

By: Meir Javedanfar

10/12/2008

On 18^th of June 2007, the Ghanaian government received important economic news.

According to a recent find, 600m barrels of light offshore oil had been discovered.

The news was understandably greeted with joy and promises.

Ghana's president, John Kufuor, whose party recently stood for reelection said in an interview with BBC's Focus on Africa:

"Oil is money, and we need money to do the schools, the roads, the hospitals. If you find oil, you manage it well, can you complain about that?"

President Kufuor is right. You can't complain about such an important find. Some countries dream of finding such an important source of wealth and energy in their back yard.

But there are other countries, who have found oil to be a curse, rather than a blessing. So the question to ask is: How can the Ghanaian population be sure that oil does not lead to unrest, corruption, and neglect of other sectors?

Ghanaians point to democracy in their country as one reason why they are likely to be more successful. Accra is home to one of the most democratic governments over the last 20 years.

According to George Owusu, country manager for Kosmos Ghana (the company who discovered the oil:

"Ghana is different from other African countries. The public is wide-awake. There are 30 dailies, 160 radio stations. The people are well educated - more so than in many other African countries - and there's freedom and some level of transparency".

There are a number of important factors, which need to be in place to ensure that a new entrant into the oil producing league starts on the right path. One of the most critical is level of corruption, as its instrumental in ensuring that oil money is spent in areas recommended by experts and elected bodies. According to Transparency International's 2008 league table, with a total of 180 countries surveyed, Ghana is mid way up the table at 69^th .

This places Ghana near other oil producing countries such as Kuwait and Saudi Arabia, but far behind others such as Qatar and United Arab Emirates.

All eyes should be placed on the results of the current elections. The new Ghanaian administration has a golden opportunity to learn from other country's experience, and to use the new wealth to propel Ghana's position.

Failure to manage the newly found wealth could not only bring stagnation, it could pull the country backwards, both economically and politically.

One suggestion to the new Ghanaian government: as well as health and education invest the new wealth in non oil sectors, as it could produce inheritance long after the current blessing has departed. Africa is looking for a new Information Technology giant, to join Nigeria and South Africa.