I was on my way to teach a class today when I heard a segment on the BBC World Service. The segment concerned oil in Ghana, and was filed from the city of Takoradi (mp3 here). (Incidentally, the BBC journalists were cutely mispronouncing it — the correct pronunciation is pretty close to “tok-rahDEE”.)
This segment made me quite sad for Ghana. Situated between Togo and Côte d’Ivoire, Ghana is a beautiful and hopeful country full of amazingly cooperative and hospitable people, with relatively little infighting or conflict. I was living in Cape Coast (only a few kilometers to the east of Takoradi) when the first offshore oil drilling came on-line in 2010, and unfortunately I fear it’s a Pandora’s box for Ghana. I’ve been to Nigeria, seen the steep inequality that permeates the country from south to north, and I wouldn’t wish that fate on Ghana (or anywhere else).
The gist of the report was that the influx of billions of dollars of oil wealth and investment (new jobs and so forth) will be good for Ghana. But frankly, I think that’s a misconception. It will be good for some businesses in Ghana (mostly foreign-held ones), and it will be good for some of the elite in Ghana, but the benefits in those sectors will be balanced by a reciprocal suffering amongst the everyday people of the Central and Western Regions. The reporter gets a tour of a home that is now renting for $5,000 per month, compared to the $800 it rented for a few years ago. I can’t even put into words how patently insane a $5,000/month rent is in Ghana — that’s close to 7,000GHC, which is an amount many Ghanaians I know wouldn’t even be able to realistically conceive of, let alone as a monthly rent. They redenominated their money a few years ago, and many people in Ghana would have a difficult time picturing any amount of money that now runs into the thousands (having to multiply 7,000 by 10,000 in their heads to arrive at the ‘old Cedi’ value).
Moving from the real estate agent, they interview a woman whose rent has increased from 120GHC to 260GHC per month. That’s not only a large increase by percentage, but in real dollars as well. Her landlord is evicting her so he can rent her home to an oil worker. I was happily overpaying when living in Cape Coast, and my rent was only 200GHC (inclusive of all utilities), about $130.
While in Ghana these rents of thousands-of-dollars-per-month are essentially unheard of until now; in Abuja, however, they are more common than one might imagine. Abuja, the capital of Nigeria, is home to many $5,000-to-10,000-per-month homes. It may seem somewhat paradoxical that a smog-choked and dusty city with virtually no electrical service or even working stoplights could be home to rents that rival New York City, but that is the reality where inequality is steepest. An inequality fed by ex-pat NGO workers with their fat NGO paychecks, by the way. So when I hear a reporter lauding the possible influx of resource-based megadollars to a country, I cringe. I cringe because I know what will be the result.
Depending on which source you use, the average Nigerian income might be 50% or even 100% more than that of a Ghanaian, but those sources are deceiving. I’ve spent time in both countries, and I can tell you that Ghana is a much more egalitarian society. The average person in Ghana, despite “earning a lot less” than the equivalent Nigerian, is actually much better off. The truth of the matter is that the average Nigerian is subjectively poorer than the average Ghanaian. The stats are skewed by the huge wealth that flows to the top margin of Nigerian society. There is some effort to reflect this in an indicator known as the GINI coefficient, but in my experience the data are wildly inaccurate for Ghana and Nigeria. That is to say, the GINI indices for Ghana and Nigeria are too close (with less than a 10% official difference according to the UN); way too close. I can fall back on many other indicators to illustrate this, perhaps the most telling of which is that Ghana’s capital region has around an 80-90% vaccination rate, and Nigeria’s is officially at 13%.
So one might think, perhaps, what could be wrong with part of the society getting richer? Doesn’t that wealth trickle down to other segments of society? Not in my experience. What it means, in practical terms, is that now a certain margin of people can afford to pay two or three or ten times as much for certain goods. A scoop of ice cream at the Accra Mall is around $1 or maybe $2. The equivalent scoop, at the equivalent mall in Nigeria’s capital city is around $5-6 (more than it would be in the US!). And while the average Ghanaian doesn’t buy much ice cream, this has real world implications for things like medical care, staple foods, and so on. When the Ghanaian diet is already vitamin-poor and heavily dependent on cassava, what happens when vitamin-rich foods triple in price?
Will the influx of ex-pat workers mean infrastructure demands that currently don’t exist in the Central Region? The main source of drinking water for Ghanaians is bags of “pure water” sold by vendors, bagged under dubious circumstances, with a recent study finding 80% of the bags contain parasites. Yet Ghanaians are content drinking this water (in my experience few realize how polluted it is, and even if they did, they don’t have many other options). So one possible upside would be that ex-pat workers demand better sources of water. Except, of course, that this infrastructure already exists in a scattershot sort of way. As an affluent worker or tourist you can choose to drink Voltic water, which is ten or twenty times the price of sachet water, but will (very probably) be parasite free. So it’s not that clean water doesn’t exist in Ghana, it’s that the clean water effectively doesn’t exist for the average Ghanaian. Other needs and demands will be met in a similar manner; in a way that doesn’t really benefit most Ghanaians at all, in a way that maybe even further impoverishes them. There will be more private generators running 24/7 (as in Abuja), more fancy hotel rooms in which Ghanaians can only be found for purposes of cleaning or carrying luggage, more restaurants with prices that rival a Ghanaian’s weekly pay. And worst of all, there will be more Obruni — the Fante word for whites — running around reinforcing various neocolonial stereotypes.
In short, the arrival of oil in Ghana can only serve to stratify Ghanaian society, leading to more inequality, more suffering. I teared up a little bit while listening to this report, finding myself missing Cape Coast, missing my friends and neighbors, and worrying about the poverty and suffering this oil development portends.