A former Vice-Chancellor of the University of Ghana, Prof. Ivan Addae-Mensah, has cautioned against the contracting of huge loans in anticipation of the country’s oil revenue.
He said the country needed to be careful about the euphoria about the expected oil revenue, and that more attention should be given to other areas, especially agriculture.
“Even if the country was entitled to more than 50 per cent of the expected oil revenue, it still needs to secure five times the expected amount to realise a realistic hope of making major economic take-off,” he added.
Prof. Addae-Mensah was speaking in Takoradi at first two-day Western Regional Development Forum on the theme: Preparing Minds and Space Towards the Oil and Gas Culture.
He said if the country would need more than five times the expected revenue for economic take-off “why then are we rushing into all sorts of huge loans ostensibly with our envisaged or expected oil and gas revenue as our hope?”
Prof. Addaie-Mensah gave an example of Nigeria saying, “Nigeria went the same way in the late 1960s and the early 1970s, and has still not recovered from those huge debts it was virtually conned into incurring, including kickbacks from dubious loans.”
He questioned how realistic these expectations of large revenue inflow would be, especially in the long and short terms.
“I believe some of the expectations are rather exaggerated and unrealistic, and need to be carefully managed,” but not to rush into huge loans.
He said what was needed at the moment was the moderation and diversification of the country’s economy. The country, the professor said, had seen over-reliance on its primary products with very little value addition which was one of the biggest challenges and feared the oil and gas sector was likely to be faced by it.
The oil sector he said was frightening because it had the potential of becoming a replacement for other sectors of the economy, particularly agriculture, rather than addition.
He said agriculture still plays very important role in the development of the country, therefore, serious efforts should be made to avert such tendencies.
The professor said it was important, therefore, to ensure that the development of the oil and gas industry in the country be made an addition and not replace agriculture,therefore, every effort should be made to avoid it.
“Other sectors of the economy, particularly agriculture, must be boosted, and not displaced by oil and gas,” he strongly suggested. Prof. Addae-Mensah said, “we must use local goods and services to the maximum in all aspects of the oil and gas industry, including finance, insurance, construction, consumable, fabrication, product,transportation and health, among others, in order to retain the benefits to Ghanaians.”
He said owing to the large capital requirement of the sector, attracting investors to the sector and its development, it would be an important strategy that must, however, be made consistent with increasing benefits to the people of this country.
“In this connection, national capacity to monitor the distribution of benefits of oil and gas production in Ghana needs to be strengthened so that Ghana obtains her fair share from the benefits from the resource development through, for instance, taxation being administered effectively,” he said.
The forum was organised in the memory of Nana Kobiana Nketsia IV and was attended by Nana Kobina Nketsiah V, Paramount Chief of Essikado-Traditiona l Area, and chiefs from all the paramount areas in the region as well as members of parliament and the general public.
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