Story: Boahene Asamoah
THE Ghana National Chamber of Commerce and Industry, the umbrella organisation of the industry and commerce, has said that exploitation of oil in the country would yield maximum benefit for all Ghanaians.
A policy paper issued by the chamber on the impact of the oil find in the country said recent history of poorly managed oil resources in developing countries made life worse for most of its peoples, adding that, instead “the discovery of oil in Ghana should be a blessing”.
The chamber’s position was that the government’s intention to create a stabilisation fund was in the right direction, but explained that the design and operation of the fund should be based on transparent integration into the budgetary process to avoid off-budgetary spending.
“Parliamentary/legislative oversight should be included, with the aim of preventing the Executive from maintaining sole discretionary powers over the fund’s resources,” the chamber stated.
It said to ensure a proper integration of the fund into the budgetary process, there should be no independent spending authority for it.
“Moreover, the fund should be prohibited from holding public debt. Assets in the fund should not be used as collateral to increase uncontrollable fiscal spending,” the chamber stated.
The chamber suggested that an asset management strategy for the fund to be designed should be consistent with the debt management operations of the Ministry of Finance, the treasury’s management of government cash flow and the financial assets already held as part of the government’s balance sheet.
“This will help ensure that the overall net asset position of the government is maintained in an appropriate way,” the chamber added.
It said the country’s experience in this regard suggested that success lay in some combination of expenditure restraint and revenue management.
It added that the aim of these approaches was to eliminate instability in aggregate demand, and consequently the real exchange rate, by smoothing expenditure over time, which implies self-insuring against revenue downfalls.
On the impact of the oil find on the economy, the chamber urged the government to promote a diversified economy by maintaining incentives for a competitive non-oil tradable sector.
The chamber observed that currently there was a slowdown of the industrial sector in the country, as a result of competition from foreign cheap imports.
“We do not anticipate any improvement as a result of the oil find until we are able to develop the human resource capacity and provide utilities efficiently and generally upgrade the quality of locally produced goods,” the chamber stated.
It went further to state that priority must be given to investment in affordable and renewable energy sources, water and rail transport which was key to industrialisation as well as to modernisation of agriculture.
The chamber suggested that the country could use its oil wealth to manage resources efficiently, by ensuring that the country processed 50 per cent of its cocoa production, refine 50 per cent of its gold as well as train and retain 100,000 doctors and other health workers.
Additionally, the chamber said the government should use the oil to invest in affordable nuclear energy technology, construct additional oil refineries and also expand University of Mines at Tarkwa to include a faculty of oil drilling.
The chamber also urged the government to pursue modernisation of agriculture to improve real income, enhance local raw material supplier and ensure food security.
“With a successful implementation of the agricultural land management action plan, investment in large commercial farms and making use of latest technology would ensure that Ghana meets shortfalls in food security,” the chamber stated.
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