By: Bernard Kwame Tomo
It is an undeniable fact that the presence of oil wealth in developing countries presents them with a huge paradox of both positivity and negativity. On the one hand, the discovery of oil and gas creates an atmosphere, strong, efficient and effective enough to eradicate poverty and build stronger economies. On the other hand, the presence of oil and gas only tend to make an economy worse than before; shoddier of all, create a very uncomfortable human environment characterised by civil wars.
Such has been the experience of countries like the former Republic of Sudan, Angola and Nigeria. Nigeria’s oil rich Niger Delta, for instance, has been embroiled in crises between some militant elements and government forces on several occasions. Recent reports1 appear to suggest that the aggrieved militant groups have not only vigorously fought the government forces, but also taken foreign oil workers hostage, sabotaged oil installation and staged pipeline bombing attacks. Some of these groups, which include Movement for the Emancipation of the people of the Niger Delta (MEND) have carried out severe, destabilizing attacks on the oil industry with view to generating fear within the oil community, significantly affecting supplies and forcing the government to respond to the socio-economic pressures they are confronted with. After witnessing the failure of most of their registered grievances, the group in January, 2006 kidnapped oil workers and demanded that Shell Petroleum Development Company of Nigeria (SPDC) pays $1.5 billion to local communities within the region, resulting in the killing of at least 17 people and reducing operations by 106,000 bpd .
A major cause of almost all the crises in the Niger Delta region points towards the inability of the state to meet citizens’ expectation. Although the production of oil in Ghana is just about six years old, could the country pride itself with meeting such expectations which could gradually aggravate tensions in its western region as seen in the Niger Delta case? Historically3, the Niger Delta, just like Ghana’s current Western Region, was one peaceful place to live. The place was characterised by very strong social and cultural tides, with agriculture being the backbone of their economy. From this perspective, both past and recent development in relation to crises could, potentially, be related to oil find in the region. What went wrong? Which signs show that Ghana is seemingly heading same direction?
One common characteristic found in the Niger Delta and Ghana’s Western Region is the fact that there seem to be mismanaged perception about the potentials of oil benefits to indigenes in these regions. In both instances, people appear uniformed informed about the realities a country is faced with after discovering oil. They are rather made to believe that the discovery of oil could be the beginning of an end to their economic woes. In Ghana, although the government has denied making similar promises , there is some evidence to suggest that people’s expectations have been raised by some political figures in their attempt to deliver their campaign messages . However, such expectations if not properly managed could potentially trigger violence because the reality may not have been truthfully communicated. For Ghana to avoid similar situations in the Niger Delta in which people vent their frustrations and grievances through violence means, the government must be more transparent on the budgetary allocations of oil revenues and with all activities that are related to the country’s oil and gas sector.
Another major factor, seemingly ignored in the Ghanaian context, which is a cause of these tensions is ineffective Corporate Social Responsibility (CSR) by oil and gas companies in the Niger Delta Region. Whether philanthropy or corporate strategy, most companies appear to engage in CSR for the sole purpose of making profit. The challenge however, points toward the effectiveness of their CSR strategies, in respect of the benefits inhabitants of oil rich regions derive. SPDC and other oil companies in the Niger Delta region, in the past half of a century, have embarked on strategies which are more ‘philanthropic’ than pure CSR – some of which include agricultural projects, schools, scholarship awards, hospitals and roads. However, these CSR approaches are fraught with several challenges rendering the resulting interventions ineffective in the long term, for the following reasons.
First, a qualitative report6 on CSR in the Niger Delta region suggests that the CSR approaches adopted by SPDC and other oil companies were seemingly predicated on fulfilling only the most minimal ethical obligations and premised on achieving business objectives. This approach to CSR by most businesses is underlined by the assumption that business goals are incompatible with the development
aspirations of local communities. From this perspective, CSR practices in the region, appear not to be community-focused and/or take account of what the people really needed. Thus, despite the millions of dollars invested in community related projects, the communities and other observers perceived these projects as some cosmetic attempt for the companies to protect their reputation. This usually renders the sustainability of such projects questionable.
Second, lack of coordination in the strategic CSR projects in the Niger Delta resulted in unbalanced outcomes that had very minimal impact on real poverty alleviation and the socio-economic development of inhabitants in the region. Oil companies failed to help address real community expectations and rather adopted a ‘slavery strategy’ of imposing projects on community members in the name of building capacity. Ghana’s case has not been much different. Some oil companies in Ghana (including the country’s own GNPC) spend not less than £2 million yearly on offering scholarships for students to study abroad. The questions this raises are numerous; are these real community expectations? Can we not build such capacities in Ghanaian universities?
In relation to strategic community development, how relevant are some of these projects to communities which are directly affected by oil production (i.e. communities whose livelihoods are currently at stake because of oil production)? A collective analysis of some of these issues gradually compounded the displeasure registered by the people of the Niger Delta. To avoid this in Ghana, CSR projects by oil companies are to be designed to address urgent environmental, economic and social needs and not imposed on local communities, especially when it has no direct implications for community development.
Apart from these, Nigeria’s experience on perceived unfair rules governing revenues from oil and gas exploration reveals that significant conflict and tensions could arise. Inappropriate institutional design for oil revenue distribution could also be a major source of conflict and tension, one which could potentially extend between oil producing communities and national government. Nine out of the thirty-six states in Nigeria produce oil and gas, contributing to over 35% of the country’s GDP, per OPEC’s statistics7. Despite setting aside 13% of oil revenues for the development of oil-producing states, as stipulated by their constitution, these states have decried
the derivation formula as iniquitous and unfair, considering the fact that their land sustains the country’s economy.
The current case in Ghana has been seemingly closer to this. Ghana’s western region, despite contributing to more than 50% of the country’s GDP is somehow experiencing this unfair treatment. Worse is the fact that almost all the headquarters of the oil companies are located in Accra. Even ‘Cocoa Clinic’ is built in Accra where a single cocoa tree cannot be found. At least Takoradi, with the discovery of oil and gas could have somehow seen a facelift. What is currently disturbing is the fact that people’s livelihoods are at stake, confirming the Akan proverb ’’if you don’t get anything for your in-law, you don’t also call him a thief’’.
Although some government officials have denied8 the existence of the Cape Militia (a suspected young militant group believed to have existed in Cape Three Points), Ghana still needs to be very precautious and take the early warning signals very serious. A lot of lessons, as mentioned earlier could be derived from the Nigerian case before it gets too late.