Oil-backed growth will transform the Ghanaian economy, but the politicians are battling over the direction the country should take and how that growth can be shared
These are heady days in Ghana, full of revolutionary economic plans and partisan politics at full throttle. The IMF estimates that Ghana's real economic growth this year will hit an average of more than 21%, ahead of such stars as China, India, Qatar, Angola, Ethiopia, Mozambique and Liberia.
It is an ascent from zero to hero, the statisticians insist. Three decades earlier, when Flight Lieutenant Jerry John Rawlings and his comrades seized power, Ghana was functionally bankrupt, social services had all but collapsed, and basic commodities were in chronically short supply.
This year's growth surge, driven by the launch of commercial oil production last December, brings the country to another turning point: success will mean the development of a new industrial and processing economy, powered by gas and hydro-electricity financed with billions of dollars of new loans from Asian trading partners.
Burn and Earn
The advent of locally produced gas will revolutionise business and industry in Ghana, companies in Accra and Takoradi insist. Now their greatest concern is for it to be priced competitively and for the distribution network to be established quickly. Responsibility for that will fall to the new Ghana National Gas Company (GNGC) chaired by former finance minister Kwesi Botchwey (see page 62). In mid-August, GNGC officials said that they had approved the use of at least $800m in loans from the China Development Bank to build pipelines and other infrastructure to accommodate about 120 million cubic feet per day of natural gas production from 2012 or 2013. David Mureithi, the managing director of Unilever Ghana, says cheap and reliable power will transform his company's operations: "When I was working in Côte d'Ivoire, we never ran out of power, even in the worst of times. We installed a gas-driven heating system which used the power produced to make steam to keep all our machines running. All our boilers there run off gas, and this has reduced our running costs by 35%." One of the government's top priorities is to provide gas supplies to the 132MW thermal plant under construction at Aboadze. K.B.
These plans launched by President John Atta Mills's government are the country's most ambitious since founding president Kwame Nkrumah tried to use the surplus from cocoa and gold earnings to kickstart an industrial revolution. Today, the challenge is to sustain this economic momentum in tandem with Ghana's hard-won reputation for stability and credible multiparty elections.
The next hurdles are the elections in December 2012, which will be a tight contest between Mills's National Democratic Congress (NDC) and the opposition New Patriotic Party (NPP) led by veteran Nana Addo Dankwa Akufo-Addo. The party that wins will preside over the most critical period in the country's development since independence. If the victors manage it well, they could be in power for a decade or more.
Equal share in prosperity
Certainly, the upward revision of Ghana's national income by more than 70% is an accolade for which both the NDC and NPP governments of the past decade can take credit. The Ghana Statistical Service calculates that gross domestic product this year will be $43.7bn, instead of the $26.9bn previously forecast, and GDP in 2012 is calculated to rise to $48.8bn, instead of $29bn.
This takes Ghana into the ranks of lower middle-income countries. Projected earnings from oil production of 120,000 barrels per day from the Jubilee field – jointly run by Ireland's Tullow Oil and US companies Anadarko and Kosmos – and promising news of more oil and gas finds by these companies and Italy's ENI have made Ghana a new target for lenders and suppliers. It should also mean the economy is on a path of self-sustaining growth and the days of aid finance are over. But such statistical averages can conceal a world of deprivation, inequality and frustration – as the revolutions in middle-income countries such as Tunisia, Libya and Egypt have shown.
To win, President Mills has to convince Ghanaians that the impressive statistics will translate into much better living standards and opportunities for education.
When asked about the slow pace of progress, Vice-president John Dramani Mahama told The Africa Report that gas, more than oil, would be the driving force for Ghana's industrial revolution, but that attention to accountability meant things would not happen overnight.
From the opposition corner, Akufo-Addo raises questions about the government's competence to manage a vast new borrowing programme and attract serious foreign investors. In Parliament on 26 August, the NDC majority voted unanimously for a $3bn credit facility from the China Development Bank (CDB). The NPP abstained, arguing the government had not provided enough information on how the loans would be spent. It was also unhappy that 60% of the credit would be tied to Chinese contractors and not subject to competitive bidding.
Akufo-Addo warns of the risks of this higher oil-backed borrowing: foreign debt had risen from $4bn at the end of 2008 when the NPP lost power to $10.8bn by the middle of 2011. "Oil gives us more space to borrow the funds we need to speed our development," Akufo-Addo says, "but we risk a return to our [heavily indebted] experience if we do not borrow responsibly."
Both parties argue that Ghana should become the industrial hub of the sub-region over the next decade on the strength of its oil and gas. The centre-left NDC wants a bigger role for state institutions, while the centre-right NPP is more determinedly pro-business. At the centre of the development plan is an industrial base in the Western Region, powered by gas piped in from the Jubilee field and linked by rail to Kumasi and Accra. It would produce petrochemicals and a host of by-products such as plastics, paints, pesticide, bitumen and natural gas liquids, all with a ready market in West Africa.
Accountability Counts
Activists and opposition politicians are demanding much more accountability from government. A report submitted by the Auditor-General to Parliament's Public Accounts Committee in July uncovered financial losses of 2.7bn cedi ($1.8bn), and serious abuses in the judicial system. Few of the officials named in these reports have been sanctioned.
Former acting director of the Commission for Human Rights and Administrative Justice Anna Bossman argues that corruption has to be fought more vigorously. After her resignation from the Commission in June she said "there is quite a bit of corruption and especially conflict of interest among public officers. As a society, we seem to condone bad behaviour."
Reinforcing concerns that the commission lacks the resources and authority to tackle political and corporate criminality, Bossman complained that "we don't have robust systems that will allow us even to trace and monitor properly. And then, when we do monitor and find things, we do not sanction." Such reasoned critiques of institutions and policies are rare in the point-scoring world of party politics. Instead, many fear that the rising stakes in next year's elections have led to a coarsening of debate with violent undertones.
So serious have matters become that more moderate politicians are calling for the introduction of a code of conduct for political parties with sanctions against intemperate and foul language along with fines for the frequent personal attacks in Accra's lively independent press. A locomotive-like economy and landmark elections promise an exciting year, and perhaps Ghana's return to centre stage in Africa.
