Geopolitics

Ghana Struggles To Cash In ‘Black Gold’ Dreams Of Oil Riches

Five years after the discovery of a major offshore oilfield, people in Ghana are still banking on better times ahead. But foreign companies -- notably those from China -- are also poised to cash in. A visit to the rapidly expanding city of Sekondi-Takorad

Woodworkers in Sekondi-Takoradi, where the economy is ripe with potential (Ben Sutherland)
Christian Putsch with K. Owusu Peprah

SEKONDI-TAKORADI - The route to the training center is a crumbling asphalt road losing its battle with encroaching vegetation. The guards sitting in a wooden hut to our right barely look up as we drive past. Ebow Haizel-Ferguson is the director of the training center where we are heading; officially called "Sigma Base Technical Services," it is Ghana's largest "oil school."

Steering the car to the left and through the thicket, a view suddenly opens up on to a railway graveyard. Haizel-Ferguson says proudly: "You'd be surprised what we've achieved out of nothing."

Rust is eating its way through scrapped cars surrounding a large hangar. Through the dusty windows of the building, alignments of long work-tables can be seen. This is where in recent months Haizel-Ferguson and his team have taught 2,000 young people welding, pipefitting and other skills -- but not for the rail sector: they're only renting the premises in the Ghanaian coastal city Sekondi-Takoradi from the train company.

Since the 2007 discovery of the Jubilee offshore oilfield -- one of the largest oil deposits ever found in Africa -- only one thing has mattered in Ghana: black gold. For the country's people it means the hope of better economic times. Investments in oil-drilling infrastructure have boosted growth by over 13%. And the rapidly expanding city of Sekondi-Takoradi is at the center of it all.

So is Haizel-Ferguson, who worked at Nigeria's oil metropolis Port Harcourt for 22 years. The tall Ghanaian entrepreneur says he knows everything there is to know about oil: "I've breathed it, drunk it, and puked it."

But Nigeria's path is unfortunately one that Ghana is in danger of following. After decades of pollution by oil companies, oil thieves, and rebels, the Niger Delta is one of those places on the planet that look as if it's straight from of an apocalyptic science fiction set. And while western oil companies lure employees to Nigeria with the highest bonuses in the world -- a senior manager can earn 320,000 euros a year -- Nigerian government figures say local firms account for only 18% of the value-creation process.

Very few Nigerians benefit from the commodity, and the oil boom has cost countless fishermen and farmers their livelihood. It is only in the last few years that laws relevant to granting supplier contracts have been tightened with the intent that two-thirds of them will go to Nigerian companies.

Cautionary tale

What happened in a country only some 100 km away is a cautionary tale -- and Haizel-Ferguson wants to make sure the story doesn't repeat itself in Ghana.

Expectations here are high indeed. Although so far the oilfields have produced less than expected, the Ghana Oil and Gas Service Providers Association (GOGSPA) says that the industry could create 100,000 jobs for Ghanaians. Two years ago, the Ministry of Energy promised a more cautious 10,000 new jobs -- and in early June 2012 announced that only 813 jobs have opened up so far. Meanwhile, as oil infrastructure is being built up, Ghanaian companies complain about how few of the contracts they obtain.

Others are benefitting instead. China, for example, which gave Ghana a 2.4 billion euro loan to construct oil infrastructure, is being paid back with 13,000 barrels per day. That's a cheap price for the Asians who have also stipulated that a significant number of contracts be awarded to Chinese companies.

What clearly has little bearing is that five years ago the Ghanaian government drafted laws stipulating that companies like Tullow Oil (USA) and Kosmos Energy (Great Britain) had to award 90% of contracts to local firms. In any case, these laws have yet to come into force.

But all of this has not dimmed the hopes of many Ghanaians for well-paid jobs. And it's why Haizel-Ferguson is schooling young men and women in oil industry skills at the old railway training center. "They are now qualified to apply for jobs. Bear in mind that the construction of oil industry infrastructure will be going on for another 20 years at least," he says. "But so far they've not been giving the work to Ghanaians."

If it is the largest, Haizel-Ferguson's "Oil and Gas Skills Training Workshop" is by no means the only oil industry training center in Ghana. On the streets of Sekondi-Takoradi you see hundreds of posters advertising such institutes. All of them promise that a certificate from their school guarantees a job in the industry.

The offer is seductive to many. It didn't take long to persuade Emmanuel Opoku-Agyeman, for example, who quit his job in the marketing department of a newspaper to pursue training. "It isn't just Ghana that's got oil, they're discovering new fields all over Africa," says the 31-year-old. "With a certificate, you can apply for jobs anywhere."

Opoku-Agyeman earned 500 Ghana Cedi -- about 200 euros -- a month at his old job. In Takoradi, the "oil schools' hand out documents stating that the minimum monthly salary for a job on an oil rig is the equivalent of 2,800 euros – 14 times what Opoku-Agyeman was making. With prospects like that, it didn't seem to him that what the Harvard Marine Petroleum Training Institute (HMPTI) was asking for a three-month course -- $3000 (2,394 euros) -- was excessive.

On the job market

The HMPTI's Australian investors have made over an old office building where experienced oil industry engineers give the courses. Proudly, Opoku-Agyeman takes me on a tour of the premises and tells me about the packed days of learning, the great equipment the facility offers, the competent teachers. As one of the first 200 graduates, he's now on the job market. He says he's only going to start getting nervous if he hasn't found something within the next few months -- and he shouldn't even be thinking that way, he says, there are no grounds for it, he has received excellent training "as you would expect from a Harvard school."

No, there is no connection to Harvard University in the United States, school director Ron McGrath concedes. "The important thing is that we are qualifying young Ghanaians to work in the oil sector," he says. The focus is not on the jobs requiring very high-level qualifications, but on occupations on the supplier side: "Future international regulations will require workers in the sector to have attended courses such as ours."

McGrath doesn't believe Ghanaian black gold expectations are too high, nor is the price charged by his institution. "Training in this field just is expensive, you need a lot of equipment and the teachers have to have top qualifications."

Along with the government, schools like the HMPTI urge people to be patient. Coming up for reelection in December, President John Atta Mills has promised that oil revenues will be used to build up the infrastructure of the entire nation. And all you need to do is travel through Ghana for a few days to see the huge expectations such promises unleash in a country that is still one of the world's poorest.

Five hours away from Sekondi-Takoradi is the village of Awukuguanyensi. Most of its population of 130 work as farmers. As you enter the village you pass a wooden sign that reads: "No electricity, no votes." It's a pretty empty threat, born of desperation -- one way or the other, the village is likely to have to wait a long time for power lines to be put in.

On the day of my visit, the children of Awukuguanyensi are being vaccinated against Pneumococci and rotavirus for free. In Ghana, these two fatal diseases account for 20% of child mortality. Thanks to the GAVI Alliance's mission to provide free vaccines to children in developing countries, 87% of the children in this area have been vaccinated -- although overall the situation in the country is far away indeed from one of the major UN Millennium Development Goals, which is to reduce, by 2015, child mortality by two-thirds from what it was in 1990.

In this village, many families have lost a child to illness brought on by the miserable living conditions. And those who do make it past childhood face bleak perspectives. Isaac Kwasi, 25, says all he ever wanted was to be a farmer, but you can't make a living from it. So many of his friends have moved to Sekondi-Takoradi. He sometimes gets text messages from them saying they still don't have full-time jobs. But that's not holding him back. Next year, he says, he's moving too -- to Takoradi, and its promise of black gold.

Read the original article in German.

Photo - Ben Sutherland

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Economy

European Debt? The First Question For Merkel's Successor

Across southern Europe, all eyes are on the German elections, as they hope a change of government might bring about reforms to the EU Stability Pact.

Angela Merkel at a campaign event of CDU party, Stralsund, Sep 2021

Tobias Kaiser, Virginia Kirst, Martina Meister


-Analysis-

BERLIN — Finance Minister Olaf Scholz (SPD) is the front-runner, according to recent polls, to become Germany's next chancellor. Little wonder then that he's attracting attention not just within the country, but from neighbors across Europe who are watching and listening to his every word.

That was certainly the case this past weekend in Brdo, Slovenia, where the minister met with his European counterparts. And of particular interest for those in attendance is where Scholz stands on the issue of debt-rule reform for the eurozone, a subject that is expected to be hotly debated among EU members in the coming months.

France, which holds its own elections early next year, has already made its position clear. "When it comes to the Stability and Growth Pact, we need new rules," said Bruno Le Maire, France's minister of the economy and finance, at the meeting in Slovenia. "We need simpler rules that take the economic reality into account. That is what France will be arguing for in the coming weeks."

The economic reality for eurozone countries is an average national debt of 100% of GDP. Only Luxemburg is currently meeting the two central requirements of the Maastricht Treaty: That national debt must be less than 60% of GDP and the deficit should be no more than 3%. For the moment, these rules have been set aside due to the coronavirus crisis, but next year national leaders must decide how to go forward and whether the rules should be reinstated in 2023.

Europe's north-south divide lives on

The debate looks set to be intense. Fiscally conservative countries, above all Austria and the Netherlands, are against relaxing the rules as they recently made very clear in a joint position paper on the subject. In contrast, southern European countries that are dealing with high levels of national debt believe that now is the moment to relax the rules.

Those governments are calling for countries to be given more freedom over their levels of national debt so that the economy, which is recovering remarkably quickly thanks to coronavirus spending and the European Central Bank's relaxation of its fiscal policy, can continue to grow.

Despite its clear stance on the issue, Paris hasn't yet gone on the offensive.

The rules must be "adapted to fit the new reality," said Spanish Finance Minister Nadia Calviño in Brdo. She says the eurozone needs "new rules that work." Her Belgian counterpart agreed. The national debts in both countries currently stand at over 100% of GDP. The same is true of France, Italy, Portugal, Greece and Cyprus.

Officials there will be keeping a close eye on the German elections — and the subsequent coalition negotiations. Along with France, Germany still sets the tone in the EU, and Berlin's stance on the brewing conflict will depend largely on what the coalition government looks like.

A key question is which party Germany's next finance minister comes from. In their election campaign, the Greens have called for the debt rules to be revised so that in the future they support rather than hinder public investment. The FDP, however, wants to reinstate the Maastricht Treaty rules exactly as they were and ensure they are more strictly enforced than before.

This demand is unlikely to gain traction at the EU level because too many countries would still be breaking the rules for years to come. There is already a consensus that they should be reformed; what is still at stake is how far these reforms should go.

Mario Draghi on stage in Bologna

Prime Minister Mario Draghi at an event in Bologna, Italy — Photo: Brancolini/ROPI/ZUMA

Time for Draghi to step up?

Despite its clear stance on the issue, Paris hasn't yet gone on the offensive. That having been said, starting in January, France will take over the presidency of the EU Council for a period that will coincide with its presidential election campaign. And it's likely that Macron's main rival, right-wing populist Marine Le Pen, will put the reforms front and center, especially since she has long argued against Germany and in favor of more freedom.

Rome is putting its faith in the negotiating skills of Prime Minister Mario Draghi, a former head of the European Central Bank. Draghi is a respected EU finance expert at the debating table and can be of great service to Italy precisely at a moment when Merkel's departure may see Germany represented by a politician with less experience at these kinds of drawn-out summits, where discussions go on long into the night.

The Stability and Growth pact may survive unscathed.

Regardless of how heated the debates turn out to be, the Stability and Growth Pact may well survive the conflict unscathed, as its symbolic value may make revising the agreement itself practically impossible. Instead, the aim will be to rewrite the rules that govern how the Pact should be interpreted: regulations, in other words, about how the deficit and national debt should be calculated.

One possible change would be to allow future borrowing for environmental investments to be discounted. France is not alone in calling for that. European Commissioner for Economy Paolo Gentiloni has also added his voice.

The European Commission is assuming that the debate may drag on for some time. The rules — set aside during the pandemic — are supposed to come into force again at the start of 2023.

The Commission is already preparing for the possibility that they could be reactivated without any reforms. They are investigating how the flexibility that has already been built into the debt laws could be used to ensure that a large swathe of eurozone countries don't automatically find themselves contravening them, representatives explained.

The Commission will present its recommendations for reforms, which will serve as a basis for the countries' negotiations, in December. By that point, the results of the German elections will be known, as well as possibly the coalition negotiations. And we might have a clearer idea of how intense the fight over Europe's debt rules could become — and whether the hopes of the southern countries could become reality.

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