Last month, Ghana’s Civil Society Platform on Oil and Gas issued a ‘Readiness Report Card’ on stakeholder preparations for the potentially transformative—and disruptive—impact of oil revenues from the Jubilee Field, where commercial extraction began in December 2010, marking Ghana’s debut as an oil producer. Drawing on best practice guidelines, including the framework provided by the Natural Resource Charter, five stakeholder groups assessed the preparations for the impact of operations and revenues estimated to reach $1bn per year over the next decade. Prominent amongst the efforts examined was the landmark Petroleum Revenue Management Act (PRMA) passed by the Parliament of Ghana in March.
The report gave Ghana an overall ‘C’ rating across each stakeholder group assessed—a fair, improved performance, with a mixture of optimism and foreboding about how much further there was to go.
The short time between 2007 discovery and 2011 production had prompted fears expressed in the report that Ghanaians could suffer the ‘resource curse’ and end up, inter alia, being ‘penalized in the future because the petroleum…frameworks were underdeveloped when contracts were signed’. This reflects a key insight of the Civil Society Platform: the importance of readiness. As noted in the report, quoting an earlier 2009 document, ‘the needed institutions, regulations and transparency measures should be in place early on to avoid the corrosive and corrupting effects of oil booms seen elsewhere in Africa’.
This is worth dwelling on. Natural resource rents can corrode governance, inducing the symptoms of the resource curse. Countries that are fortunate enough to be endowed with sufficient capacity, capabilities and a robust political economy prior to the discovery of a Jubilee Field or a Prudhoe Bay are considerably more likely to benefit from the exploitation of these resources (now more than ever, given trends in commodity prices). Those countries which are not so fortunate are more likely to experience all-too-familiar difficulties. Yet these are also those societies most likely to have urgent unmet citizen needs and which would most benefit from using natural resource revenues to invest in long-term development.
The threshold that divides the latter unfortunate countries from the former fortunate ones is not fixed, unchangeable or unbreakable. By learning from the mistakes and successes of other countries, and moving to swiftly prepare societies, resource rents can be successfully harnessed to national ends. That is why efforts such as the Readiness Report Card are so important: in its own words: there are ‘positive as well as negative lessons to share with…neighbors’ to help them obtain maximum benefit from natural endowments.
By using a common framework such as the Natural Resource Charter to allow for peer-to-peer comparison and peaceful competition in maximizing public benefit, countries such as Sierra Leone and Liberia could conduct similar reviews and see how they can match and improve upon Ghana’s precarious progress. It is intended that the Charter will provide an ‘off-the-shelf’ toolkit that can be quickly tailored by local stakeholders to the specific requirements of a country—so that governance has time to catch up with rapidly increasing demand and ever-swifter extraction operations in countries with little experience of resource windfalls.
The ‘needed institutions, regulations and transparency measures’ must gain continued support if Ghana is to improve its scorecard rating; they need organized constituencies. An investment advisory board and a partial, official institutionalization of the Civil Society Platform model, in the form of the innovative Public Interest and Accountability Committee established by the PRMA, bode well for the sort of continuous engagement that translates transparency into efficacy, and transforms institutions into active forces. Even party-political point-scoring and drawn-out, parliamentary debates, which the report fears may retard progress towards addressing the problems of a ‘big push’ approach to resource exploitation and a ‘close to ‘hand-to-mouth’’ model of revenue management (not to mention regulatory weakness), are encouraging signs: oppositions should brandish the Report Card and the Natural Resource Charter to hold governments to account, and incumbents should move to deprive their opponents of political capital by improving performance.