Oil

Ghana has received a lot of attention over the past few years for the offshore oil finds. As the BBC reported earlier this year, Ghana’s economic growth rate is expected to double due to this find. Some of the most recent news on this:

• The debate as to whether Ghana will “escape” the oil curse rages on.
  • Ghana’s Business Guide reports that “prominent indigenes” of the Niger Delta are warning Ghanaians that the troubles in Nigeria could be reproduced in Ghana. Specifically, they cite the concern that oil companies will use Ghanaians against each other.
  • Meanwhile, Ghana Business News cites Standard Chartered Analyst Raziah Khan, who claims that Ghana is doing too many things right to experience an oil curse. This includes hedging their entire share of production from the Jubilee oil field, passing a law that saves oil income for future generations (a “Heritage Fund”). However, as they note, there is still concern that more needs to be done to protect Ghana from possible environmental damage.
• At the Pulitzer Center on Crisis Reporting,Christiane Badgley has a series of reports on oil’s actual and potential impacts. One of the more significant themes in her work is the problem that oil production is posing for fishermen.

It is obviously way too early to tell if Ghana will escape the oil curse. One major question is whether Ghana’s democracy has had enough time to consolidate itself and avoid some of the high levels of corruption that other African nations have experienced in connection with oil. Indeed, oil need not lead to bad politics (the US, Norway and many other nations have avoided such problems for the most part). As Thad Dunning notes in his excellent book, Crude Democracy, oil finds can also promote democracy. If other sectors of the economy are still important to elites, and if the country is overall poor and unequal, then an oil boom may actually make democracy more palatable to elites as they now have another source of revenue for redistribution. (OK, this is an oversimplification of his argument…. definitely pick up his book if this idea interests you!).
I like the optimism in Charles Kenny’s Foreign Policy piece,“What Resource Curse?”. A couple of nice quotes:

• “The curse is the type of counterintuitive idea that makes for a great newspaper op-ed. Nonetheless, the curse is also the kind of counterintuitive idea where intuition may have been right to begin with.”
• “Blaming oil wealth for poverty, though, is like blaming treasure for the existence of pirates.”