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Ghana energy market: Discovery of oil in the 'Jubilee fields' expected to boost GDP
Ghana Oil & Gas 2012 - a new market research report on 2014-03-13 19:03:03
Ghana won independence from Britain in March 1957: the first sub-Saharan African nation to achieve freedom from European colonization. While the immediate post-independence history was one of political strife and economic uncertainty, recent decades have seen Ghana striving to reclaim its ancient prosperity. The country has experienced uninterrupted GDP growth since 1985; 2012 will see this growth enter its 28th consecutive year.

In 2011 the country posted an impressive growth rate of 14.4%, making it the second fastest growing economy in the world behind Qatar. Indeed, in many ways Ghana is the poster child of a continent that in recent years has found its economic confidence; until 2015 it is estimated to grow at an average of over 7% per annum, the eight-highest growth rate in the world.

Strong macroeconomic policies, a stable government and the exploitation of the country´s plentiful natural resources have been the foundations for a growth that is apparent wherever you look: vehicle purchase grew by a record 88% in 2011; energy consumption is rising by an annual average of 10%; 2011 saw production of cocoa, of which Ghana is the world´s second-largest producer, rise to a record 1 million tons; and a rebasing of national accounts in 2011 has propelled Ghana´s global position to among the lower middle income group of countries.

In this context, the addition of an oil and gas industry promises to bring grand rewards.

In 2007, commercial quantities of oil were discovered off Ghana´s coast in two sites that would come to be known as the Jubilee fields. The effect that this will have on Ghana´s rise is promising; the "black gold" could form a basis of wealth just like ordinary-coloured gold did in the past. The African Economic Outlook predicts the oil industry to add 0.7% to GDP growth in 2012 (7.6% nonoil growth, and 8.3% with oil) and 1.4% to GDP growth in 2013 (6.3% non-oil growth, and 7.7% with oil).

Yet the excitement should be tempered by caution. This is the region, after all, for which the phrase "the curse of the black gold" was created. Admittedly, Ghana seems less likely than its regional peers to succumb to the problems stereotypically associated with resource-based African economies: resource nationalism, corruption, and "Dutch Disease". In terms of GDP-per-capita it outperforms its neighbours and even regional giant Nigeria. The proportion of its population living below the national poverty line has fallen from 51.7% in 1992 to 39.5% in 1998 and 28.5% in 2006, and has undoubtedly fallen further since then. In Transparency International´s Corruption Perceptions Index 2011 it ranked 69th, tied with the European nations of Italy and Slovakia, and above Latin American powerhouse Brazil.

Nonetheless, however, there are risks.

Ghana´s decision late last year to reexamine the fiscal arrangements of the mining sector could well be a sensible decision in line with the International Monetary Fund´s (IMF) advice to raise taxes. Yet some are seeing it as a populist measure driven by the upcoming elections in December this year. This election may make a continuing reduction of the fiscal deficit politically untenable, especially in a country where GDPper- capita is still only $3,100, threatening the sensible macroeconomic policies the government has previously adhered to.

Ghana´s track record is good. Sensible policies have led the country ever closer to prosperity (ranked seventh in Africa in the Ibrahim Index of African Governance 2010). A free press (one of only five Sub-Saharan African nations ranked as "free" by Freedom House´s Freedom of the Press 2012 report) plays an important role in holding politicians accountable.

The December 2012 election is expected to maintain Ghana´s tradition of peaceful democracy. All of this points to the country´s ability to successfully integrate the oil and gas industry into their growth.

Today West Africa´s warrior king faces a new battle; to ensure that the discovery of petroleum sustains the promising growth of its economy rather than condemning it to the mistakes of past oil exploitation in the region.

Report Scope

Ghana Oil & Gas 2012 explores the challenges facing Ghana, from labor shortages and logistical hurdles to an in-depth exploration of the possibility of "Dutch Disease", through exclusive interviews and guest articles from the industry´s leading players, alongside extensive coverage from GBR´s own on-the-ground journalists.

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