Can Ghana Avoid the Oil Curse?

In a policy briefing on resource revenue management in Ghana, Antoine Heuty of RWI and Andrés Mejía Acosta of the Institute of Development Studies explore how domestic political factors may influence development outcomes through the management of natural resource revenues.

Though Ghana is among the world's top ten exporters of gold, nearly 80% of the population lives on less than two U.S. dollars per day. Despite this paradox, Ghana appears to have avoided some of the traditional "curses" associated with resource-rich, aid-dependent countries, leading the Sub-Saharan African nations on most democracy indicators.

Building on policy lessons from the management of Ghana's gold and cocoa, Heuty and Mejía Acosta analyze possible scenarios for sharing the windfall from the newly discovered oil resources. They review the mixed performance of fiscal decentralization of mining revenues and argue that a model of centralized power-sharing appears more likely to manage revenues from oil.

Improved transparency in oil revenue management is critical if Ghana hopes to mitigate asymmetries of power, information and accountability across all the parties in its emerging oil sector. The regulation of the oil sector should also create and enforce checks and balances by the judiciary and the legislature. With the proper mechanisms for equilibrium, a centralized power-sharing mechanism could offer the political incentives and rewards for the long term management of oil revenues.

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