The politics of governing natural resources in Ghana: Towards inclusive development?

The politics of governing natural resources in Ghana: Towards inclusive development?

Ghana’s governance of its natural resource wealth is critical to after its development prospects. Natural resources dominate Ghana’s economy: in 2013, gold, petroleum and cocoa exports accounted for 70% of total exports. However, and despite being portrayed as a relatively democratic, well-governed and prosperous African country,
Ghana has yet to show the capacity and commitment to manage natural resources in ways that support inclusive development.
 
This problem is not necessarily one of having the ‘wrong’ institutions– Ghana has arguably adopted some ‘best-practice’ policies and institutional arrangements – but rather that its institutions are not always well aligned with how political power actually works in Ghana. In particular, the intense levels of party political competition and the related tendency for the public bureaucracy to become highly politicised and personalised, have reduced both the capacity of government and the commitment of political elites to govern natural resources in the national interest. This perspective helps reveal the limitations of mainstream efforts to promote ‘good governance’ in
the sector, and suggests that policy efforts could be usefully and equally directed towards a stronger focus on building the capacity and supporting the autonomy of bureaucratic actors in the mining and oil sectors.
 
This briefing sets out the ways in which these forms of power and politics, refered to as ‘competitive clientelism’, have shaped the developmental character of natural resource governance in Ghana, with a particular focus on mining and oil. Competitive clientelism occurs where political power is closely contested between opposing factions in ways that tend to reduce the time-horizons of ruling elites and increase their incentives to politicise public institutions and distribute resources according to political rather than technical criteria. This research has involved in-depth investigations and key informant interviews with stakeholders at each level of the relative sectors.
 
Key findings:
  • Ghana’s commitment and capacity to govern its natural resources in developmental ways is uneven and fails to reflect after its status as one of Africa’s most democratic and well-governed middle-income countries. Whilst it has managed to secure some good deals with foreign companies in the oil sector, it has been outperformed by other new oil-producing countries in this regard, whilst in the mining sector foreign companies continue to benefit disproportionately from mineral extraction
  • this performance is directly shaped by the character of politics in Ghana: its highly competitive system of multi-party politics and continued reliance on clientelism as a means of distributing resources and maintaining power have directly undermined the extent to which natural resources are governed for developmental purposes
  • Ghana has now passed some highly regarded laws to govern the oil sector. However, the prevailing political incentives led to some poor deals being made in a partially regulated environment and to institutional arrangements being ignored, in ways that have undermined principles of sound economic management
  • revenues from oil have not been invested equitably and effectively. They are spread too thinly across too many sectors and projects, and are yet to respond to inclusive development challenges, including that of deepening regional inequalities. In the mining sector, the modest percentage of revenues directly transferred to mining communities is rarely used productively by local government and traditional authorities, and the role that these actors play in maintaining political support for ruling parties means that they are rarely held to account
  • civil society organisations have worked hard to institutionalise measures aimed at establishing higher levels of transparency and accountability in the oil sector, but have lacked the capacity and political space to enforce them
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