structural adjustment


The International Institute for ICT Journalism created a blog for following news of oil finds, oil wealth, and the oil industry in Ghana:
Reporting Oil and Gas


FPSO, Floating Production Storage and Offloading vessel for the Jubilee Field and sub sea FPSO production facilities diagram from a presentation at Kosmos Energy

For awhile there was not much published, but in the last couple of months there have been new stories posted almost daily, sometimes several times per day. Many of these stories are taken from various media in Ghana. That makes Reporting Oil and Gas a very useful tool for collecting and following the stories on oil development in Ghana. At the end of each story the blog provides the link to the original source. This news blog is still in its early stages, but I hope it continues and expands. It is quite useful and much needed.

On February 1 it reported that Ghana is considering setting up a sovereign wealth fund for oil revenues.
Ghana Eyes Sovereign Wealth Find For Oil Morey -Minister

Ghana is considering setting up a sovereign wealth fund to channel surplus revenues from oil production, which are due to start rolling later this year, Finance Minister Kwabena Duffuor has said.

“We have held a couple of meetings already it’s something we’ re seriously working towards and we hope to put the proposals before Cabinet in about a month,” Dr. Duffuor said in an interview with Reuters.

He said if Cabinet backs the proposals, a bill will then be drafted for consideration by parliament, Duffuor said.

The Finance Minister gave no details of the size of the possible fund. But a Ghanaian government source close to discussions on the matter said it will be largely shaped by the size of oil revenues.

The source noted that it was not certain that the fund would be given the green light, noting an alternative option-investing in key domestic infrastructure project was also under discussion.

Ghana is the latest Africa state, alongside Nigeria, Angola and Tunisia to study ways to ring fence energy windfalls for future generations.

Ghana, the world’s number two cocoa producer and Africa’s second –biggest gold miner after South Africa expects to starts oil production late this year when its offshore Jubilee energy field starts operation.

And Is “Oil Fund” all Ghana needs to defeat the Resource Curse? by Stephen Yeboah from the Department of Planning, Kwame Nkrumah University of Science and Technology

The case for the economic and political significance of oil funds remains very bleak. It is now argued by some economists that oil funds are no more effective than other measures for mitigating the threats of Dutch Disease.

… the country needs accountability, openness and transparency to defeat the resource. And what makes these three pillars meaningful in any democratic dispensation? Ghana ought to rejuvenate its institutions and governance structures to solve the paradox of plenty.

Most importantly, regulatory and legal framework in the oil and gas sector and in managing the oil fund should be made operational. Would Ghana have the capacity to enforce the laws that would govern the oil industry?

The statement by the Deputy Minister of Energy, Emmanuel Armah-Kofi Buah, that the Ministry of Energy would oversee the disbursement of funds in the “Oil and Gas Business Development and Local Content Fund” leaves much to be desired. Here, it is definitely the adherence to the political disincentives in the country where virtually the executive wields leverage even over parliament. This situation would allow public spending for personal gains. Ideally, the role to oversee and monitor the disbursement of funds should solely be assigned to an independent oversight body and parliament respectively. Parliament should exercise the authority of debating, approving and scrutinizing petroleum agreements, government transactions in and out of the oil fund.

Concerning the role of civil society organizations, there is a seemingly brighter step since Ghana is blessed with vibrant groups that are always in place to have a say in government decisions. But in the context of the oil sector, are civil society groups empowered enough to meet the difficult challenges ahead? It is worthy of note that an oil fund with small number of actors operating in nontransparent and poorly linked manner would encourage misappropriation and abuse of power. The outcome of the issue here is that limited roles of CSOs mean that the tool for ensuring transparency and openness in the oil sector is made ineffective. The Extractive Industries Transparency Initiative (EITI) is the best medium that can enjoin the role many actors, from government representative to civil society organizations.

Again, what is always significant is for the ordinary Ghanaian to be educated and made informed of what goes on in the oil and gas sector. This is to clamp down on possible uncontrolled grievances that may cause revolts.

The latest stories as of today are dated February 4th.
World Bank gives Ghana $30m for capacity building for oil and gas industry

The World Bank in a programme is giving the country an amount of $30 million for training to build capacity for the industry.

Diwan said the Bank was embarking on an “ambitious programme to train Ghanaians in the universities, financial institutions, for taxation and management” to prepare the country to be in a position to manage the oil resources.

This development has given hope to many observers who believe that the discussions are an opportunity to lead the country to develop a sound plan on how to manage the oil and to avoid the problems that many oil-rich African countries are going through presently.

I doubt any plan of the World Bank will help avoid the oil curse. The pattern of the World Bank and the IMF is to tear down any responsible government institutions with structural adjustment programs, leaving countries at the mercy of predatory global capitalism, without any institutional defense system. This is largely the point of structural adjustment programs. Ghana has already suffered and continues to suffer from loss of personel in the public sector due to structural adjustments, preventing the government from carrying out its responsibilities to the people of Ghana.

Reporting Oil and Gas is very simple in design and only puts two or three stories on a page. This is smart design, as it makes it much more useful in Ghana where there are not so many high speed connections to the internet. And Ghana is where this information is really needed.

The other story on the front page today is Investment conference in Ghana in March

International Business Event Management Ghana Limited, in collaboration with the Ghana Investment Promotion Centre (GIPC) and other stakeholders, is to host a multi-sectoral conference in March, this year, for potential investors to the Ghanaian business terrain.

The conference, dubbed: “Investing and Growing Your Business in Ghana- Challenges and Opportunities (IGB-Ghana 2010), follows the launch of the International Business Event Management Ghana Limited (IBEM-Gh. Ltd) on January 13, this year, in Lagos

“IGB Ghana 2010 conference will not only present a unique business networking opportunity for participants but would also provide the opportunity to meet and deliberate with service providers, government regulators, development partners, law firms, government agencies, ministries, Ghana Chamber of commerce and financial institutions,” he stated.

Mr. Ampah said:” the conference is bringing together manufacturers from Africa, Europe, Asia, and thee United States, adding that regional and multi-national corporate bodies, gas companies, embassies, banks and financial institutions as well as private sector operators would participate in the conference.”

Shedding some light on the launching event in Lagos, Mr. Ampah said many investors expressed their interest in investing in Ghana but expressed the need for regular power supply to avoid disruptions in their operations.

Irregular power supply is a huge handicap to businesses in Ghana, and to doing business in Ghana. It can make many activities and transactions impossible. It would be nice to see some progress to solving the problem.

There is one thing I hope Reporting Oil and Gas adds to their stories, and that is the name of the original author, if it is available. They do link to the original story, so it is possible to find who wrote a story if the author is named, but it would be nice to bring that information into the stories at Reporting Oil and Gas. Nevertheless Reporting Oil and Gas performs a valuable service well, and I recommend it to your attention.

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Added February 10:

Subsea Equipment Ready For Oil Production

The subsea equipment required for the production of oil from the Jubilee Oil Fields off the coast of Ghana in the Western region, have begun arriving in the country.

A statement issued in Accra and signed by the Communications Manager of Tullow Ghana Limited, Mr. Gayheart Mensah, said, “this is a strong indication that the operator of the Jubilee Field, Tullow Ghana Limited, is ready to produce first oil from the Jubilee Field by the last quarter of this year.”

An equipment known as “The Christmas Tree,” which is an assembly of control valves, gauges, pipes, chokes and fittings and which is installed on the ocean floor, is used to control oil and gas flow from a completed well.

The statement said that the Sekondi Naval Base and the Takoradi Port have been the main entry points for the equipment, adding that before the vessels carrying the equipment set sail for Ghana, a team from Tullow Ghana Limited visited some of the companies contracted by the Jubilee Partners to manufacture subsea structures for the project.

According to the statement, the oil discovery in the Jubilee Oil Fields has come with “expectations among Ghanaians that the oil find should transform Ghana’s economy and spin off jobs immediately. These are huge expectations that need to be managed.”

The statement is confident, “with the level of technology deployed by Tullow Ghana Limited, the operator of the Jubilee Oil Fields and the quality of personnel working on the project, the target date of producing first oil by the last quarter of this year will be met.”

An international discourse of China-in-Africa has emerged … China in Africa has more in common with the West than is usually acknowledged; … there are nevertheless notable differences between Western and Chinese presences in Africa

Map of Chinese investment in Africa 2005 (click to enlarge)

African exports to China (click to enlarge)

In December Asia Pacific Journal published:

Trade, Investment, Power and the China-in-Africa Discourse by Barry Sautman and Yan Hairong

They make a number of interesting points about the nature of China’s involvement in Africa.

An international discourse of China-in-Africa has emerged, particularly in Western countries with dense links to Africa: the US, UK and France.

The essence of the discourse then is to cast PRC policies in Africa as promoting human rights violations or “colonialism,” while implicitly comparing them invidiously with high minded US and Western practices. Some PRC activities in Africa do violate the human rights of Africans — not in ways that Western elites claim, but in much the same manner that Western policies do, through disadvantageous terms of trade, the extraction of natural resources, oppressive labor regimes, and support for authoritarian rulers, all common features of the modern world system. These are practices that China’s elites used to denounce, but now come close to extolling as dynamic capitalism. … the path taken by China is “consistent with the logic of market capitalism-liberal trade” and makes China not a colonialist, but “a successful capitalist in Africa.”

The discourse should not be inverted by arguing that China’s presence in Africa is positive and the West’s negative or that problematic Chinese activities in Africa are justified because abuses are shared with the West. The analysis of China-Africa should invoke neither a “win-win” nor dystopic representations; rather, the trees of China’s behavior should be seen as part of a world system forest and the discourse examined using comparative analysis. Our arguments are threefold: 1) given the world system, it is difficult to assess the pluses and minuses of China-in-Africa as a single phenomenon; 2) as a player in the world system, China in Africa has more in common with the West than is usually acknowledged; 3) there are nevertheless notable differences between Western and Chinese presences in Africa; many derive from China’s experience as a semi-colony, its socialist legacy, and its developing country status, features which together make PRC policies presumptively less injurious to African sensibilities about rights than those of Western states.

The US Treasury termed China a “rogue creditor.” Africa remains, however, in a Western-created “debt trap,” owing more than $300b and paying significant interest. Yet, as US Africanist Deborah Brautigam has noted, China “regularly cancel[s] the loans of African countries, loans that were usually granted at zero interest [and] without the long dance of negotiations and questionable conditions required by the World Bank and IMF.” …

OECD researchers have concluded moreover that increased PRC activities in Africa have not deepened corruption among African governments. China’s leaders know corrupt officials will siphon off part of their infrastructure loans, but its packaged loans are less likely than Western aid to being drained by corruption. As a Hong Kong journalist has noted, because China’s loans and aid are tied to infrastructure projects, that is, a large portion of the funds are allocated directly to contractors, “corrupt rulers cannot somehow use it to buy Mercedes Benzes.” A close US observer of PRC activities in Africa has argued that China’s aid is more effective than Western aid because much is used for “hydroelectric power dams, railroads, roads and fiber-optic cables, which have the potential to benefit ordinary people, no matter how corrupt the regime under which they live.”

Despite promoting a rhetoric of transparency regarding African oil-producers, Western states have not bound their citizens and corporations. Bids for oil blocks in Africa typically feature “signature bonuses,” paid to governments, which often run into the hundreds of millions of dollars. Foreign oil firms know host governments skim off large shares of what the companies pay. In a rare instance of disclosure, Western oil firms told the IMF that they paid $400m in 2001 for an Angolan oil tract, but the Angolan government claimed it received only $285m. Presumably the difference went into the pockets of government officials.

Most multinationals refuse to publish what they pay to secure oil rights. Western governments do not compel oil firms that are their own citizens to make disclosures, but “ask the tiger for its skin” (yu hou mo pi), as the Chinese say, by demanding corrupt governments publicize their own corruption.

Western policy interventions have not actually diminished the resource curse.

… oil is capital intensive, creates few jobs, is environmentally damaging and corrupts producing states. People in oil-rich regions, such as southern Sudan and Nigeria’s Niger Delta, receive so few benefits from their patrimony that violent conflict has ensued.

The China-in-Africa discourse will likely continue to focus overwhelmingly on oil in discussing PRC imports from the continent. American analysts particularly see the US as strategically competing with China for African oil. … The US government estimates African oil production will grow 91% in 2002-2025, while global production will grow 53%. Armed forces in a newly established US Africa Command will have as a main task protecting US access to oil.

US prominence in taking African oil is accompanied by its backing authoritarian rulers in almost all oil producing states.

Sautman and Hairong’s article discusses Chinese activities in Africa regarding the textiles and clothing (T&C) industries and also mining, particularly in Zambia. They provide detailed information of T&C in Africa and how it works in different countries.

If the affordability of PRC imports benefits grassroots African consumers, there are in any case only seven countries that receive a significant share (5-14%) of their imports from China. Basic consumer goods do not predominate among PRC exports, but rather “machinery, electronic equipment and high- and new-tech products.” A UK government study found that in only one African country, Uganda, are basic consumer goods more than a fifth of the value of all goods imported from China and that PRC imports into Africa mainly displace imports from elsewhere and have little effect on local production. The PRC government recognizes that some exports are of poor quality. Many Chinese goods are brought to Africa by private Chinese or African entrepreneurs whom the PRC government does not control. It nevertheless has “in place stringent measures to ensure that its goods meet all the minimum quality standards for exports [and] a ministry to ensure low quality goods are not exported.”

WB/IMF-mandated structural adjustment programs (SAPs) were the actual gravediggers of African T&C production. The influx of second-hand clothing from developed countries particularly reduced domestic markets for African T&C producers.

A balance of positive and negative impacts for China’s exports to Africa is not easily drawn. Yet, as to the T&C industry, the balance is less negative than the discourse makes out. Its fixation on Africa’s T&C industry is non-comparative and lacks historical context, as China did not contribute to the steep decline in African T&C through SAPs [structural adjustment programs], while Western states have yet to restrict their used and new clothing exports to Africa.

Most foreign direct investment (FDI) inflows to Africa come from Europe, along with South Africa and the US. These countries together account for more than half of Africa’s FDI inflows. China had only $49 million in FDI in Africa in 1990 and $600m in 2003. Its FDI stock in 2005 was $1.6b, of $57b in global PRC FDI. In 1979-2000, the most recent years for which figures are available, 46% of PRC FDI in Africa went to manufacturing (15% to textiles alone), 28% to resource extraction, 18% to services (mostly construction) and 7% to agriculture. The PRC has said it will encourage investment in Africa’s industrial processing, infrastructure, agriculture, and natural resources.

Investments thus also figure in the China-in-Africa discourse.84 Even more than with trade, the discourse is narrowly focused; its primary focus has been on only one investment by one Chinese SOE, among the more than 800 major PRC enterprises in Africa, 100 of them large SOEs. Western media have devoted hugely disproportionate attention to the Non-Ferrous Company-Africa (NFCA) Chambishi copper mine. The upshot of these reports is that “the Chinese” are Africa’s super-exploiters.

Sautman and Hairong discuss the low wages, no job security, lack of health care and unsafe working conditions for miners in Zambia. Zambian miners had previously enjoyed some health benefits and better wages. The authors point out that the lowered wages, reduced safety, and lack of health care date to the privatization of the mining sector mandated by the World Bank.

In drawing their conclusions they write:

The China-in-Africa discourse in the West for the most part insists that Chinese have particularly positioned themselves to exploit Africa and Africans; for example, by supporting authoritarian rulers in countries like Sudan and Zimbabwe. Several Western states, however, directly support despots by providing military assistance and legitimacy. In fact, US assistance to African rulers for purchases of US arms and the training of African states’ military forces has increased significantly under the Obama Administration. China is thus not likely to fare worse than the West in an evaluation of how foreign investments impinge on development and human rights in Africa.

The modalities of trade examined for development implications commonly involve the import and export of goods. There is also trade in money and people however. Western, but not PRC, banks have traded secrecy and interest to the exporters of 40% of Africa’s private wealth. Western states trade citizenship for the skills of professionals, especially doctors and nurses, trained in, but now largely lost to Africa. These forms of trade likely impinge as much as commodity exchange on Africans’ right to development.

The main problem with the China-in-Africa discourse is not empirical inaccuracies about Chinese activities in Africa, but the de-contextualization of criticisms for ideological reasons. Some analyses positively cast Western actions in Africa compared to China’s activities; others lack comparative perspective in discussing negative aspects of China’s presence, so that discourse consumers see a few trees, but not the forest. Such analysis reflects Western elite perception of national interests or moral superiority as these impinge on “strategic competition” with China. Many analysts scarcely question Western rhetoric of “aiding African development” and “promoting African democracy,” yet are quick to seize on examples of exploitation or oppression by Chinese interests.

To comprehensively interrogate Chinese and Western activities in Africa is to question a global system that has in many respects de-developed Africa and into which China is increasingly integrated. Failing that, one is left with little more than a binary between a Western-promoted new “civilizing mission” on behalf of Africans and activities of the “amoral” Chinese, who refuse to fully endorse that mission by not adopting trade and investment practices wholly compliant with neo-liberalism. China, after all, can and does throw this binary back in the face of its proponents by portraying the West as seeking a new tutelage for Africans and China as eschewing the role of intermeddler, while promoting “win-win” trade and investment. So too do many Africans. The popularity of features of China’s presence in Africa, compared with that of the main Western states, goes well beyond elites. The 2007 Pew Global Attitudes Survey asked Africans in ten countries to compare the influences of China and the US in their own countries. In nine of the ten countries, by margins of 61-91%, African respondents said Chinese influence was good. These percentages substantially exceeded those for the US. One important implication of the Chinese presence in Africa then is that Western states and firms may need to engage in greater self-reflection about their own presence in the continent.

There is much more, I can hardly do justice to this meticulously well sourced article and recommend you read it for yourself: Trade, Investment, Power and the China-in-Africa Discourse.

corn in Ghana

corn in Ghana

In his essay Destroying African Agriculture Waldo Bello describes how:

African agriculture is a case study of how doctrinaire economics serving corporate interests can destroy a whole continent’s productive base.

Until the 1970s, Africa was able to feed itself and export food. Now most African countries are net importers. Among the international financial institutions, the IMF, and the World Bank, there was no intention to assist or maintain Africa’s ability to feed itself:

As then-U.S. Agriculture Secretary John Block put it at the start of the Uruguay Round of trade negotiations in 1986, “the idea that developing countries should feed themselves is an anachronism from a bygone era. They could better ensure their food security by relying on U.S. agricultural products, which are available, in most cases at lower cost.”

What Block did not say was that the lower cost of U.S. products stemmed from subsidies that were becoming more massive each year, despite the fact that the WTO was supposed to phase out all forms of subsidy.

Bello’s essay is short and crystal clear in describing the net effect of structural adjustments and agricultural dumping.

Mark Plotkin writes in his book about ethnobotany Tales of a Shaman’s Apprentice:

Ironically, if the American farmer had to grow only species native to the United States, we would be living off of Jerusalem artichokes, pecans, black walnuts, sunflower seeds, blueberries, cranberries, raspberries, and gooseberries. To paraphrase the contemporary Kenyan economist Calestous Juma, the exploitation of tropical plant resources by the United States has turned a continent of berries into a global agricultural power.

I was leafing through Plotkin’s book today looking for another quote, which I didn’t find yet, when I found the previous passage and thought it particularly ironic in light of Block’s sentiments above. There is another related issue Plotkin discusses. He is speaking of medicinal uses for plants, but the same holds true for food crops:

… new medicines were probably just waiting to be found in the rain forest plants, but one of the issues that troubled me as I began my research is what has come to be called “intellectual property rights.” Briefly stated, no matter what disease an ethnobotanist might find a cure for during the course of his research, the indigenous peoples who taught him the cure would not benefit from the sales of the new drug.

American agriculture has profited by exploiting the botanical heritage of the entire world. Now giant corporations such as Monsanto are trying to engineer plants from across the globe, so that they cannot be grown anywhere without paying tribute to Monsanto. Local people, whose heritage is these crops, do not share in the profits, and may be forced to pay tribute to a corporation to enjoy their own heritage.