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Oil and Gas at Ghana’s Door Step: Implications for Socio-Economic Development in the Oil Communities Augustina Adusah-Karikari, PhD Newton International.

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Presentation on theme: "Oil and Gas at Ghana’s Door Step: Implications for Socio-Economic Development in the Oil Communities Augustina Adusah-Karikari, PhD Newton International."— Presentation transcript:

1 Oil and Gas at Ghana’s Door Step: Implications for Socio-Economic Development in the Oil Communities Augustina Adusah-Karikari, PhD Newton International Fellow University of Birmingham Development Studies Association Conference, Birmingham, Nov 16, 2013

2 Outline Background Paradox of Oil Transformations in the Western Region Implications for Socio-Economic Development Way Forward

3 Background – Ghana’s Oil & Gas Industry Discovered in 2007 off the shores of the Western Region of Ghana by KOSMOS Energy Production started in Dec 2010 Estimated 800 million barrels of proven reserves Estimated to be producing 120,000 barrels per day Government Revenues could reach an accumulated value of $20billion between 2012-2030 ( Source: Annual Report 2011, Public Interest & Accountability Committee)

4 Government Revenues Source: Ministry of Energy, 2013 YEARREVENUES 2011$444.12M 2012$541.07M 2013 (As at June 2013)422.76M

5 Jubilee field map Atuabo

6 High Hopes “Oil is money and we need money to do the schools, the roads, the hospitals. If you find oil, you manage it well, can you complain about that? Even without oil, we are doing so well already. Now with oil as a shot in the arm, we are going to fly…” President Kuffour (Source, Gary, 2009 p. 5) Revolutionary removal of poverty Unimpeded path to accelerated development

7 Paradox of Oil “Political Resource par excellence” (Hirst, 1966) The revenues that flows from oil have the potential to drive domestic development and transform a country into a significant economic actor both regionally and globally (Shepherd, 2012). Natural Resource extraction is often accompanied in certain contexts by spectacular and far reaching socio- economic changes (eg. Norway, Botswana) To achieve such breakthroughs require a strong economy with sound administrative capacity and transparency.

8 The Paradox of Oil – Illusory Hope “the image now conveys wealth, security and opportunity, unconvincingly superimposed on local poverty and the authoritarianism of host governments. It brings to mind for companies, phenomenal rewards; for ruling elites, undreamed riches; for diplomatic pundits diversification of energy supply …” (Soares de Olivera, 2007, p, 5). Leads to wishful thinking (Krause, 2005) Tied to slow economic growth (Sachs & Warner) Authoritarian rule (Ross, 2001a) Civil War (Collier, Hoeffler) (eg. Nigeria, Angola)

9 Transformations in the Western Region Takoradi (known as the oil city) Upsurge of new luxury hotels Exorbitant housing prices and rents Unprecedented traffic congestion Rise in prostitution and other social problems Coastal Villages Fishing rights – Restrictions on fishing zones Land – Rights – Clearing of farmlands for construction of Gas plants. – Compensation challenges

10 Study Area 1. Axim – Municipal Capital of Nzema East Major player in Marine fishing 16 landing sites are found in the municipality. Endowed community in terms of infrastructure 65% of economic active population are engaged in agriculture including fishing and agro processing. 2. Atuabo: Located in Ellembelle District Assembly Mainly subsistence farming and Fishing Very rural Gas plant located in the village Lack basic social amenities

11 Examining the Socio-Economic Changes in the Oil Communities Threat to livelihood – Fishing and farming are the main stay in the inhabitants in the coastal communities In fact life in the coastal communities is unique. This is because we depend on the sea – fishing as the source of the income for our existence. If there is no fish there is no life, one is helpless. The fish business is what puts food on the table and helps us take care of our families (Fishmonger, FGD - Axim). Look at me an old woman, who has never been to school before, I know there is no way I can find employment in the gas company. My whole livelihood is the sea and fishmongering is what our family depends on. Our men cannot even bring in any big catch for us to smoke so that we can get some money to cater for our needs. What else can I do to make a living? (Interview, Atuabo)

12 Threat to Livelihood, cont’d Constant conflict with coastal guards Ripple Effects of Low Catch – Depletion of Fish stocks – Unable to offset their costs – Fishmongers cannot get enough fish supply – Low income place burden on providing financially for the family. Dislocation of livelihood: Farmlands destroyed for the construction of gas plants – No Alternative livelihoods provided – Compensation?

13 Multiplier Effects Employment:- Unskilled Labour – Politicisation of employment Unemployment in the fishing industry Job creation Potential employment opportunities – Draft Local Content and Local participation Policy in Petroleum Activities Policy Framework – 90% local content and participation in all aspects of oil and gas value chain within a decade. Is this Realistic? (Ministry of Energy, 2010)

14 Expected Socio-Economic Development Oil Communities Provision and Improvement and Infrastructure – Roads – Well equipped schools – Accommodation for teachers – Health care provision

15 Other Implications Social Vices – Promiscuity – Prostitution – STIs

16 Way Forward Consultations, dialogue and participation has to be maintained to prioritize developmental needs of the oil communities. Management of potential conflicting issues between community, oil company and government needs to be managed as soon as practical. Provision of alternative livelihoods need to prioritised Timely and fair compensation entitlements to both the tenant and the owner of the land should be established according to the provisions of the 1992 constitution. Of crucial importance is the management of expectations More commitment from Jubilee Partners and Government

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