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The economic impact of Ghana’s oil industry

The burgeoning oil industry in the African nation of Ghana has the potential to create widespread gentrification, according to Kwamina Panford, an associate professor of African American Studies at Northeastern University.

In one major city in the country’s western region, rental prices have skyrocketed and housing complexes have been converted into commercial properties, forcing working-class families to relocate to more affordable neighborhoods. It’s not uncommon for a three-bedroom condominium in an upscale harbor city to cost $4,000 per month or for an international shipping company to lease an office building for more than $400,000 per year.

“The social tensions are rising because the cost of living is escalating,” Panford explained, noting that the price of a popular canned coco drink has increased 50 percent. “There has been a substantial population rush to Ghana’s western region because everybody is trying to get a piece of the action.”

Panford spent a year in Ghana on a Fulbright scholarship, the goal of which was to conduct research and find out whether oil production would lead to socio-economic devel­op­ment or create new social and polit­ical ills.

He gathered information from ministers of state, top-level civil servants and leaders of nongovernmental organizations, and then presented his findings at public forums, on national television and in Ghana’s leading daily newspaper. He even wrote a report on petroleum revenue management on behalf of the Public Interest and Accountability Committee, which oversees the country’s use of oil and gas revenues.

“You get the feeling that everything you say and do has an impact on human life,” Panford said, adding that he recently published a scholarly article on his findings in the Ghana Policy Journal.

Ghana’s oil and gas revenues recently exceeded $1 billion, Panford said, and the country is on the verge of becoming the seventh largest oil producer in Africa. Last year, Ghana’s par­lia­ment passed the Petro­leum Rev­enue Man­age­ment Bill, which gives the gov­ern­ment per­mis­sion to use 70 per­cent of oil rev­enues to sup­port its budget and save 30 percent in “her­itage and sta­bi­liza­tion” funds.

Policy makers and elite business leaders appear to be following the rules and regulations of Ghana’s oil industry, according to Panford’s watchful eye. As he put it,“I don’t see any foul play or corruption.”

But Panford suggested that representatives of Ghana’s ministries of energy and finance demand a more profitable deal with foreign oil companies, none of which are currently paying corporate taxes. “Ghana’s oil is high quality and is being produced in a fairly stable political environment,” he explained. “This should help Ghana improve its bargaining position and control the relations with foreign companies.”

The country, he added, should view its billion-dollar oil industry as a catalyst for economic growth and development, using revenue to invest in green energy and jobs in the oil and gas sector.

“Ghana should use this money to diversify its economy and finance economic transformation,” Panford said.