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Saving Ghana from Its Oil: The Case for Direct Cash Distribution

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  • Todd Moss
  • Lauren Young

Abstract

Ghana can be considered a relative success story in Africa. We cite six variables—peace and stability, democracy and governance, control of corruption, macroeconomic management, poverty reduction, and signs of an emerging social contract—to suggest the country’s admirable political and economic progress. The expected arrival of sizeable oil revenues beginning in 2011–13, however, threatens to undermine that progress. In fact, numerous studies have linked natural resources to negative outcomes such as conflict, authoritarianism, high corruption, economic instability, increased poverty, and the destruction of the social contract. The oil curse thus threatens the very outcomes that we consider signs of Ghana’s success. This paper draws lessons from the experiences of Norway, Botswana, Alaska, Chad, and Nigeria to consider Ghana’s policy options. One common characteristic of the successful models appears to be their ability to encourage an influential constituency with an interest in responsible resource management and the means to hold government accountable. The Alaska model in particular, which was designed explicitly to manufacture citizen oversight and contain oil-induced patronage, seems relevant to Ghana’s current predicament. We propose a modified version of Alaska’s dividend program. Direct cash distribution of oil revenues to citizens is a potentially powerful approach to protect and accelerate Ghana’s political and economic gains, and a way to strengthen the country’s social contract. We show why Ghana is an ideal country to take advantage of this option, and why the timing is fortuitous. We conclude by confronting some of the common objections to this approach and suggest that new technology such as biometric ID cards or private mobile phone networks could be utilized to implement the scheme.

Suggested Citation

  • Todd Moss & Lauren Young, 2009. "Saving Ghana from Its Oil: The Case for Direct Cash Distribution," Working Papers 186, Center for Global Development.
  • Handle: RePEc:cgd:wpaper:186
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    File URL: http://www.cgdev.org/content/publications/detail/1422981
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    Cited by:

    1. World Bank, 2009. "Economy-Wide Impact of Oil Discovery in Ghana," World Bank Other Operational Studies 18903, The World Bank.
    2. Rentschler, Jun, 2016. "Incidence and impact: The regional variation of poverty effects due to fossil fuel subsidy reform," Energy Policy, Elsevier, vol. 96(C), pages 491-503.
    3. Ayelazuno, Jasper, 2014. "Oil wealth and the well-being of the subaltern classes in Sub-Saharan Africa: A critical analysis of the resource curse in Ghana," Resources Policy, Elsevier, vol. 40(C), pages 66-73.
    4. repec:eee:jrpoli:v:52:y:2017:i:c:p:122-133 is not listed on IDEAS
    5. repec:oup:renvpo:v:11:y:2017:i:1:p:138-155. is not listed on IDEAS
    6. World Bank, 2015. "From Gas to Cash," World Bank Other Operational Studies 22803, The World Bank.
    7. World Bank, 2011. "Tackling Poverty in Northern Ghana," World Bank Other Operational Studies 2755, The World Bank.
    8. UNDP Regional Bureau for Africa, "undated". "Resource Dependence and Inequality in Africa: Impacts, consequences and potential solutions," UNDP Africa Policy Notes 2017-07, United Nations Development Programme, Regional Bureau for Africa.

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    Keywords

    Ghana; resource curse; oil; resource management; direct cash distribution;

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