| Ghana's Oil must be a blessing not a curse - J.A. Gyasaw |
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The Managing Director of the National Investment Bank (NIB), Dr. Percival Kuranchie has stated that non-oil sectors like agriculture do 'not always benefit from the discovery of a natural resource like oil' unless managed well. In a speech read on his behalf by Mr. J. A Gyasaw, Advisor to the NIB Management Team at the Fifth Matriculation and Fourth Congregation of theWenchi Campus of the Methodist University College Ghana
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on Saturday, April 16,2011, Dr. Kuranchie warned that the oil boom could lead to undesirable outcomes like destruction of habitats, economic distortions, social and political instability and sometimes armed conflicts. |
Speaking on the theme 'Managing the Oil Reserves For Agricultural Development In
Ghana In The Face Of Global Climatic Changes,' Dr. Kuranchie said economists spoke of the dreaded Dutch Disease (or the resource curse) which might result in the asphyxiation of the growth and employment potentials in non-oil sectors of the nation's economy, as a result of the discovery and drilling of substantial oil reserves. He hinted that 'when the cedi appreciates in value, the nation's other exports, which arepredominantly agricultural or agro- based, will become more expensive for other countries to buy'. This he said 'will have an effect on the agricultural sector as a whole'. According to Dr. Kuranchie, the negative impact of the Dutch Disease on agriculture would also have a ripple effect on other areas like the
manufacturing sector. He noted that more than 70% of the nation's manufacturing sector depended on agricultural inputs so if agricultural growth began to dwindle, Ghana's competitiveness on the continental or global level would be weakened. He observed that the majority of Ghanaians would suffer if the Dutch Disease attacked the country's economy in the wake of the oil boom.
He averred that livelihoods would be affected so there was the need for effective management of the oil revenues that would flow into the economy. He was, however, confident of the fact that' managing the oil reserves for agricultural development in particular and national development as a whole can be within the capabilities of Ghanaians'; adding that ' with good policies we can reap the benefits of the oil.'
Dr. Kuranchie mentioned some policy interventions which, in his view, if well coordinated would mitigate the negative effects of the oil boom on agricultural development. He pointed out that the Dutch Disease, whilst making some sectors of the economy to dwindle in terms of their contribution to GDP and employment creation, could also lead to substantial growth in the manufacturing, chemical and tertiary industries. He said as the agricultural sector's contribution to GDP dwindles, the overall spillover effect of the oil industry could cause rural transformation through road and other social infrastructure development.
The NIB boss asserted that Ghana could fight the Dutch Disease by having focused complementary policies that would make the country self-sufficient in food through domestic production and external trade. He affirmed that the required policy initiative was to focus on the two strategic agricultural products; i.e. cocoa and the basic staple food products (maize, millet, sorghum, cassava, yam and plantain). On the cocoa sector, he advised that Ghana needed to capture its leadership position by increasing its volume of cocoa production without compromising on the quality as that would make the country continue to earn a premium price for the product on the international market.
On management of the financial resources from oil, Dr. Kuranchie suggested that a substantial amount be channeled into modernizing agriculture through mechanizations, use of seedlings, fertilization to improve soil
quality and pesticides to fight pests; all with the view to ensure increased yield and guarantee the country's food sufficiency. He also said resources from oil must be invested in irrigation to ensure water sufficiency for sustainable agriculture. He cautioned that, as a nation, Ghana should not put all its hopes in oil as 'it is a finite product and our long-term reliance may not be sustainable.' He stressed that 'other sectors of the economy must be developed with revenue from the oil.One very important offshoot of the oil industry is gas generation and Dr. Kuranchie opined that, it could be harnessed to establish a chemical fertilizer factory to serve the whole of the West African sub-region. He also believed that oil-generated wealth could lead to transformation of Agricultural Extension Services and could also be channeled to the rural areas in the form of community-driven development grants. He said a reduction in taxes on agro-based products could help in
combating any effects of the Dutch Disease and that government could give subsidies on agricultural inputs which would in turn make Ghana's agricultural produce highly competitive on the world market.Concluding, he told the gathering that NIB had been collaborating with MUCG since the inception of the University College. He recalled that NIB supported MUCG with Ten Million cedis ( 10, 000,000.00) in the early stages of the University College's development and said he was impressed with the progress made so far in MUCG's development. And as a further support for the University College, he gave a cheque for Twenty Thousand Ghana cedis (20,000.00), which he handed over, on the spot, to the Principal, The Very Rev. Prof. Samuel Kwesi Adjepong. |
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