Introduction
This post is the third in the follow-up theme of how oil and gas discoveries affected three countries referenced in my book “Overseas Adventures – From Afghanistan to Zambia and Points In-Between.” The first two posts were about Timor-Leste and Guyana respectively. Recall from my book that I was in Ghana in the mid-1970s as a Field Staff Officer with the Canadian volunteer agency CUSO. Although not mentioned in the book, I also had the pleasure of working in Ghana with the FAO in the early 1990’s on an agroforestry extension project as a development communication advisor.
Offshore oil
Oil was discovered offshore in 2007 and production started in 2010. Ghana is considered the 8th largest producer in Africa but its daily output in 2022 was only 174,000 barrels per day considerably less than juggernauts Nigeria and Angola. Still, Ghana earned some 6.5 billion USD in the first 10 years of production, and in 2022, another USD 1 billion. New discoveries have raised future output estimates to some 400,000 bpd.
You may find this video clip on the oil industry in Ghana informative. “How Ghana only earned $8 billion in oil revenue?” There are some nice visuals of Ghana too.
Government response
The Government passed legislation in 2011 entitled the Petroleum Revenue Management Act to establish proper use of oil revenues. The Ghana Heritage Fund and Ghana Infrastructure Investment Fund were also established. Apart from transfers to these entities the Government directly spent considerable amounts on infrastructure particularly roads, alternate energy sources, health and education. However, there was controversy when required transfers to the GIIF were not made on time and the Government took money from the GHF early to deal with the effects of COVID and to initiate the free Secondary High School Initiative.
Although the Free Senior High School (SHS) policy in Ghana increased secondary school enrolment by 13.5% from 2017 to 2018, it was criticized for overcrowding classrooms and dormitories. Critics also raised concerns about its financial sustainability and the impact on education quality. Despite the controversy, public opinion remains largely favorable, and a 2024 study confirmed that FREESHS has a positive impact on girls’ educational attainment amongst other benefits.
Free secondary education policy and education attainment – ScienceDirect,
Technical and Vocational Education (TVET)
In my view, apart from secondary general education, the TVET sector also needs more of Ghana’s oil revenue. The country’s Education Strategic Plan notes that “Currently, technical and vocational education is limited in scope and does not cover the diverse needs of learners or of Ghana’s economy. The relevant institutions are also ill-equipped to provide an adequate education, and all of these factors contribute to the poor perception of TVET. The TVET sub-sector also receives less than 3% of the overall education expenditure.” (p8)
ghana-education-strategic-plan-2018-2030.pdf
I am gratified to see that Government plans do suggest a serious effort to enlarge and enhance this sector as indicated below. My hope is that the allocated budget for TVET gradually rises to five or even eight percent of total education budget.
“The ESP response to existing challenges is therefore to implement the new TVET policy and ensure improved coordination of provision, increase access, and improve relevance under the umbrella of the realignment of the TVET sub-sector, which is a key pillar of the reform agenda. All TVET programmes and institutions will be brought under the Ministry of Education (MOE), to improve coordination, coherence, monitoring, and quality of the offer provided. These institutions, along with their budgets, will fall under the oversight of the MOE and improving data collection and collation from TVET institutions will be an important part of mapping the success of the realignment. The new TVET curriculum will be developed in close cooperation with the industrial, commercial, and business sectors. In line with curriculum reform in other sub-sectors, the new TVET curriculum will be competency based. The competencies will be based on identified skills’ gaps and will be decided on in collaboration with the private sector.” (page 38)
Conclusion
Ghana’s oil wealth has a significant positive impact on areas such as education. For example, this month (November, 2024), the President of Ghana said the free secondary school scheme has benefited some 5.7 million students since its inception.
And, as noted in the previous section there are significant plans to develop the TVET sector, and other parts of education including primary, secondary, higher and continuing education. There have also been investments in infrastructure especially roads and in health provision.
That said, there are still challenges with oil revenue distribution and unintended consequences such as perceived threats to democracy.
A 2023 study entitled “An empirical review of petroleum revenue management and distribution after a decade of oil production and export in Ghana” concluded:
“that petroleum revenue collection and allocation has largely been done with reference to the PRMA. However, ministerial discretion and lack of a clear-cut definition of the priority areas are sources of abuse to oil revenue management. The study, thus, calls for reforms in the management and use of oil revenues to help ensure long-run benefit and sustainability.”
In short, there is still work for the government and other stakeholders in Ghana to do before deciding whether oil has been a blessing or a curse.