In January 2011, Ghana exported its first oil from the Jubilee oilfield and thus joined the exclusive club of oil exporting nations. Tullow Oil was the first company to lift crude oil at the Jubilee Field during the first week of January this year. Reuters News Agency reported that US company Exxonmobil, which expressed interest sometime ago to buy Kosmos’ 30 per cent stake in the Jubilee oilfield was the first company to buy the cargo of Jubilee crude loading on 1-7 January and 8-18 January from trading companies Vitol and Trafigura. Forecast estimate that Jubilee oilfields can produce 55,000 barrels of light sweet oil per day. With further development of more oil wells, production could reach 120,000 barrels per day. At that rate, Ghana would soon be awash with petro-dollars, which if properly managed, would provide much-needed funds for the development of infrastructure and enhance the living conditions of the people. Before it struck oil, Ghana depended on cocoa and minerals like gold, diamond and bauxite as foreign exchange earners which it prudently utilized to build a fairly decent economy with a modest but steady four per cent yearly growth rate. With our democracy now well into the third decade under a succession of enlightened and committed leadership, the country is now being touted as a model for the continent. With new-found oil wealth, the future promises to be rosier. Yet, if the experience of other oil producing countries on the continent such as Nigeria is anything to go by, a warning would be instructive to ensure that Ghana avoids the costly mistakes others made. Ghana should be aware of the so-called ‘Dutch Disease which arises in countries such as Holland and Nigeria where huge wealth from mineral resources becomes a problem to manage. Before oil took over as the major revenue earner in Nigeria, agriculture was the mainstay of its economy with major crops like cocoa, groundnuts and palm produce providing the wherewithal that drove economic development. In the past four decades, however, the contribution of the agricultural sector has continued to decline, making Nigeria solely dependent on oil as the major source of revenue which contributes about 95 per cent of the foreign exchange earnings and 80 per cent of budgetary income. Ghana would have to avoid going the same route otherwise its oil sector would merely replace agriculture as foreign exchange earner. Another area of the economy that could decline is the manufacturing sector. Again Nigeria’s example where its major non-oil industries have folded up or simply moved their operations to other countries or converted to other sectors on account of bad and inconsistent government policies is apt. A notable case is that of its textile firms, which have mostly closed down, fuelling the growing unemployment rate. Recently, government launched a 100 billion naira fund to resuscitate the textile firms. The challenge before Ghana therefore is to ensure that its oil wealth is utilized to propel its industrial sector to create a truly diversified economy where agriculture, agro-allied industries and the entire manufacturing sector would continue to contribute to the growth of the economy. Already there is a hint of low level agitation gathering in the Western Region of Ghana. Before crude oil began to gush out, paramount chiefs of the region sought audience with national authorities to press home the point that the region deserves a special concession of 10 per cent of the oil proceeds for development purposes. President John Evans Atta Mills has pledged that the region would be compensated with development, which is a good sign. The difficulty however lies in concretely turning this pledge into action that trickles down to the people who have high expectations. In Nigeria, by the time the initial neglect of the oil producing areas was rectified, matters had almost got out of hand, a realization that led to making yearly special budgetary allocation for the development of its oil producing areas, apart from funds that go to the states in the area. It is worth pointing out that official corruption, as well as other factors has militated against the attainment of intended development. Ghana would benefit a great deal if it understudies measures embarked upon by Nigeria to facilitate the development of its oil producing states. It needs to do this expeditiously to avoid the unpleasant repercussion of a delayed attention to the demands of its oil bearing communities. Credit: Felix Klutse/Business Guide E-mail: felixklutse@yahoo.com