Ghana: Oil-rich City Sparks Entrepreneurs and Debate

Commodity booms can seem like the answer to a poor nation’s prayers, a way to fulfil all their development dreams and goals. The reality, however, is far more complex. More often than not, the discovery of resources sparks a mad scramble for profits and patronage, as politicians and politically connected elites carve out their slice of the new resource boom before anyone else.

The twin cities of Sekondi-Takoradi (http://en.wikipedia.org/wiki/Sekondi-Takoradi) in the Western Region of Ghana are now experiencing an oil boom. Ghana’s oil production went online in December 2010 and the government is hoping it will double the country’s growth rate.

Large supplies of oil were found off the coast in 2007, transforming Takoradi from a sleepy, rundown port city into the hub for the oil boom.

Local man Peter Abitty told the BBC he was renting out an eight-bedroom house for US $5,000 a month. The house overlooks the sea and comes with banana and coconut trees.

“Tenants that come here can take the coconuts for free! We don’t charge anything,” Abitty said.

He put the strong interest in the house down to a simple fact: “It’s out there: oil, oil, oil.”

People’s hopes are being raised in Ghana’s case because it has built a reputation as a better-governed country than other African petro states like Nigeria and Angola.

But others argue that price increases caused by the boom are destroying local businesses. A report on the Ghana Oil news website found popular local businesses suffering. One example it gave was the Unicorn Internet Café, an employer of local youth, which shut down in 2010 because of high rents.

It found businesses have shut down in the following sectors: timber, sawmilling, super markets, mobile phone shops, boutiques and trading shops. But it also found many new businesses opening up, including banks, insurance companies and hotels.

The challenge facing Ghana is to ensure oil brings a long-term change to a higher value business environment and economy, rather than just an unequal and temporary boom.

Another challenge is to connect the many youth leaving education in the city with the jobs and opportunities being created by the oil industry. The twin cities are a regional educational centre with a lot of technical colleges and secondary schools.

To counter these concerns, a Regional Coordinating Council is promising to place the growth of small and medium enterprises at the centre of regional development.

The dreams and promises for Takoradi are very ambitious. “In five years time, I see Takoradi becoming one of the modern cities of the world,”  Alfred Fafali Adagbedu, the owner of Seaweld Engineering (www.seaweldghana.com), a new local company set up to service the oil sector, told the BBC.

“I can imagine skyscrapers, six-lane highways and malls.”

“The transport industry is going to improve, because workers on the rig are going to need to be transported. Agriculture is going to see a boom because all those people on the rig will need to be fed.

“Even market women are going to see more business, because a lot of workers are going to have very fat paychecks. Everyone in this city is going to gain in business.”

How far Takoradi has to travel to come close to meeting these dreams and expectations can be seen in its current state. The railway station has a train with laundry hanging from it because it hasn’t moved in years, reported the BBC. People are living in the sleeping car of the train.

But the typical signs of a boom are all visible: traffic jams, booked hotels, rising rents and prices, and it is already hurting people on fixed salaries.

Local authorities have plans to demolish rundown parts of the city and rebuild with modern office environments for the new businesses resulting from the oil economy.

An estimated US $1 billion a year in revenue will go to the Ghanaian government and local authorities want 10 percent of this to be ring-fenced for regional development.

“Many resources are coming from the western region. From years back, gold is here, timber is here, diamonds are here,” said Nana Kofi Abuna V, one of the few female chiefs in the area.

“But when they share the cake up there, they leave out the western region. This time, if there is oil and gas in the region we should benefit more than everybody else.”

But Adagbedu at Seaweld Ghana believes Ghana will see real improvements.

“I’m very sure we will avoid the mistakes,” he said. “Ghana is a democracy, everyone is watching, so there is going to be a lot of improvement here.”

And to help in keeping these promises, the BBC will continue to return to Sekondi-Takoradi to track its changes and see how things improve.

By David South, Development Challenges, South-South Solutions

Published: September 2011

Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP's South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South's innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator.  

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