Can Ghana Move from Oil Euphoria to Transparency and Good Revenue Management?

Ghana has been a leader among African nations in its heightened standards for revenue reporting in the mining industry to date. Now, with the discovery of massive offshore oil reserves, Ghana faces a new round of governance and development challenges as it plans for substantial windfalls.

Last Thursday's Financial Times included a compelling profile of the situation in Ghana, where an upcoming national election underscores the high stakes surrounding control of revenues from the Jubilee Field, which could eventually produce as much as 150,000 barrels of oil per day.

In response to the article, Revenue Watch's Africa regional director Emmanuel Kuyole cautions that, to reap the benefits of the coming boom wisely, Ghanaian leaders must "reconcile the country's gains and renew its commitments to the Extractive Industries Transparency Initiative."

"Ghana is an international front-runner in the EITI process," says Kuyole, "due to its early and innovative implementation of EITI practices. The risks to stability described in this week's news article will be vastly reduced if Ghana can bring the same transparency and good practice to its oil industry as it has shown in the mining sector."

Since Ghana's national EITI launch in 2003, it has published three reports: one inception report, and audits and reconciled reports for 2004 and 2005.  Ghana's EITI program goes beyond the initiative's minimum criteria to include mechanisms for sub-national payment reporting.  "The regional breakdowns in the national report appendices make the overall report technically a disaggregated document, setting a standard of detail that puts Ghana ahead of most EITI countries." says Kuyole. "The challenge for the country is to temper the widespread euphoria around the oil discovery with actions that will ensure openness, transparency, accountability of government and industry, and public trust in the contracting and development process," he adds. One issue of concern is the absence of public information or participation in the design of a new national oil and gas policy.

Ghana faces formal validation of its EITI status in 2010. As the expected oil boom begins, Kuyole says "Ghana will need to improve public discussions on concession agreements, payment disclosure requirements, and the oversight role of its parliament if it hopes to build on its example as a leader on extractive transparency in Africa, and create an accountable and prosperous oil economy."

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• "Crude Realities," by Matthew Green, Financial Times, August 25, 2008
• "Master plan must involve Ghanaians," Ian Gary, Oxfam America, Letter to Financial Times, September 4, 2008