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2017 Resource Governance Index: Comparing Ghana’s Oil, Gas and Mining Sector

Ghana performed satisfactorily in the 2017 resource governance index of the Natural Resource Governance Institute. The 2017 index marks the 3rd credible index to be published by the institute. The first and second index were released in 2010 and 2013 respectively.

According to this year’s report on 81 oil and gas countries across the world, Ghana scored 67 points out of 100 making it the best performer in Sub-Sahara Africa. The index was based on three components which are value realization, revenue management and enabling environment.

Value Realization in the index looks at key issues pertaining to a country’s state-owned enterprises, local impact, taxation and licensing. Revenue Management on the other hand deals with national budgeting, subnational resource revenue sharing and sovereign wealth funds, whilst enabling environment involves open data, political stability and absence of violence, control of corruption, rule of law, regulatory quality, government effectiveness and voice and accountability.

Overall, Ghana’s oil and gas and mining achieved the score point below under the three key component of the index.

Value Realisation
Oil and Gas 65
Mining 61
Revenue Management
Oil and Gas 65
Mining 37
Enabling Environment
Oil and Gas 70
Mining 70

Table 1: RGI Component scores for Ghana’s oil and gas and mining Sector

In comparison, Ghana’s mining sector scored 61 whilst the oil and gas sector scored 65 points over 100 under value realization. According to the index, the sub-component under value realization of Ghana’s oil and gas recorded 45 points with respect to licensing, 80 points on taxation, 59 points on local impact and 79 points in state-owned enterprise performance, a score which put Ghana’s GNPC 8th on the global rank of state-owned enterprises.

With respect to the mining sector, Ghana scored 61 points on taxation, 69 points local impact and 40 points state-owned enterprise. In summary, the mining sector performed satisfactorily in the value realization component, with varied performances in it subcomponent. For instance with a score of 62 of 100 points in licensing, Ghana’s mining outperform most neighboring countries in sub-Sahara Africa ranking fifth among 31 assessments.

 

Figure 1: Value Realization scores of Ghana oil and gas and mining in 2017 Resource Governance Index

Furthermore, the scores of the NRGI revenue management on the country’s oil, gas and mining sector had 65 and 37 points respectively.

The mining industry performed poorly due to the fact that the industry’s revenue management declined and was surpassed by income from oil and gas. According to the report revenue management is the weakest element in governance of Ghana’s mining sector. With a score of 36    out of 100 in National budgeting results from the absence of numerical fiscal rules setting a binding constraints on overall public finances.

Table 2: Revenue management score of Ghana’s oil and gas and mining.

Under enabling environment, according to the index, Ghana’s mining sector had favourable enabling environment which provides a good foundation for resource governance. An ever-opening space for the media’s and civil society is reflected in Ghana’s position within the top ten countries in the voice and accountability subcomponent.

Ghana, however, performed abysmally in the oil and gas sector due to its challenges of developing rules that linked petroleum revenues, national budgeting and general public financial management. Despite the introduction of several new laws to govern its oil and gas sector, it failed in enforcing the regulation of this laws. According to the report, a weak score of 58 out of 100 points in local impact is a true indication that the country suffered an absence of disclosure of environmental impact assessments and environmental mitigation management plans. Overall, both sector performed 70 points in enabling environment.

Table 3:  Enabling Environment score of Ghana’s oil and gas and mining.

In conclusion, Ghana’s mining sector ranked 24th whereas the oil and gas sector placed 13th in Natural Resource Governance Institute’s  2017 Resource Governance Index.

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Jacqueline Parditey

Jacqueline is a graduate with a Degree in Communication Studies from the Ghana Institute of Journalism (GIJ). She is a Project Associate currently working with the Oil, Gas and Mining projects team at Penplusbytes.
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