Ghana’s oil revenues are not being spent well, President of Policy Think Tank IMANI Ghana, Franklin Cudjoe has said.
According to him, monies accrued from oil exports are being channeled into the wrong areas.
“I’ll be more interested in how even the little we get from the oil are spent because it’s not being spent well,” he told Starr Business.
“It’s supposed to go into four investment related areas: infrastructure-related, most of the times, but it is now being used to pay people at the sports Ministry, the Flagstaff house people get some of the money and it is going into 13 other unrelated areas and that is where the problem comes in, so you cannot spent all your oil money on toffees and chocolate for kids,” Mr Cudjoe said.
Ghana begun producing oil on commercial basis in 2011. The industry, according to President John Mahama contributes about 6 percent to the country’s GDP.
However, the country will lose an estimated $500 million in export revenue for this year as a result of the sharp fall in the price of crude oil on the international market, Mr Mahama revealed on Tuesday when he met the Ghanaian community in Germany during a two-day state visit.
A barrel of crude oil currently sells at a little above $48 dollars. Reuters reported Wednesday that the current price is a consolidation after a drop in the previous session, although traders and analysts said oversupply and the prospect of inventory rises made further weakness likely.
“Increasingly, oil and gas is playing a role in our revenues…from 2011 when we started producing oil, it’s been a small part of our revenue, it’s been about 6 percent of our total revenue, but every year it has continued to grow and so this year we were expecting about $1.2 billion from oil revenues but look at what has happened, the price of crude oil has gone down and from the estimates that we have, we are going to lose about $500 million in oil revenues coming into the economy and so that’s the problem when your economy is based on primary commodity exports,” Mr Mahama bemoaned.
He added: “That’s why we need to add value to our economy by ensuring that we add value to some of the primary products that we export and so when it comes to the oil and gas sector, I have more faith in the gas than in the oil because with the gas we can build a downstream petrochemical industry and be able to multiply the effects it has on our economy.”
As a result of the price fall in crude oil on the world market, Finance Minister Seth Terkper has said there will be a need to revise the budget earlier this year to take account of the current development.