Dealing with resource curse syndrome in the Ghanaian oil sector through reforms of appropriate laws and policies

Abstract

Most resource-rich nations, particularly in sub-Saharan Africa are often unable to properly utilize the revenues generated from their resources. The problem has always been that, governments of these resource-rich states are unable to harness revenues and efficiently utilize them towards growth and development. This situation is mostly described as the “resource curse phenomenon or the “paradox of plenty”. The issue of the so called curse bedeviling such resource-rich states seem to emanate from over dependence on these resources and failure by governments to diversify various sectors of their economies. The fear that emanates from the culture of dependence on these natural resources is that, they are exhaustible in nature. Therefore any prudent government tasked with the management of these resources in trust for its people must take necessary steps to use the revenues generated from these resources to diversify other sectors of the economy. The need to invest wisely and diversify the economy is also important for sustainable development. This is because the resources belong to the present and the future generations. Ghana discovered oil in commercial quantities in July 2007 and started production in 2010. This discovery and subsequent production has moved the nation from a lowincome status to a middle-income status. Whether the move to a middle- income status has translated positively in the lives of Ghanaians is a question that remains unanswered. For over a century, Ghana mined gold, bauxite, diamonds and other minerals just to mention a few, but the nation did not benefit much from these resources due to poor management and persistent corruption. For over seven years now, the country has been producing oil but it seems the revenues generated from the sale of these petroleum resources have not been used equitably and efficiently. To avoid the mistakes of the past, Ghana needs proper management systems and sound legislation in order to utilize efficiently, its resources and possibly avert the “resource curse” syndrome. This paper examines whether Ghana is experiencing the “resource curse”, the type of management systems in place and the gaps that are in the industry specific legislations. It is hoped that, the findings, conclusions and recommendations therein will serve as a guide to resource-rich sub-Saharan African states in general and Ghana in particular.