Despite accruing a large sum in oil wealth, Nigeria continues to struggle economically and Ghana is watching carefully.
Member of Parliament for Ghana, Dr. Kojo Appiah-Kubi wrote in the GhanaWeb that one of the largest problems facing the soon to be oil-producing country is how to use its oil wealth “strategically to promote sustainable development.” And what better way to get a handle on things than to look at its neighbor Nigeria?
Appiah-Kubi said that from 1971 to 2005, Nigeria was estimated to have earned about $390 billion in revenue based off its oil resources although poverty levels rose 28% in 1980 to a peak level of 70% in 1990. He added, “The latest records estimate about 48% of Nigerians [living in poverty].” The MP discussed Nigeria’s debt despite its oil wealth saying, “What is more ironic is that this huge flow of oil revenues has been accompanied by rapid substantial increases in the country’s external debt from $3.4 billion in 1980 to about $33 billion in 2002.”
He blamed the lack of effective policies saying that Ghana was headed down the same road if its strategy was not properly outlined to prevent a downfall as seen in Nigeria. First is to understand that oil, while important, will not sustain Ghana’s economy. He said, “It is unfortunate that oil is being seen by politicians as the panacea to all of Ghana’s problems; rather it should be seen as just one of the [country’s] many finite natural endowments.” One example is the potential for the country’s renewable energy sector.
In mid-October, the country announced that it would pass a renewable energy law in order to regulate and further promote the development of alternative energy resources. The government is currently working on a draft policy and regulatory framework for the production of biofuels, set to be released in 2011. For any oil producing country, incorporating biofuels into the mix is one of the easiest ways to not only promote sustainability, but also generate even more revenue for a country. Also, with the EU’s recent announcement that will require the transportation sector to use a biofuel blend, many African countries are getting geared to help the EU meet their biofuel demands.
Appiah-Kubi concluded, “The oil revenue spin-off should also be used to strongly strengthen the private sector in the non-oil sector through tax incentives and infrastructure development. Non-tariff barriers to support domestic manufacturing should be tenured and targeted. With so many positive and negative experiences abound from which Ghana can learn, failure to use the oil resources sustainably is not an option.”
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