Ghana’s rich natural resources potential, should have afforded her the laudable opportunity to be one of the richest countries on the continent on which other less unfortunate African countries could have been counting for financial support and not to be rather going to bowwow from others.
NATURAL RESOURCE POTENTIAL OVERVIEW
Base metals/Industrial minerals
Ghana no doubt is one of the most endowed African countries in terms of mineral resources when talking about both base metals such as gold and diamonds then, industrial minerals such as salt, lime, alumina among others. Not only has the country’s name once been associated with gold (Gold Coast) signifying its richness in the precious metal, but she is still today the second largest producer after South Africa.
Unfortunately some experts contend that, despite this huge natural resource endowment with particular reference to gold, which has for centuries attracted and continue to European and other miners, she is still not the gross beneficiary from the industry .Only about 10 percent of the benefits from mining, some industry experts contend, remain in the country .The biggest chunk, that is, the 90 percent they maintain, leaves the country to further enrich already rich and developed nations.
Despite all the big noise about the gold mining industry being a major employer and leading national revenue earner surpassing cocoa for decades, the contribution of the mineral sector including gold as a whole, is still yet to impress any serious minded Ghanaian. What the apostles and proponents of the decades long gold mining driven economic posture of Ghana either consciously or unconsciously fail to mention, is the negative impact via heavy socio-ecological cost, nay, the food security implications it poses to the country. It is dangerous to compute GDP based on the value of revenue earned from gold alone which is merely normal without factoring in environmental and other costs.
Almost all the major river basins in the mineral resource rich areas in the Southern zone including the famous river Birim as of today have been badly polluted with toxic mining chemicals. Shifting the emphasis and heaping all the blame at the door steps of small scale illegal miners popularly called “Galamsey” is sickening .This is in view of the fact that there is ample scientific proof and evidence that the legal or commercial scale mining giants who are made up of mostly of foreign multinationals are not only the major beneficiaries of mining, but they are also the pioneers of pollution in Ghana’s mining industry.
Is Ghana already a Resource Curse Victim?
The crucial question one may be tempted to ask is, “Is Ghana already a victim of resource curse?” The million dollar answer would be a big YES to the extent that, what is happening in the precious minerals industry led by gold is not a blessing at all no matter how many Ghanaians are employed and what amount of national revenue it is said to rake in. Ghana would need to rectify the situation and more so, draw useful lessons from it so as to avoid a repetition of the same mistakes in the young offshore and the about to be explored onshore oil and gas industries.
Ghana’s Gold Boom: The Glitters, The Tears, The Gnashing of Teeth
The Third World Network-Africa conducted a research on the environmental and socio-economic impacts of mining, AngloGold Ashanti Obuasi Mines, on Obuasi and its satellite communities. As part of process of validating the findings of the research, TWN-Africa organised a two-day workshop from 24th -25th August, 2005, for communities who participated in the workshop. The statement below is part of an outcome of the workshop.
The findings of the TWN Africa indeed vindicated what the communities affected by mining had long been trumpeting about what the activities of AngloGold Ashanti has caused them and issued the following statement:
“We, 18 communities affected by mining from Obuasi, Kenyasi, Bibiani, Himan-Prestea, Hia, Anyinam, Tarkwa, Oseikrom/Twinsaaso, New Bidiem, Ankaako, Ntonsu, Ayankyerem, Kwaberefoso, Jimiso, Ewiase, Dokyiwaa, and Fenaso-Fawoman participating in a two-day workshop in Kumasi, Ghana, from August 24th to 25th, 2005 to validate a research conducted on the environmental and socio-economic impact of mining (Anglo-gold-Ashanti Obuasi Mines) in Obuasi and surrounding communities, and also the potential effects of the mining bill, concluded thus:
“On the findings of the research, we are pleased that these have vindicated our long held perception that mining, particularly surface mining has adversely impacted our communities. The activities of Anglogold-Ashanti in particular and generally surface mining in our communities have resulted in:
⦁ Water pollution in particular River Fena, Hweaseamo and supu which lie within the operational area of Anglogold-Ashanti
⦁ Increased lack of access to farmlands
⦁ The spread of mining related diseases such as skin rushes, eye inflammatory diseases, respiratory tract infections, HIV/AIDS, and tuberculosis (TB)
⦁ Increased unemployment
⦁ Land degradation
⦁ Increased harassment and intimidation by mining company security and officials
⦁ General environmental degradation such as blasting effects, noise and public health safety.
“We are extremely concerned that the response by the company in particular Anglo-gold Ashanti and the state regulatory institutions to these problems has been very appalling. For instance, while the law provides for adequate and fair compensation this has not always been the case when mining companies take over our lands and other property.
“Also, the expression of dissent and demand for fair treatment has often been met with rapid deployment of state and private security to harass community members resulting, in many cases, in violent conflicts and human rights violation.
“The spread of mining related diseases is a matter of concern to our survival and development in our respective communities as well as public health generally. The health concerns were confirmed by aspects of the research report and we call on the Ghana National Health Service and the Environmental Protection Agency (EPA) to investigate into this.
The Genesis of “Galamsey”
It is commercial mining activity that was heavily financed by the European Investment Bank and others during the IMF and World Bank sponsored Economic Recovery Programmers (ERP) between 1983-1999 that gave birth to illegal mining in the first place.
Multinational mining giants as was the practice those days and may be still as of today would acquire mining concessions without even having to first consult the communities where they are to undertake their mining activities.
They are on record to have subjected the poor rural dwellers to involuntary sales of their cocoa farms to them for a pittance to pave the way for mining to start .The giants handing over to the poor people woefully inadequate resettlement packages thus denying them of their basic livelihoods and natural abodes. How do we expect them to survive? Then to add insult to injury, the river bodies which are their basic source of drinking water, fishery requirements among others, too are badly polluted.
To this end, for the youth in such mineral resource rich communities, it has become a matter of a last resort in order to survive .If the legal miners are polluting to make money they who have more or less been turned into economic refugees in their own land also have to pollute in order to survive. We need to get serious as a nation on tackling this issue of galamsey using a better and pragmatic approach than how the matter is currently being treated.
A global environmental and Human Rights organization known as act!onaid noted for keeping multinational mining companies in Africa on their toes in a Report ttitled,”Gold Rush. The Impact of Mining on poor People in Obuasi in Ghana” poses the question, “Has AngloGold Ashanti (AGA) brackets mine, contributed to development in the region?”
“The most striking thing visiting villages sitting on gold deposits within the Obuasi concession area is the extent of poverty. To our knowledge, no villages ActionAid visited have permanent health facilities, for example. AGA has rebuilt at least one school – in Binsere – after knocking down the first in its takeover of land, but this remains rudimentary.
“Sansu lacks everything,” said Benjamin Annan, an assembly man from the village, referring to poor local health and social amenities. “When you talk about the richest single gold mine in the world, it’s Obuasi.
“If you think mining has created development, visit Sansu village and see for yourself. There’s nothing this community can do.” Asked if AGA had brought any benefits, building water boreholes, for example, Annan said: “But I don’t call that development. It’s like barter trade since they’ve destroyed our waters. The company destroys your livelihood and then offers something like a scholarship scheme. “GA disputes this and says it has a community development programme and claims the company has brought benefits to the area (see box, opposite)
In fairness to AGA, Act!onaid, publishes the mining giant’s response inter alia, “A fundamental philosophy of the company is that its operations and activities should contribute towards long-term sustainable development and that communities should be better off for AngloGold Ashanti having been there(But is that really the case as of today?) brackets mine.. Total corporate social investment expenditure in 2005 was $8,752,407 – of this amount $266,206 was Spent in Obuasi.”
.”How does one equate the afore outlined monetary benefit to the social, environmental, health and other cost? Nothing also has been said about the carbon debt owed to Obuasi, other mining towns and Ghana as a whole through the mineral wealth exploitation activities by multinationals from the advanced countries.
Obuasi has a history of over 100 years of mining activities and if one beholds the level of urban development in the town as of today, one is greatly baffled. Only God knows what amount of money have left and still continue to leave Obuasi, Ghana for foreign lands. Is this a blessing to Obuasi and its satellite communities?
Act!onaid could only conclude in its report thus,, “given its valuable gold deposits, Obuasi should be a prosperous and thriving region, but instead mining activity by AGA/AGC has brought large social and environmental costs to thousands of its poorest people. Overall, interviewees say AGA is a net drain on the area’s health, wealth and development prospects.
It also recommended thus, “We believe the following areas require urgent action.
“1. Pollution and environment pollution of local rivers and streams in Obuasi pollution of homes and streams from AGA pipes in Anwiam village, flooding in Ahansonyewodea from AGC’s waste dump, polluted or broken standpipes in Anhansonyewodea,Anyinam, Jimiso, Kofiefrom villages, contaminated land in Ahansonyewodea and Dokyiwa abandoned pits at Binsere.
Addressing the Galamsey Scourge
Instead of condemning them as renegades and sending the military in most cases to stop them because they are damaging the environment, a sensitization and education outreach approach must be adopted. This must be supported by introducing alternate livelihood options to them as commercial mining had also brought about unemployment in mineral resources rich communities. Free training should also be provided to enable jobless youth acquire skills in Aquaculture in terms of ornamental and edible fish breeding, bee keeping, grass cutter rearing among others. Their training should also include business and financial management .This could then be followed with financial and management support until they are able to stand on their feet before they are left to operate on their own.
Proposed Ecological Restoration Fund
The damage that has been done to lands and river systems by gold mining in particular need to be addressed by government .We could have the introduction of an Ecological Restoration Fund with a seed capital provided by government.
The Multinationals in particular should be made to pay levies and miners no matter whether they are legal or illegal who violate the rules and regulations that do apply, should be prosecuted and fines emanating therefrom be paid into the Fund.
Cleaning Ghana’s River Systems of Mining Filth
If one seeks, I am inclined to believe, one would get companies with technology that could clean our river systems of poisonous mining substances. Money could be drawn from the Fund to meet the cost involved. But that should only be done after we are able to stop pollution of our water bodies underpinned by the prosecution of offenders in our law courts.
Ghana could take a cue from Senegal where the government in conjunction with the Abidjan Convention of UNEP has starting preparing to prosecute marine pollution offenders. Training has already started for judges in environmental judiciary also to be known as the “Green Judges”
Less the foregoing action, Ghana is heading for fresh water resources disaster .We need fresh water for human use, livestock and poultry production, irrigation farming, and aquaculture .We cannot therefore afford as a nation to recklessly manage this vital resource this way. A number of mining machinery that uses less of no water at all in the gold mining process are already on the market and can be accessed by miners.
The decades or even century’s long towns associated with mining in the Southern sector of the country such as Obuasi, Konongo, Prestia, and Tarkwa among others, when critically looked at in terms of availability of basic urban amenities leaves one perplexed .This is granted the amount of daily and annual wealth generated from there from mineral exploitation.
In point of fact Ghana, ought to sit up and take pragmatic steps to plug all the loopholes in the mining sector through which the country is losing billions of dollars annually .It is sad that gold is still exported in raw form by Africa’s second largest gold producer and more so, we don’t still have a commercial gold refinery in the country safe numerous privately owned small ones dotted across the country.
It imperative to recount that the late President Nkrumah in his wisdom and economic foresight was in the process of establishing Ghana’s commercial gold refinery at Tarkwa in the Eastern region but after the 1966 coup detat,the project and numerous others of great national importance ,were discontinued.
Mediocre Politics: The Bane of Current Energy Crisis
The Bui Dam designed to supplement the Akosombo Dam alongside the Atomic Energy Projects which the Osagyefo put in place was to guarantee cheap source of power on a long terms basis to support the country’s industrialization agenda was thrown overboard by the coup mongers .Indeed countless other projects and initiatives started by the Osagyfo wasn’t continued but discontinued and considered even evil.This, was how such vital energy sector projects of national economic development relevance and importance were simply sacrificed on the corrupt alters of personal hatred driven by senseless and misguided ethnocentrism.
Up till today, Ghana is still suffering from the heavy cost of the 1966 coup in many ways. The so-called “Dumsor Dumsor” or energy crisis which is today being used to blame government unjustifiably just to score cheap political points is one of the costs of the unfaithful 1966 coup.
If Ghana had a commercial gold refinery, today as the Osagyefo had wanted to do, the country would have been making annual substantial revenue from refining the estimated 300 tons of gold produced by the West African sub-region as a whole. Today this amount of gold leaves the Kadoka International Airport to the Rand Refinery in South Africa for refining.
The country is watching helplessly money slip by when we badly need money for developing infrastructure the building blocks for our economic prosperity .Thus, we more often than not have to borrow capital through Eurobond issuance among others which go at a heavy ay back cost to the detriment of the gross national economy.
Issues of Financial Reporting, Accounting and Auditing Standards
The issue of unfair and insulting royalty payments by multinational as also captured by the Action Aid report on Ghana and other African mining countries, should be addressed without compromising national for corporate interest.
Financial malpractices involving illegal transfers committed by mining multinationals as well as using tax free havens that cost the country billions of dollars annually as exposed in the same report must be stopped. If for this reason some of them will start threatening to leave as they are wont to do so be it. They could be given the exit as Ghana would be better off with less gold mining but more of primary agriculture and agro industry and other productive sectors of the economy.
Ghana must ensure that the nation gets its fair share from the exploitation of both base metals and industrial minerals and above all. All loopholes that mining multinationals in the mining sector in particular are known to use to siphone billions of dollars annually away to the detriment of the nation must be sealed
There should be a capacity building programmme for Ghanaian accountants and auditors to be equipped with the requisite skills to be able to effectively audit the complex books of the mining giants so as to ensure financial reporting best practice by the mining giants. They must be kept on their tones and financial reporting on their part must meet international best practice.
Strategic Exploitation of Industrial Minerals
Even though Ghana is also blessed with a big industrial mineral potential such as salt, clay, lime deposits (both for clinker production and neutralizing acidic arable lands) among others, the emphasis has been on oil and gas since independence.
Ghana’s joins African Oil and Gas Production Club
The untiring efforts by the GNPC in gathering of seismic data were amply rewarded via the major discovery in the Cape Three Points Bloc in 2007.
That Ghana is one of the luckiest among the later day entrants of Africa’s oil and gas industry cannot be overemphasized. The country had all the early warnings about the need to avoid the resource curse or the so-called ‘Dutch Disease’ prior and after pouring her first ever commercial sweet light crude oil with 0.25 percent sulphur by mass content in 2011
Early warnings came from various civil society organizations, a number of individual senior citizens including no mean a person like the ex-UN Chief Scribe, Busumuru Kofi Anan.Well guided by this, the late President Evans Ata Mills, moved with great passion in making sure the words of such people never fell on death ears more so when it bordered on the national interest.
To ensure prudent use of oil revenues as well as transparency, the Professor Mills-led Administration came out with the Petroleum Management Bill. To ensure that many Ghanaian as much as possible benefitted from the black gold, the government also came out with the Local content Bill and both were promulgated into laws.
Ghana’s Oil and Gas Potential: Minimizing the Environmental Impact
Aside offshore the Jubilee Field Bloc among others, oil and gas resources Ghana is also blessed with onshore oil and gas resources located in the Voltaian Basin which cover over fifty percent of the country’s total land mass.Recent Media reports says government is to now undertake exploration of the oil and gas resources of the Voltain basin. Experts project that Ghana could be a major oil and gas industry player on the continent in the next five to ten years to come if the industry comes in full stream.
National Gas Company is born
Coming out with the National Gas Company was also very prudent a move to avoid flaring of gas and for that matter environmental catastrophes which other countries had got to grapple with for decades.
The Soviet Hydrogeolocal Team upon the instance of the late President Nkrumah conducted some studies in Voltaian Basin. They sunk 10 exploratory wells in the Northern sector between 1962-1966 and took specimens of light crude oil and thus established for a scientific fact, the oil and gas potential of the Voltaian basin.
Interestingly, the one who led the then team, Professor Bozhko is now with the Moscow University and still going strong. He has since visited Ghana twice and when asked about his impression about the North and Tamale in particular, where he other members of his team resided during the studies; his response was “Still the same people and same culture”
Ghanaians Must be Owners not mere Participants
Government needs great circumspection in maintaining a strict regime that ensures a minimum impact of the exploitation of oil and gas on the environment .Apart from the local content bill that requires foreign oil and gas companies to employ a stated percentage of Ghanaians, attention must also be made for Ghanaians to be owners in the industry and not simply being part of it in terms of job opportunities. Ghanaian must be encouraged and supported to establish oil and gas exploration and production companies and be part of the eventual oil and gas industry boom as also owners.
Using Mineral Wealth for Development: The Contentious Issues
Ghana ought to introduce pragmatic reforms in the mining sector, underpinned by a strict regime that ensures responsible mining and bringing down negative environmental impact to the barest minimum if achieving zero point may not be possible for any reason. This is the only way to make our mineral resources endowment a blessing rather than a curse.
The Issue of Industrial Minerals
There should also be the introduction of incentives but reasonably to encourage exploitation of our industrial minerals such as salt for which neighboring Nigeria is said to spend about USD2 billion in annual imports. The focus on the exploitation of only base metals led by gold with all the environmental damage that goes with it is untenable.
The EPA must wake up and be up to the task, crack the whip mercilessly no matter who the offender is, enforce laws that do apply relating to engaging in economic activity in the extractive industry. The EPA the lead environmental regulatory body which some see as a toothless bulldog, must put in place a regime that makes sure a meaningful balance is struck between wealth generation and environmental and ecological health the negative impact of which affect minerals rich community dwellers badly.
The Issue of Agriculture
One of Ghana’s competitive advantages is her most favourable agro-climatic condition, with a total arable land of 17.5 million acres, excluding forested land, abundant river basins, ground water and annual rainfall to match. How to maximize this to our gross national economic advantage is the prep on our hands now. Ghana shouldn’t have been spending about a billion dollars on food and general agriculture imports annually granted her abundant agriculture potential.
The current state of Ghana’s agriculture constitutes one of the sad weaknesses in her economic fundamentals. Ghana for many decades appears not to have any clear-cut and strategic agriculture policy or development plan.
In this 21st century, small holder or peasant farming relying on outmoded farming implements and rain-fed driven production, still account for about 90 percent of agricultural production and productivity in Ghana and most other African countries.Menwhile, annual population growth has been perched at 3 percent while annual growth in agricultural production is said to be less than that figure.
Against this backdrop, we have to import to augment the shot falls in our annual requirements for rice, fisheries, among others. Application of technology and improved seed varieties to get better output per unit input as appertains in the East Asia world, is still at its low ebb in the country
Primary Agricultural Exports: Cocoa in Retrospect
We still also rely on the same small holders for the production of cash crops such as led cocoa the prices of which are not dictated by seller but by price fixing cartels in London and other commercial centres around the world. We are getting woefully inadequate revenue from annual cocoa sales because we export a great chunk of the produce in raw form since from the day Tetteh Quarshie brought the crop to Ghana.
How has Ghana maximized its competitive edge of being the best quality cocoa producers in the world with Ghana cocoa being the bench mark in the international market? Ghana cocoa has the lowest oleic acid content of 7 percent .Ghana cocoa doesn’t need to be blended with others before they are palatable as other cocoa producing countries have to do. Ghana made chocolates are even being traded secretly by some East Asian smart people and not Ghanaian exporters.
Indeed other cocoa producers may have surpassed Ghana in terms of quantitative production but in terms of qualitative production, none is yet to. The country ought to not only jealously guard this feat but more so, make maximum economic gains out of it.
Diversifying Cocoa Product lines
The over bloated attention being given to cocoa alone as a cash crop as if it were the only cash crop that could bring in foreign exchange for Ghana is seriously flawed .Whereas cocoa could be processed for cosmetic,pharmaceutical,nutraceutical, beverage and other applications, we still heavily rely on raw bean exports that is subject to external market volatilities.
Other alternate Cash Crops
In order to maximize economic gains from the cocoa industry not only must Ghana craft a zero-cocoa beans exports agenda and religiously work towards achieving it like Ouattara’s Ivory Coast is doing, but she must also give equally important attention to other numerous cash crops which even has the potential of bring in more income than cocoa.
The shea nut butter that is coming on the heels of cocoa and has since won international acclaim for its use as active ingredients in various industry applications including, chocolate manufacturing also deserves a Marketing Board and shouldn’t be made to play a second fiddle as it were, to cocoa for such a long time .This is tantamount to a “Ghana Disease” as it relates to Cocoa just as the same posture is what led to the “Dutch disease” for oil and gas.
We could also look at crops like sun flower, butternut squash among others that are hotcakes in the multibillion global wellness and nutrition market. Exotic fruits like Noni which has been brought in from East Asia and proven to be doing very well around the whole country can be exploited. It not at all wise to carry one’s egg s in a single basket.
Ghana’s Current Agriculture Sector Performance Indicators
Modern commercial farming accounts for only 10 percent of primary agriculture which some maintain is even less than that. Tractor-arable land availability ratio from various development reports on Ghana puts it at 1:2000 hectares .Amount of irrigable land under irrigation is still not that impressive. What amount of ground and surface or fresh water is being currently used for serious farming?
Ghana needs to take far reaching and pragmatic measures aimed at maximizing domestic revenue emanating from her extractive industry and use that as a denominator for opening up the others sectors of the economy led by agriculture, tourism, services, trade, industry, manufacturing, real estate and construction.
The plan to use the SADA zone and the Afram Plains as the heart-beat of an agro-products driven industrialsation agenda by government within the context of the of the Ghana Commercial Agriculture Project (GCAP) is a good and laudable idea. Ghana could even learn from the experiences of others and don’t need to re-invent the wheel.
The Issue of Borrowing
In as much as borrowing capital to either undertake economic infrastructure development projects, or any acts of national development endeavor is a global phenomenon, at what cost and what implications it has for the gross national economy too must always be critically weighed .Borrowing at an affordable cost that allows the country to make maximum returns after investing it in productive areas and also be able to pay back without too much ‘wahala’ for the nation is very crucial.
Exploring Alternative Capital Raising Modes: The Issue of Islamic Finance
To this end, Ghana must explore all the alternative forms of financing available in the international financial and capital markets including Islamic finance.Sukuk or the Islamic zero interest bond is an equity based financing mode whereby investors partake in sharing of risk and profit for their equity holdings rather than earning on interest for no economic activity or risk undertaken as is the case with conventional bonds. Conventional interest based financing comes with scores of interest- Basic, compound, and penalty ones which raises cost of production and builds up inflation.
South Africa, Nigeria, Senegal and of late neighboring Ivory Coast taking a cue from others across the globe have since joined the sukuk band wagon. The UK is on record to be the first developed economy to have issued a Sovereign sukuk of GBP200 million with a book value of 2 billion GBP in 2014. Ghana badly needs equity financing than debt financing as she is already debt servicing embattled and must take steps as a nation to free her from the debt burden dragnet.
Plucking the loophole of financial losses due to Corruption in Non-Mining Sector
The issue of heavy financial loses to the state being perpetrated by some unscrupulous people in the public and private sectors be it through thievery at the ports, ghost names among others, should also be tackled more seriously than ever before. Could the introduction of cutting edge technology stem the tide as government is trying to do? Selflessness commitment and extra-vigilance on the part of government would be needed to badly sustain any anticipated successes.
Proposed Making Accra the Dubai of West Africa Agenda
The Tema Port and the Kotoka International airport, that is being upgraded to much higher standards, underlined by Ghana’s geo-strategic location as a gateway to West Africa surrounded by landlocked Sahelian neighbours gives the Greater Accra region a competitive edge over the rest of Ghana.
The government could craft an agenda, like the Ruler of Dubai emirates in the UAE did, and passionately work towards making Accra, in the Greater Accra region, the hub for trade, commerce, tourism, finance among others, of the sub-region, nay the African continent at large. This would be to the great benefit of the gross national economy. The Accra Financial Centre facility which has since opened shop could even be upgraded to the Dubai International Financial Centre standards over time.
Dubai using its position as the trade hub of the Arab Gulf/Middle East region, nay, and the entire world is able to leverage brisk trade making re-export trade through Dubai emirate alone account for about 30 percent of UAE’s GDP.
Tons of merchandise of all sorts ,heading towards Dubai find their way as re-exports through Dubai ports to their final destinations in other Arab Gulf countries or even beyond .Imports meant for re-export is granted special duty and tax concessions .Ghana through the Tema Port could also do same and make billions in annual re-exports trade. The UAE through Dubai export both what is produced locally and what is not using this strategy.
On the back of the highly impressive transformation agenda through massive infrastructure development in various sectors of the economy that has been witnessed over the past four years, Ghana need must one crucial thing.- stop clever thievery and financial loss in the mining sector led by gold, through corruption in the ports, public service through ghost names among others. If that could be achieved Ghana would need less interest based debt financing.
The country could derive enough revenue for government to pump more into the agriculture and agri-business, tourism, manufacturing, real estate and construction among other sectors .That would have spared Ghana the debt repayment burden and would have been good for the health of the nation’s economy and more so avert it of the resource curse.
THE UAE’S ECONOMIC MIRACLE: SOME LESSONS FOR GHANA/AFRICA
Current UAE Economic Overview
In May this year, the Institute of International Finance (IIF), a Washington-based association of the financial services industry representing 500 members in 70 countries, expressed optimism about the UAE’s growth prospects. The organization recently projected the UAE to grow 3% in 2016.
The UAE economy is expected to weather the turbulence caused by the oil price collapse better than its Arab neighbours, as Abu Dhabi advances its strategy of economic diversification focusing on tourism, technology and skilled labour.
Growth for the United Arab Emirates (UAE) slowed to 3.9% in 2015, down from 4.6% the year before, according to the International Monetary Fund (IMF). The IMF expects the UAE economy to expand 2.4% this year and 2.6% in 2017. By comparison, the combined economies of the Middle East, North Africa, Afghanistan and Pakistan are projected to grow 3.1% this year and 3.5% in 2017.
Goldman Sachs and Morgan Stanley believe the latest oil-price rally is not sustainable and is due for a correction. Crude prices gained more than 3% last week, with US WTI futures setting new highs for the year.
However, the UAE economy is clearly better positioned to withstand additional headwinds caused by collapsing oil prices than its regional ally Saudi Arabia. The Saudi monarchy, which heads the Middle East’s biggest economy, recently announced plans to diversify away from oil dependence. This includes raising a $2 trillion Public Investment Fund (PIF) to help wean the kingdom off oil.
In this respect, the UAE has a clear advantage. The country already launched a diversification and liberalization strategy to reduce its dependence on oil. In 2008 Abu Dhabi launched its Vision 2030 blue print, which identified nine pillars to revamp the Emirate’s economy. This included increasing the size of the private sector, creating a sustainable knowledge-based economy, boosting local infrastructure and improving the regulatory environment.
Growth momentum in the UAE slowed a little in April after rebounding in March,” Khatija Haque, head of MENA Research at Emirates NBD said in a statement. “External demand remains relatively subdued, and firms appear to be reluctant to increase hiring, despite solid growth in new orders and output last month. The PMI data year-to-date points to slower, but still positive, growth in the UAE’s non-oil sector, which is in line with our expectation for slower real GDP growth in 2016.”
If there is any country from which Ghana or any other country in Africa could draw very useful lessons from the strategic use of oil and gas revenues for economic and national development, that is the United Arab Emirates (UAE) The UAE comprises seven emirates or states, namely, Abu Dhabi (The seat of Presidency), Dubai, Sharjah, Ras Al Khaimah, Fujairah, Um al Qaiwan, and Al Ain
The country was born only in 1975 following the subscription to the formation of a country by the emirs (Rulers) of the other six states .This idea of forming a country was mooted by the late Sheikh Zayed the emir or ruler of Abu Dhabi on the premise that they stood to gain collectively from a wider market and they could also enjoy the economics of scale.
At that said time, Ghana was already a mature country doing Operation Feed Yourself Programme launched by the late General Acheampong which will go down in the annals of Ghanaian history as an era Ghana achieved agri-business excellence to the extent that Ghana exported maize and rice to other African countries.
20 YEAR ECONOMIC DIVERSIFICATION PLAN
Having been fairly given the opportunity by a unanimous decision taken by the other six emirs to be the first President of the then newly formed country, the UAE, Sheikh Zayed Bin Sultan Al Nahayan moved with great passion. When the country struck commercial oil, In his wisdom and visionary leadership he reasoned that this natural resource was exhaustible and as such there shouldn’t be any room for complacency to the extent that, the nation’s economic future should be hinged on it alone
To this end, the country launched a 20-year Economic Diversification Plan aimed at diversifying the economy from the word go, so that when the oil wells finally dry up, the economy would have been so diversified that the economy would not suffer any back lash. In this regards, revenues from oil and gas was used as a denominator for opening the other sectors of the economy via tourism, industry, manufacturing, services, trade, real estate, among others.
A lot of money was invested in tourism sector infrastructure applying innovation and technology to create artificial tourist spots like the world’s tallest hotel and only seven star facilities in the world, known as the Burj al Arab Hotel in Dubai.
Within three decades a once poor desert economy was transformed into a thriving and prosperous modern tourism, trade and industry-led economy.
SUCCESS OF PLAN
Shiekh Zayed was blessed to see the fruits of his labour before departing for eternity in 2005.He left behind a UAE that had become one of the fastest developing economies in the world and had acquired the status of hub for global commerce, tourism, finance with oil and gas accounting for a mere 30 percent of UAE GDP.
As of today the UAE is reputed as one of the world’s knowledge, technology and innovation driven economies of our time. The colonization of the sea using a technology known as Pillage created the artificial islands known as the Palm projects. Thus, we now have onshore Dubai and offshore Dubai. The construction of the world’s tallest building,Burj Khalifa(0ver 800 m high with 120 floors that comes with the world’s largest shopping mall, aquarium, artificial Iceland for skiing among others ,added yet another impressive page to Dubai’s record of artificial tourism spot surprises .The super imposing Burj Kkalifa also resonates and epitotimses the economic affluence of the country.
The greatest injustice any nation can ever commit against its self is to fail to recognize her competitive edge and to take maximum advantage of it. Dubai emirate which is located between the historical cross roads,Euope,Africa,Asia and the America’s is her competitive edge which it has exploited for maximum economic advantage for the state and nation as a whole. With very good sea ports and one of the largest airports in the world, and also the gateway to the country and to the Arab Gulf Middle East region at large Dubai is able to leverage its position and do brisk trade around the world.Re-exports trade alone is said to account for 30 percent of GDP.
Under the re-export policy of government importers of goods are granted very reasonable tax and duty concessions to enable them re-export them to other market destination through Dubai. They are able to make profit and pay government its due No wonder prices of made made-in-Europe, or Japan cars and vehicles are sold fairly lower than the prices offered back home for the same vehicles.
RETURNS ON INVESTMENTS
Today the UAE has the world’s largest Sovereign Wealth Fund with assets worth over USD900 billion acquired globally in both advanced and emerging markets The booming tourism industry alone makes close to USD 20 billion annually from ornamental, leisure and health tourism aside what the others sectors of the economies bring in.
This is lesson worth learning by oil producing African countries in particular .With oil wealth prudently and strategically used the UAE has opened the other productive sectors of the economy underpinned by buying of latest technologies from all over the world that is relevant and vital for her economic and national development agenda and the fruits of which is beheld by the whole world with awe today.
Ghana stands a lot to gain by learning from the rich experience of using revenues from mineral resources exploitation for the accelerated transformation of a once poor desert economy that at a point had to fall on other Arab Gulf neighbors when the going was though for it.However as of today, the UAE is an economic success story and a show piece from which all the Gulf nations are drawing inspiration and lessons.
1. Diplomatic Ties: Ghana must graduate from the current Consulate status with the UAE to Ambassadorial level with the UAE
2. Ghana must sign an Investment Promotion and Protection Agreement with the UAE just as it did in the 80s with a number of countries in Europe, the Americas, and East Asia and so on.
3. Sigining of a Joint Educational, cultural and Technical Cooperation Agreement between the UAE and Ghana .Within the context of this agreement, the Ghana Ports and Harbours Authority (GHPOHA) could establish cooperation relations so that Ghana could learn from the UAE’s rich experience of profitable port management principles a feat which even the US had once acknowledged and even had wanted to access her services through the Dubai Port World.
4. Ghana’s Trade and Industry Ministry and Ghana Free Zones Board could also do same with their UAE counterparts .Ghana can learn from the UAE’s re-export experience as Ghana the Gateway to the West African sub-region surrounded by land locked sahelian market. Ghana could rake in billions of dollars in annual re-export revenue if she could learn from the UAE’s wealth of experience in this endeavor. It is pertinent to recall that in the 90s Ghana is on the records to have drawn some useful lessons from the Dubai Ports Authority and Jebel Al Free Zone in setting up the Ghana Free Zones Board.
Mr. Samuel Aboagye the immediate past CEO of the Ghana Investment Promotion Centre (GIPC) who was then the Executive Director and the pioneer in the setting up of the Ghana Free Zones Board dealt with the two stated UAE institutions very well.
5. A cooperation Agreement between the Accra Metropolitan Assembly and its UAE counterpart, the Dubai Municipality would have been a lot more useful. The AMA could learn from the rich experiences of the Dubai Municipality in terms of municipal development strategies, revenue mobilization and Urban Sanitation and waste management.
In conclusion, Ghana has all the potentials and what it takes to be a star in economic performance and well-being on the continent .Learning and drawing useful lessons from others to help her shapes her development agenda within the context of the proposed forty years national development plan must be given great attention by government.
Scenes of Part of Dubai Metropolis