Executive Director of the African Centre for Energy Policy (ACEP), Benjamin Boakye, has averred the energy and extractive sectors are becoming a “graveyard” for investors.
According to Mr Boakye, the lack of transparency in the sectors coupled with bad decisions made by government is affecting investors’ interest in the two sectors.
Mr Boakye’s assertion is premised on declining production from the extractive sector – gold and oil – as well as the inefficiencies and debts accumulated in the energy sector.
Ghana’s gold production declined by 29.9% to slightly over 2.8m ounces last year – 2021 – from 4.02m ounces in 2020.
Prior to 2020, gold production by Ghana dropped from 4.57m ounces in 2019.
According to the Public Interest and Accountability Committee (PIAC), Ghana’s crude oil production declined by 17.7 per cent from 66.93 million barrels (bbls) in 2020 to 55.06 million bbls in 2021.
The lower production volume in 2021 was due to reduced production in all the three producing fields.
Decreased production from the extractive sector can be attributed to decreased investments in the sector.
For the energy sector, debts accumulated in the sector for this year, according to Mr Boakye, stands at $1.3bn and is projected to possibly hit $2.5bn by the end of the year.
“Ghana is gradually becoming a graveyard as investors are no longer interested in the country. Production from the extractive sector has been declining, no serious efforts are being made to increase production.
“And moreover, decisions by government pertaining to the sector have been poor,” stated Mr Boakye speaking at a stakeholder engagement on government‘s compliance to the Public Financial Management Laws.
The stakeholder engagement themed “Review and Compliance of the PFM Laws in Ghana – Digging Ghana from the Trenches”, was held by the Natural Resource Governance Institute (NRGI) and PFM Tax Africa, on Wednesday, August 31, 2022.
Speaking further at the event, the Executive Director of ACEP stated that, given the fact that Ghana is resource-dependent, the country can optimize exports from the extractive sector to earn more foreign exchange and improve its balance of payments position.
With increased earnings from exports from the extractive sector, the country can have enough foreign exchange to pay for its interests on loans and debts.
The stakeholder engagement held by NRGI and PFM Tax Africa sought to;
I. Review the current framing of the PFM regime and its constraints (content and processes)
II. Evaluate compliance and adherence to the regime; the role of state and non-state actors in pursuit of an economic turn-around
III. Identify areas of reform with the goal of improving ease of implementation and enhance compliance