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Feature: Big Lessons for Ghana after oil discovery

We are all familiar with the cases of the Nigerias, Equatorial Guineas, Angolas, Democratic Republic of Congos, Camerouns, Gabons and Zimbabwes, to name but a few, where in spite of the presence of vast amounts of natural-resource wealth, the masses of the people wallow in poverty.

In fact, nature could not have been more generous to Africa for endowing the continent with vast natural- resource wealth ranging from minerals to oil and gas. Ironically, however, the continent remains the poorest, as the wealth tends to benefit a few while the masses live in abject poverty—a kind of rich-poor paradox situation.

Poverty abounds on the continent, with over half of the population subsisting on less than US$1 a day. In addition to income poverty, Africa has some of the poorest of other social indicators, including life expectancy sanitation and illiteracy.

Ribadu Nuhul poignantly describes the plight of the African people in these words: “As we go back to our comfortable beds tonight, we should think about the voiceless millions who may not even have beds at all, who go to sleep hungry, sick and uncertain about their future. For many, it’s literally a matter of life and death.”

The scale of Africa’s natural resource wealth may be inferred from Africa Development Indicators, 2006, where the World Bank notes that between 2000 and 2010, $200 billion in oil revenue was expected to accrue to African governments. It adds, however, that, ironically, African countries tend to have higher poverty rates, greater income inequality, less spending on health care, higher prevalence of child malnutrition, and lower literacy and school enrollments than other countries at the same level of income.

The question is: why does the wealth of Africa fail to trickle down to the masses who suffer abject poverty in the midst of plenty? The rich-poor paradox in Africa is the result of two non-mutually exclusive factors: big government and corruption.

The problems of BIG Government and corruption

A major factor responsible for the impoverishment of the African people is big government. A penchant for creating jobs for party members, relations, and friends leads to over- bloated “governments” across Africa. In the event, large numbers of people are employed and paid with state resources to do little work or to duplicate the work of others. In Africa, loyalty—to relations and cronies—is strong. The extended family system extends the reach of family loyalty. This also extends to friends, since friends of your relations tend to be your friends as well. The network of family and friends thus becomes extensive. And that is where the problem of big government and corruption start.

When African politicians assume power, they see their first duty as extending favors to their relations. This is done through appointments to key positions, award of public contracts, or provision of other financial or material privileges. The next circle of people to be favored is friends.

This may include home-town buddies, school mates, or friends of relations. As is to be expected, the perpetration of corruption by Africa politicians often involves relations and friends.

The African traditional family and friendship loyalty bring so much pressure to bear on political leaders; pressures that they are often unable to resist. Next in line are party members and supporters, who are also appeased with jobs and other favors.

Lessons for Ghana after oil discovery

The traditional African family and friendship loyalty often manifests in the creation of jobs for the boys, which many times results in placing square pegs in round holes. This comes with considerable economic costs, since incompetence is rewarded at the expense of efficiency. As Professor Adei points out, this is akin to the “winner-takes-all concept,” which, he argues, has the tendency of making politicians, upon assumption of office, to appoint old school mates and other cronies to positions, disregarding competence and merit. He regrets the unfortunate situation where old students from their former schools “suddenly become intelligent” when their school colleagues assume power.

Often, ministries and departments are created haphazardly without due regard for economy or efficiency. In per capita terms, African countries tend to have more ministries, ministers, and parliamentarians than other developing or developed countries.

The big size of “government” in Africa can be illustrated with examples from Ghana and the US.

Ghana has a population of 24 million and the US, 350 million. In the next government, Ghana will most probably have over 25 ministries on current count. The US has 15 ministries/departments. Assuming one minister and one deputy for each ministry plus 6 Ministers of State, Ghana’s ministers’ figure comes to 56, implying 2.33 ministers per 1 million people.

The same assumption will yield 30 secretaries of state for the US, implying 0.08 secretaries of state per 1 million people. On this count, Ghana’s minister-population ratio is [29 times] that of the US. Who says that the more ministers you have the more efficient the government is? Having a leaner government may be more efficient given that you avoid duplicative practices and inter¬personal rivalries that hold back progress.

When it comes to parliamentarians, Ghana has 2753 , implying 11.5 parliamentarians per 1 million people. The US, on the other hand, has 538 – representatives, implying 1.5 representatives per 1 million people. This means that Ghana’s parliamentarian-population ratio is 7.6 times that of the US.

Ministers are, of course, very expensive people, as, in addition to their basic pay and allowances, they are often provided with free or subsidized housing, transport, security, utilities, medical care, etc. Further, they enjoy generous retirement benefits.

Then you add parliamentarians who also enjoy similar emoluments and benefits. The cost of taking care of the executive and legislature takes away vast amount of resources from ordinary people and impoverish them.

Meanwhile, Africa’s natural resource wealth is applied by the ruling class for their exclusive benefit at the expense of the people. In many cases, the wealth is stashed away in private bank accounts in Switzerland and other Western countries.

From Nigeria to Congo DR to Angola to Equatorial Guinea to Gabon, vast oil endowments have led to corruption that has impoverished the populations. One can cite numerous examples of the scale of abuse of African resources for the gain of a privileged few.

The writer, Dr. J. K. Kwakye is a Snr. Economist, Institute of Economic Affairs (IEA), Ghana
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Reporting Oil and Gas project was launched on 4th June 2009atTakoradi, Western Region, Ghana by Penplusbytes (PPB – www.penplusbytes.org) with the vision of providing a one stop online information and knowledge about Ghana’s oil and gas sector
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