Guest Post from Jonathan Wallace: Obama in Ghana, in Praise of African Democracy

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090703_ghana_obama_ap_297.jpgJonathan Wallace is the Assistant to the President at the New America Foundation.
After the G-8 meetings in Italy, President Barack Obama will travel to Ghana on his first visit to Africa (discounting his visit to Egypt). He will visit Cape Coast Castle, an infamous slave trading port, and give a speech to the Ghanaian parliament.
The speech to parliament is an appropriate gesture as Ghana is West Africa’s most stable democracy, having recently undergone a peaceful transition of power between two different political parties after a very close and contentious election. The election last year of John Atta Mills was particularly significant and laudable in comparison to the election violence that marred contests in Kenya and Zimbabwe and the corruption of Nigeria’s 2007 vote.
Ghana’s discovery of oil in 2007 in the large Jubilee field in the Gulf of Guinea, has raised concerns that this well-governed though still fairly undeveloped country may follow the same tragic path as Angola, Chad, and Nigeria. Oil wealth in these states has led to corruption, increased poverty, violence, the desertion of indigenous industry outside of energy, and declining living standard for all but a few well-connected elites.
Ghana is well aware of this trap and has been looking to set up institutions to avoid the so-called “resource curse.” Impressively, these efforts span presidential administrations and political parties in Ghana, but there is much more to be done.
This Oxfam report does an excellent job laying out the challenges ahead for Ghana policy makers and some solutions to try to avoid falling into a tired and tragic narrative. Some of the better suggestions include building and strengthening the regulatory regime before the oil starts to flow and delaying spending to avoid the dreaded “Dutch disease.”
Obama was right to choose Ghana for his first true African visit. Instead of visiting his father’s native Kenya, or oil behemoth Nigeria, President Obama will recognize that good governance can flourish in Africa and be a model for other nations. Hopefully, he will remind the Ghanaian policy makers that transparency is the best method to ensure broadly shared prosperity, and that it becomes especially important with the added blessing and burden of oil wealth.
— Jonathan Wallace

Comments

One comment on “Guest Post from Jonathan Wallace: Obama in Ghana, in Praise of African Democracy

  1. JohnH says:

    Avoiding “Dutch disease” is like tiltiing at windmills. Bye-bye cocoa industry. No country where oil exports became the major industry has ever escaped it. However, Ghana can learn from countries, such as Norway that have managed it more successfully than others. Venezuela’s recent, positive experience can also be instructive.
    http://www.mees.com/postedarticles/oped/a47n45d01.htm
    A real key is transfer of knowledge, so that the oil producer can develop a full functioning oil industry. That is what made Norway unique. Other countries mostly outsourced exploration, production, technology, and equipment supply to major Western companies, a sure recipe for disaster, since foreign oil companies extract oil but contribute little to local employment and advancement. Norway, on the other hand, was allowed to create a world class oil company, Statoil, which generates local employment and is technologically advanced. Venezuela has been moving in this direction, as it has become vertically integrated all the way to owning its own oil tankers (much to the chagrin of Houston and Halliburton).
    The second real key is to forget about trying to develop export industries besides of oil. Oil sets the terms of trade and squeezes out any but the most distinctive, proprietary industries, which are few and far between. Rather, Ghana should focus on infrastructure–transportation, education, communications, housing and healthcare–as a way to spread the wealth beyond the traditional recipients (the tyrant and his security forces). A skilled, healthy workforce, using an advanced transportation and telecommunications network, can then dedicate itself to increasing the supply and variety of uniquely Ghanaian goods and services that are not traded on international markets.
    Sadly, the die is already cast in those secret contracts. My guess is they will show that the industry has been fully contracted to Houston, money will flow through the central government, and Ghanaians, like the brethern in Nigeria and Angola, will see little impact except low import costs of manufactured and agricultural goods, more corruption, and more security forces. Houston likes it like that.

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