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Oil boom raises stakes

  • SOURCE: | qwesa2big
  • Oil production in Ghana is expected to peak in 2014, and this is raising the stakes for the December 7 elections, according to researchers at the US-based Centre for Strategic and Intelligence Studies.

    In a report titled: Ghana –Assessing Risks to Stability, the centre notes that despite Ghana’s reputation as one of Africa’s most stable nations, the 2012 elections poses an immediate but moderate threat to the country’s stability as two major parties appear “closely matched and highly antagonistic toward each other.”

    What makes the stakes even higher is the knowledge that whoever wins the elections gains a bigger than ever prize – the chance to control the country’s revenue during the peak oil production period, according to the report authored by David W. Throup, a veteran economic and political researcher specialised in Sub-Saharan Africa affairs.

    “The risk of disorder rises significantly at elections time when political passions are rising high and competition for patronage is at its most intense,” the author notes in the report.

    Mr Throup explains that the two major “parties know that the ability to distribute jobs, patronage, and investment of a grand scale could sustain them in office for the foreseeable future.”

    He argues that “the incumbent [National Democratic Congress, NDC] sees victory as a chance to pull away from its closest rival and shut it out for good while the [New Patriotic Party, NPP] fears being left out in the cold and is desperate for the chance to preside over the country’s economic boom.”

    As background, the report noted that Ghana had a lucky escape during the last elections.

    “The razor-thin failure of the NPP candidate, Nana Akufo-Addo, to win the presidency [missed out by less than 8,000 votes] tempted the NPP to hang on to power and challenge official results,” Mr Throup stated.

    The Jubilee oil field is estimated to have proven reserves of 500 million barrels of high-quality oil and a potential of more than one billion. Production is expected to peak at 250,000 barrels in 2015, but fall sharply afterwards unless additional reserves are discovered. Current production has been hovering around 80,000 barrels.

    The report, based on interviews with academics, civil and political leaders as well as published material, formed part of CSIS study series Stress Testing African States that examines the risks of instability in 10 African countries over the next decade.

    The report notes that the country’s success in democratic experiment could itself contribute to the confrontation as both parties have had the chance to taste the spoils of power, including not only the distribution of preferential access to politic constituents and business allies, but also the opportunity to reverse previous government policies.

    Each party has taken advantage of this opportunity. The NPP spent its first two years righting the wrong of the NDC but ended its term (2007-08) with a last-minute spending and patronage spree, leaving the NDC with serious macroeconomic problems, including high inflation.

    The NDC has worked hard to curb inflation, but it seems unlikely that as the country heads for December elections it will be able to resist demands from public-sector workers.

    There has already been a racheting up of political rhetoric, with each side accusing the other of corruption and misconduct.

    The report argued that without mitigating factors, the upcoming elections may be more confrontational and potentially violent than the last one.

    It further identified mitigating factors to include the fact that the country has a relatively vibrant civil society compared to the countries in the neighbourhood.

    It also saw as positive the fact that political discussions are not limited to the elite but open and welcomed by all strata of society, adding that majority of Ghanaians believe they are living in full democracy.

    While the media is also seen as playing a positive role, the report notes, however, that the overall quality of journalism is poor and therefore it can also be dangerous.

    Once the nation is able to overcome the immediate elections flashpoint, the medium-term prospects for the country would be positive if it is able to maintain financial discipline, diversify the economy and provide jobs, the report concluded.

    The finder

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