Ghana’s early struggle with the Dutch Disease

Ghana’s early struggle with the Dutch Disease

Before Ghana’s discovery of oil, the economy was anchored by agriculture and a minor manufacturing base. It was believed that the oil will boost economic growth but for the country to benefit from the oil, experts advised managers of the economy to adopt a model of development that will prevent the Dutch Disease from affecting the country.

The Dutch Disease also known as the “resource curse,” is a term Dutch Disease which was coined in 1977 to explain a sharp decline in the Dutch economy following their discovery of natural gas reserves in 1959. Due to a new dependence on a natural gas resource, the Netherlands experienced devastating economic growth where domestic industries and markets were ignored in favor of the export of natural gas, as well as an overvaluation of the Dutch currency.

It was believed that Ghana would avoid this disease that had prevented countries like Nigeria, Venezuala and Angola from enjoying the full benefits of the oil. Sadly, it seems like Ghana has not escaped the woes of the Dutch Disease. With farmlands in communities near the oil fields taken over, food production has reduced. The reduction in food production means a drop in the growth of the agriculture sector. Ghana’s agriculture sector has been consistently dropping since the oil was found.

The sector is expected to grow by 3.6 percent in 2016. Finance Minister, Seth Terkper Mr Terkper has attributed the slump in growth to the crops subsector which is expected to record a negative. A drop in growth in the sector certainly will result in the loss of jobs. As more and more people leave the farms or lose their lands to galamsey and oil affiliated businesses, Ghana’s economy shrinks.

The oil sector has not been able to produce the jobs expected neither has the ailing manufacturing sector been able to generate jobs either. These, together with the job losses from the three-year power crisis has made the effects of the Dutch Disease painful on Ghanaians.

The Dutch Disease brings to the fore the need to devise strategies and policies for managing the oil industry. To address the Dutch Disease these policies should be devised and effectively implemented:

Training and involving the local people

Effective training and other technical programs should be introduced to equip residents in oil rich countries and communities with the requisite skills needed to work within the industry. Ensuring effective participation of local people addresses inequality and conflicts in oil rich countries which in the long run promotes efficiency in the oil sector.

Establishment of systems to promote addition of value

The creation of a value addition system is necessary to ensure that Ghanaians, especially those living and working in oil rich communities benefit from the resource. This should include the enforcement of the Local Content Bill for Ghanaians to take advantage of employment opportunities in the sector.

Devising policies to check corruption in oil sector

There seem to be a conscious or unconscious attempt by various governments to weaken the intuitions mandated to ensure accountability in the oil sector. To address to this challenge, various stakeholders should come together to institute laws that will address corruption and kleptocracy in the oil sector. Also Parliament should make it compulsory for reports on the usage of oil revenues to be published to promote transparency in the oil sector.

Political will and sound economic policies

Finally government officials and politicians should develop a strong political will and commitment to develop sound economic policies that will help boost the oil sector. Without political will and sound economic policies, the oil sector will not yield the desired dividends. Political will and sound economic policies will ensure efficiency and promote accountability.

The effective implementation of these policies will tackle the Dutch disease in the oil sector and ensure that oil discovery becomes a blessing than a curse.


By: Marian Efe Ansah/

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