ABSTRACT
Since Ghana attained independence in 1957, successive Governments have pursued, with varying degrees of success, policies, programmes and projects to accelerate the growth of the Ghanaian economy and raise the living standards of the people. These are policies, programmes and projects around which national and development partner’s efforts are coordinated. The discovery and exploration of oil, no doubt has increased Ghana revenue but this has not fully translated to socio-economic development as expected. The study therefore, seeks answers to the following questions; Has oil discovery and exploration accounts for high cost of living in Ghana? Has the discovery and exploration of oil in Ghana reduce the poverty level in Ghana? This study therefore, critically evaluated the impact of oil on the national development of Ghana. The study used the Marxist instrumentalist theory as a theoretical framework of analysis and adopted the secondary sources of data collection which included books, scholarly journals, pamphlets, monographs, newspapers, and magazines and governments. The ex-post facto research design and qualitative descriptive of documented evidence was used as a method of data analysis. The study affirmed that oil production in Ghana has not improved the economy as expected, high standard of living and unequal development persist despite foreign earning from petroleum resources. The study recommended amongst others, government policies and programmes that integrates the poor and boost economic growth.
TABLE OF CONTENTS
Title Page
Table of Contents
List of Tables
List of Figures
List of Abbreviations
Abstract
CHAPTER ONE: INTRODUCTION
1.1 Background to the Study
1.2 Statement of the Problem
1.3 Objectives of the Study
1.4 Significance of the Study
CHAPTER TWO: LITERATURE REVIEW
2.1 The Discovery of Oil in Ghana
2.2 The Concepts and Theories of National Development
2.3 Oil and National Development in Ghana
2.4 Gap in Literature
CHAPTER THREE: METHODOLOGY
3.1 Theoretical Framework
3.2 Hypotheses
3.3 Research Design
3.4 Methods of Data Collection
3.5 Method of Data Analysis
3.6 Logical Data Framework
CHAPTER FOUR: OIL AND COST OF LIVING
4.1 Volume of Oil Production and Cost of Food Items
4.2 Location of Oil Companies and Housing
4.3 Oil Revenue and Income Disparity
CHAPTER FIVE: OIL AND POVERTY LEVEL
5.1 Oil Revenue and Basic Infrastructures
5.2 Volume of Oil Production and Politics
5.3 Location of Refineries and Health Issues
CHAPTER SIX: SUMMARY, CONCLUSION AND RECOMMENDATIONS
6.1 Summary
6.2 Conclusion
6.3 Recommendations
BIBLIOGRAPHY
CHAPTER ONE
INTRODUCTION
1.1 Background to the Study
Ghana’s Economy has left an indelible imprint on the country's social and political structures. Just as the presence of gold gave rise to the Asante confederacy and empire and attracted European traders and colonial rulers. Endowed with gold and oil palms and situated between the trans- Saharan trade routes and the African coastline visited by successive European traders, the area known today as Ghana has been involved in all phases of Africa's economic development during the last thousand years. As the economic fortunes of African societies have waxed and waned, so, too, have Ghana's, leaving that country in the early 1990s in a state of arrested development, unable to make the "leap" to Africa's next, as yet uncertain, phase of economic evolution.
As early as the thirteenth century, present-day Ghana was drawn into long-distance trade, in large part because of its gold reserves. The trans-Saharan trade, one of the most wide-ranging trading networks of pre-modern times, involved an exchange of European, North African, and Saharan commodities southward in exchange for the products of the African savannahs and forests, including gold, kola nuts, and slaves. Present-day Ghana, named the Gold Coast by European traders.
When Ghana gained its independence from Britain in 1957, the economy appeared stable and prosperous. Ghana was the world's leading producer of cocoa, boasted a well-developed infrastructure to service trade, and enjoyed a relatively advanced education system. At independence, President Kwame Nkrumah sought to use the apparent stability of the Ghanaian economy as a springboard for economic diversification and expansion. He began process of moving Ghana from a primarily agricultural economy to a mixed agricultural-industrial one. Using cocoa revenues as security, Nkrumah took out loans to establish industries that would produce import substitutes as well as process many of Ghana's exports. Nkrumah's plans were ambitious and grounded in the desire to reduce Ghana's vulnerability to world trade. Unfortunately, the price of cocoa collapsed in the mid-1960s, destroying the fundamental stability of the economy and making it nearly impossible for Nkrumah to continue his plans. Pervasive corruption exacerbated these problems. In 1966 a group of military officers overthrew Nkrumah and inherited a nearly bankrupt country.
By the early 1980s, Ghana's economy was in an advanced state of collapse. Per capita gross domestic product (GDP) showed negative growth throughout the 1960s and fell by 3.2 per cent per year from 1970 to 1981. Most important was the decline in cocoa production, which fell by half between the mid-1960s and the late 1970s, drastically reducing Ghana's share of the world market from about one-third in the early 1970s to only one-eighth in 1982-83. At the same time, mineral production fell by 32 per cent; gold production declined by 47 per cent, diamonds by 67 per cent, manganese by 43 per cent, and bauxite by 46 per cent. Inflation averaged more than 50 per cent a year between 1976 and 1981, hitting 116.5 per cent in 1981. Real minimum wages dropped from an index of 75 in 1975 to one of 15.4 in 1981.
Tax revenue fell from 17 per cent of GDP in 1973 to only 5 per cent in 1983, and actual imports by volume in 1982 were only 43 per cent of average 1975-76 levels. Productivity, the standard of living, and the government's resources had plummeted dramatically, during these periods Ghanaian citizens migrated out to neighbouring countries to avoid economic hardship, One of those countries been West African brother Nigeria were they engaged in menial jobs most popularly shoemaking to survive until the early 1980s when the J.J. Rawlings led regime restored parity and a sense of economic independence emerged in 1990 when most of them returned home to build on their new economy. That period gave credence to the popular Ghana Must Go.
The first discovery of crude oil in Ghana was at salt pound Beach in 1970. The exploration began in 1978 by a company known as AGRIPECTCO with the production of an average of 4,800 barrels per day. In 1983, Ghana National Petroleum Corporation (GNPC) was established to handle the oil exploration, production and distribution. By 1985, the production had reduced to 580 barrels per day. This negative development led to the shutting down of the oilfield as the cost of operation became higher than the generated revenue. It made no commercial sense to continue with the exploration process.
In the year 2007, Ghanaians burst into celebration mood as oil has been discovered in commercial quantity in another part of the country. The discovery was made by Tullow oil of the United Kingdom and the reserve was estimated at over 600 million barrels of light crude offshore. In no rush to explore this resource, foreign firms with the assistance of government engaged in series of test and analyses. The commercial production of the oil in Ghana started in late 2010 and has now reached a level of about 100,000 barrels per day, which is close to the planned targets. In 2011, the total volume of crude oil produced summed up to 24,195,895 barrels (66,290 barrels on average per day) as against the targeted 30,929,005 barrels (84,737 barrels on average per day). The deficit in production in relation to the target was mainly due to difficulties encountered in production at the Jubilee fields.
In 2012, there was an improvement despite the difficulties encountered in the first and second quarters of the year. An increase of about 8.9 per cent over the 2011 total produced volume of crude oil was achieved. The volume of crude oil produced in 2012 was 26,351,278 barrels and exploration continues. According to the government of Ghana, the country is expecting to expand its reserves within the next few years to around 5 billion barrels. Since production of oil started, oil revenues have become significant for Ghana’s public finance. In accordance with Section 48 (Act 815) of the Petroleum Revenue Management Act (PRMA), 2011, the receipts from crude oil are to be made known to the general public through publication of receipts. The first lifting of oil by GNPC on behalf of the state was in March 2011 and a total of 995,259 barrels was lifted. Throughout 2011, a total of four different lifting was undertaken which make up 3,930,189 barrels with a realized total revenue of US$444.12 million (GH¢690.26 million)....
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