Oil resources need careful management — Economist
A Professor of Economic History, University of Cambridge, Gareth Austin, has identified the country’s oil find as a vital and valuable resource that needs careful management to aid accelerated national development.
In his opinion, oil resource,like gold and any other minerals, needed judicious and prudent management at all times because it was below the surface, non-renewable and more important with so many fluctuations in prices.
In a chat with the Daily Graphic in Accra last Monday, Prof. Austin declared, “It will be better to keep the oil find underground if its exploitation will go to benefit expatriates or foreign investors at the expense of nationals.”
Prof. Austin, who is also a former editor of the Journal of African History, is in the country on the invitation of the Institute of Economic Affairs (IEA) to deliver a keynote speech at a public lecture on the theme: “Ghana’s Economic History, 60 Years after Independence.”
Prof. Austin, who has published some of his works in many journals, including Business History Review, Economic History Review and the Journal of African History, said with non-renewable resources such as oil, it was important to have government ownership rather than foreign ownership.
Notwithstanding any negotiations, “there is need for the government to own the find and if pushed to the limits, the option is to keep the oil find on the ground”.
Prof. Austin, whose publications include Labour, Land and Capital in Ghana: From Slavery to Free Labour in Asante, 1807-1956 (2005), said: “It must be necessary to exploit the oil find without relying so much on expatriates or foreign investors. This is because it is a resource that is not renewable and can be used once.”
According to Prof. Austin, Ghanaians must avoid the high risk that comes with the resource.
“How Ghana uses the oil is crucial, both the use and abuse of oil revenue is very important. It can create jobs for the construction industry when oil prices are high and the reverse the case when prices are down; Oil can be used to reinforce growth of the country and build infrastructure,” he explained.
He also indicated that because of the nature of the oil production which was essentially in the hands of foreign investors, oil revenues could easily be siphoned out of the country.
In line with this, he cautioned Ghanaians to be more careful in the management and use of the find, saying “One of the tricks of managing oil is not to exploit it all at once.”
On Ghana’s economic trajectory, he said the country had a more realistic prospect to develop and promote her manufacturing sector.
He said Ghanaians achieved political independence with generally very high hopes but wondered why despite the early efforts under President Kwame Nkrumah, and despite the considerable economic growth achieved over the last 34 years, the country’s industrialisation remained relatively tentative and elusive.
As of 1983, he said those high hopes had been confounded with output per head actually a quarter lower than in 1957.
Instead of industrialisation, Prof. Austin pointed out that manufacturing had collapsed to less than four per cent of the reduced national product, over a third down on the very low level it had reached by independence.
In sharp contrast, however, he noted that from 1983 to 2010, the year before oil exports began, output per head doubled to 55 per cent higher than in 1957 – and this was for a population four times greater in a country in which life expectancy at birth had risen from 45 to 60 since 1960, while educational enrolment and literacy had expanded far above the levels at the time of independence.
“Yet, despite the progress, I have met precisely many Ghanaians who are remotely satisfied with the present level of national income, which, now helped by oil (and adjusted for purchasing power parity), topped the equivalent of US$4,000 per head in 2015. On the contrary, Ghanaians tend to ask not why Ghana is today more prosperous than some of the neighbouring countries, but why the likes of South Korea developed much faster despite Ghana’s resources under the ground and under the sea,” he asked.
On the effective measure to curb corruption, Prof. Austin asserted,“The way to go is to strengthen anti-corruption culture where we punish acts of corruption.”
“We must put in place serious deterrents including jailing public officials for many years, and when they are out of jail banned from public office for life. Nobody stops any human being from having a second chance but a second chance should not be in the public life,” he insisted.
He also called on voters and the law courts to punish politicians who engaged in acts of corruption by voting them out of office and the law courts punishing them accordingly.
Prof. Austin lectured in West African economic history, University of Ghana, 1982-85.
Born in Nigeria, he taught at a Harambee School in Kenya and did a BA at Cambridge and PhD at Birmingham. In the 1980s, he travelled by public transport around all countries in West Africa except Mauritania. He moved to London for a post-doctoral fellowship in 1986 and worked for the London School of Economics and then the Graduate Institute of International and Development Studies in Geneva before returning to Cambridge in 2016.