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Is Oil Really Our Last Hope?

  • SOURCE: | qwesa2big
  • he cliché that oil is what turns the wheels of the global economy is not a comic strip. Oil is the lifeblood of, arguably, the single largest industry of the global economy. Chinua Achebe in his popular novel ‘Things Fall Apart’ said he who brings cola brings life. But in the global economy it can well be said that he who brings oil brings life. Oil is everything. It generates a lot of wars around the globe. Even the search of cheap oil before the use of fossil fuel inspired the American classic Moby Dick. The power of oil can make or break even the most advanced economy in the world. It disrupted the world economy in 1973 and almost brought the British economy to its knees. The collapse of the 2008 world economy, which was inevitable, was rather expedited by the unbearable crude oil prices. And our beloved country has never been immune to the oil spot market. It was hit hard by the oil convulsion of the early 70’s and it has consistently, in part, determine the strength of our currency. A substantial portion of the perennial inflationary pressures brought to bear on the national economy can be traced to oil, and I have agonised privately on what can be done to find a cheap source of oil or an alternative to ease up the pressures and to facilitate sustained economic growth.

    So when I first read in 2007 that oil had been found in commercial quantities in the country the tingling sensation I felt in my body was indescribable. I remember saying quietly to myself, after the euphoria of rubbing my fingers and licking my lips that at long last we can begin to build our economy without the threat of ‘oil piracy’.

    Since that time a raft of articles have poured out from the pens of Ghanaians from all walks of life to chip in their views and opinion as to how the windfall revenue should be spent. In a recent wonderful article by Mr Baffour Ennin entitled ‘Mike Tyson, Magic Johnson, Dubai Inc. & Ghana’s Oil Revenue’ he warned our leaders of the temptation to go on a mindless spending spree. I was therefore over the moon when Dr. Kwabena Donkor, the Deputy Minister for Energy, made a statement at an oil and gas conference in Accra that oil is our last hope. I thought that at least there is somebody in government who has got an incline as to the importance of the oil find. However, as the hormone induced happiness petered out I was left with what that statement meant to contend with.

    The clearest possible implication is that the revenue from the oil money will have to be used judiciously and efficiently. No question about that. One of the obvious efficient uses is the appropriation of the revenue to give a shot in the arm of the other industries in the economy. Now getting the right balance is what is going to make or break our future.

    A lot of Ghanaian thinkers believe, and sometimes it shares a tangent with obsession, that our development can only be achieved through industrialisation. And they are perfectly right in their belief but the model of industrialisation is what leaves much to be desired. Some believe that we should have our own car industry, and some go to the extreme of building underground transportation network to ease up the transportation gridlock in our major cities. They are all wonderful ideas that its implementation is next to impossibility judging from our technological know how.

    In Mr Ennin’s article a whole strong paragraph was dedicated to agriculture and that is what I will like to stress on for our leaders to look at when viewing the crystal ball. Almost all the advanced countries developed their economy based on one industry and the concomitant effect filtered through to other industries. United States developed as a result of their railway industry. Britain became the premium world industrial nation through the textile industry. Sweden achieved their industrial status through the lumber industry, and the list is endless.

    Currently, what our knowledge can excel revolves around the agriculture industry, and there are no illusions about that. The industry still employs between 60% to 70% of the national workforce. So all the economic potential of the nation is locked up in that sector and unlocking it is the key to our industrial growth. All the industrial countries employ a minuscule of their workforce in the agric industry. France, whose economic well being is based on agriculture, directly employs just around 4% of their workforce. United States, which is reputed as the food basket of the world, employs only 2% of their workforce in that industry. Hence, before we can achieve any semblance of industrialisation all that workforce will have to be released from the primary agric sector into the secondary sector i.e. processing.

    More than half of the average income in the country goes to the purchase of food. And this has got nothing to do with farmers and distributors. A sizeable chunk, probably about half, of what is produced goes to waste – especially fruits and vegetables. Salvaging what is produced should be a priority of any government to bring about increase. Some food producing areas are completely inaccessible at certain times of the year hence the importance of good road network. One of the problems that limit our ability to feed ourselves sufficiently is the lack of economies of scale by both the farmers and distributors. Once farmers enjoy such facilities their cost of production will be reduced drastically to the benefit of the consumer. Distributors can therefore buy in bulk from single farmers reducing their cost in the process. One of the reasons for not having large farms with the exception of cocoa farms is that most people don’t see farming as respectable business. As a result almost all the smart people who can make a lot of impact are lost to other industries where their potential, unfortunately is not achieved. Not many people know that Ted Turner of CNN fame is a farmer likewise David Rockefeller. More than a dozen of the American fortune 500 companies are farm base companies. The likes of Bill Gates Warren Buffet, George Soros rub shoulders with incredible rich American farmers.

    So our best bet is farming. The technologies involved in the secondary agric sector are very basic and it wouldn’t take us a fortune to master it. Once that is achieved the capital that is unlocked and the tax revenue generated can be re-directed to develop other high-tech industries. By that time more of our youth would have been trained adequately, and I stress the word adequate to manage, maintain and build on whatever is established. Rather than allowing our precious investments to keel over in the scorching sun and turn into white elephants if we make the mistake of putting this fresh precious eggs into that industrialisation basket.

    The most important thing is without even oil money what I have outlined above can easily be done. So our last hope shouldn’t be oil; it can equally be our nightmare if we should go the way Nigeria went when they neglected all their industries including education when the oil boom took over their imagination. Now an army of Nigerian students form a respectable number of the student population in all our major universities.

    Lets therefore not make the error of trying to do everything at the same time. Development of a national economy is a gradual process. We should first perfect the most important area of the economy and then the experience and the wealth generated can then be transferred to other sectors. The expression Jack of all trades, master of none should be a sober reminder when planning our future.

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