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Ghana’s economic growth in the second quarter of this year suffered an annual fall of 2.5 percent due to a drop in oil production, according to government data published on Wednesday.
As reported by Reuters, Ghana’s economy improved by 3.9 percent in the second trimester of 2015, but only gained 2.5 percent in the same period this year.
Ghanaian government statistician Philomena Nyarko explained that the slowdown in the second quarter this year was primarily as a result of declining oil output. Specifically, she claimed a technical fault hurt the country’s main production vessel.
The West African country had sustained growth of at least 8 percent until 2013 partly due to the revenues from oil, but in recent years, Ghana has seen less income due to the plummeting price of the commodity coupled with a growing fiscal crisis. Government spending has been curtailed but as explained on 20 September by the Governor of the Bank of Ghana, Dr. Abdul-Nashiru Issahaku, the drop in oil revenue caused growth in the federal deficit and an expanding trade deficit.
In order to relieve pressure on the economy, several analysts have urged the state to place greater importance on the agricultural sector rather than oil.
“Only 11 per cent of the petroleum revenue has been allocated to the agricultural sector, which is the mainstay of the economy,” affirmed Roland Affail Monney, President of the Ghana Journalists Association, at a forum last week.
The overreliance on the dwindling earnings from oil “has been used to tackle too many national problems at the same time,” and this has caused a strain on the funding of social programs, Monney added.
“Basing most of the country’s budget on oil revenue may fail you,” warned Dr. Charles Ackah, head of the Economic Division at the Institute of Statistical, Social and Economic Research, over the volatility of oil prices. He further noted that last year for the first time since 2011, non-oil economic growth surpassed total Gross Domestic Product growth.
Despite the recommendations of Monney and Ackah, Ghana’s oil future appears to be bright based on the conclusions of a study from Ecobank last week. Ghana’s oil production of some 103,000 barrels per day (bpd) could shoot up to around 240,000 bpd by 2020 once two new offshore fields come on stream.
“This could potentially make Ghana the fourth largest oil producer in Sub Saharan Africa by 2020,” according to the Ecobank research report.
By Erwin Cifuentes for Oilprice.com
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Erwin Cifuentes is a Contributing Editor for Southern Pulse Info where he focuses on politics, economics and security issues in Latin America and the Caribbean.…