Oil brought riches to Nigeria but also ravaged its economy and fuelled corruption and conflict. Now nearby Ghana has begun production and wants to take the wealth but dodge the oil curse.
Ghana is used to resource riches: it is already the world’s number two cocoa producer and Africa’s second-largest gold miner. But there are signs it is struggling to manage the new oil money and some people are disappointed.
A budget deficit last year which soared to 12 percent of gross domestic product (GDP), nearly twice the targeted level, raised fears among economists of fiscal laxity, a classic symptom of the resource curse that often feeds corruption.
Investors are also watching the strengthening cedi currency . An inflation-adjusted rise due to an influx of petro-dollars can signal “Dutch disease”, where the competitiveness of farming and manufacturing is eroded, as in Holland in the 1960s.
“The government seems to be very much wary of the dangers of Dutch Disease,” central bank governor Henry Kofi Wampah said. “Oil will continue to attract attention but not at the expense of cocoa or gold.”
In Nigeria, agricultural production plummeted in the 1970s and 1980s as oil came to dominate the economy. Some now fear Ghana’s cocoa sector, the largest employer in the country, could be similarly threatened by oil that began flowing in 2010.
The cedi weakened last year as the oil boom fuelled imports but its depreciation has now slowed to below inflation, which stood at 10.6 percent in April, leaving the currency slightly stronger against the dollar year-on-year in real terms.
Ghana, however, has several advantages over its giant neighbour to shield itself from the oil curse, according to senior government officials, economists and watchdog groups.
Not least of these, it is aware of the risks and is trying to avoid the mistakes made by other African states.
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