Ghana - Poor Nation with Natural Resource Abundance - Research Paper Example

Ghana: A poor Nation with Natural Resource Abundance. Africa accounts for an approximated 50% of the total natural resources remaining on earth today. The continent still boasts of vast deposits of oil & gas, and minerals such as gold, bauxite, diamond and many others. This is an enviable position and in fact places the African continent at the forefront of the next economic and resource scramble. With major world powers being strapped of natural resources, an economic struggle seems to have sparked off with the developed nations fighting for the access of and control the vast resources held by African countries such as Ghana. For this reason Africa has poised to become the next frontier of economic growth, yet Ghana and many other African nations have continued to remain in poverty. Majority of the citizens are still in the poverty and a significant proportion has continued to enjoy chronic extreme poverty. In Ghana 28% of the population is living conditions of extreme poverty (Owusu and Mensah, 2013). In this paper therefore, I will be exploring some of the reasons behind Ghana state of poverty despite possessing vast natural resources. Ghana continues to remain poor yet the country is home to vast mineral deposits, arable agricultural land and many other natural resources that are vital to economic development. At a time when manufacturing industries in the Europe, china, Japan, America and beyond are sourcing raw materials almost entirely from the African continent, Ghana and many other nations in Africa have no viable industrial or manufacturing economy beyond agro processing and production of raw materials. This situation can be looked at from different perspectives. Firstly, some have argued that Ghana and the entire Africa lacks knowledge on what can be done with the vast wealth in terms of oil, minerals and gas deposits. It can as well be argued that Ghana does not place any economic value at all to the rich mineral resources. Yet it can also be argued that that Africans are traditionally non-capital oriented and as such they derive satisfaction from just the surface value rather than what lies beneath their natural resource wealth. The most important issue here is that Africa and Ghana in particular is a net exporter of raw materials and this translates into transforming economic benefit for its citizens as would be if it were converting these raw materials into finished products for export. The biggest problem facing Ghana with its rich natural resource base revolves around the capability of converting the resources on a mass scale into finished products to the benefit of citizens. There is also the element of what the resources how the resources should be utilised so that people can enjoy the benefits. The nation needs to convert its natural resources into consumable products that can be used by its citizens and the surplus exported to earn the country money that can be pumped into more economic development projects so as not to rely on a tax economy that further deprives people. The country also needs to diversify its economy; being endowed with different minerals an natural resources it should put them to the production of different finished products that are consumed by its people and enable it earn from different sources. Industrialization for instance, other than producing the goods and services that are consumed and exported would also create jobs for many of the countries citizens and significantly reduce poverty levels. Ghana lacks this capacity and for this reason has for a long time remained to be a poor nation despite its resources wealth (Efavi and Kuwornu, 2013). With many natural resources such as gas & oil, timber and mineral resources, Ghana holds answers to some questions the modern global economy is faced with when it comes to resources. However, the mere position of resources does not directly translate into a rich and better country or its citizens for that matter. The capacity of converting natural resources into products on an industrial scale and ensuring people have access to the products is what can bring about economic development and ultimately wealth. Resources endowment as is the case with Ghana means great potential or platform for development both economic and socially but then just the mere endowment can end poverty. The resources must be put to relevant use and converted into essential products that are beneficial to the citizens so as to spur economic performance that can alleviate poverty. This calls for expertise, knowledge and investment not only on the part of government but also the citizens in finding the most beneficial way to utilize natural resources and bring about tangible socio-economic benefit that translates into poverty reduction. The unfortunate reality is that Ghana lacks such talents and capabilities. The country falls short of the human expertise, knowledge and the necessary technological capacities as well as infrastructural abilities necessary for the tapping its natural resources richness for economic benefit of its citizens. Finished and semi finished beneficial end products come from natural resources through a process of conversion. The process of converting its resources into products requires that a country has a great technical know-how in terms of ways to do it, necessary technological resources and knowledge as well as engineering capacity and expertise so as effectively harness the benefits of the process. There must be adequate and relevant infrastructural resources in place to enable the work of production on a scale that is economically sound. Such conditions are not present in Ghana and as a result the country has for a very long time remained as a raw material exporter with little economic benefits for its people in terms of alleviating the poverty levels. It is true the country is home to some of the most sought after natural resources such as Gold and Diamond but an important element of economic production is not available in sufficient supply to guarantee viable economic utilisation of the resources. The missing element in Ghana and the entire continent is knowledge. It can be very easy for citizens and even the leadership boast of the natural resource richness but very few of them are in a position to tell resources can be converted into. Not many Ghanaians for instance are aware of the fact that the gold mineral is very useful in the industries of medicine, computing, and dental technology as well as electronics and many others. Furthermore, Ghana like the majority rest of Africa is an agrarian economy and as such the industry that can utilise its natural resources to the economic benefit of people are not present. What this means is that despite the fact gold is mostly produced by Africa today, it earns the continent very little since it is exported in the raw natural state and the finished jewellery, medical products and others which can earn foreign exchange in billions while creating jobs in millions. Ghana discovered oil recently and this is worth celebrating as it means more income and job creation once commercial production is commenced. But it should be noted that even the technology and expert knowledge that discovered this oil was not Ghana’s own. Even as exploration continues and probably commercial production of the product expected to follow, the question still remains as to whether the country has the prerequisite requirements or will also end up export oil in the crude form to be finished from elsewhere. The challenge will still remain to be that of lack of knowhow, infrastructure and technical human resources expertise necessary for the utilisation of the resource in a manner that is commercially viable and ultimately beneficial to the citizens. For the oil discovered in Ghana as well as the countries many other natural resources to help the country out of its state of poverty, there will need to be a concerted effort at converting them into finished or semi-finished products that are then utilised locally with the surplus being exported to earn the country some meaningful income. Ghana will therefore need to invest in development of its technical human capital, increase its knowledge base on utilisation of natural resources for economic, avail the technology necessary for the process take momentum and put infrastructural resources in place. This may not take place any soon and therefore the country will continue to benefit the list from its own resources with poverty levels remaining unalleviated (Stiglitz, 2012). Ghana and Africa at large suffers a major setback in the form of not being able to know what to do with their vast resources and the end result is there resources are exported as pure raw materials for industrial use out of Africa. This particular setback which can be blamed squarely on lack of knowledge denies the country its economic development potential through lost revenue and not being able to create jobs for citizens. Worse even is the fact that the same raw materials exported to Europe, America and the rest of the world have to go back to Ghana in the form of imports but this time round the country’s citizens have to pay more heavily. The net impact of these Ghana is importing products made from the raw materials it export cheaply for lack of capacity to convert them into useful products. Essential products such as medicine, electrical appliances, some food stuffs and many others are imported yet are end products of the same raw materials the country exports. Not many Ghanaians are in fact aware that Coltan is mineral present in all mobile phones and many other electronic gadgets that the use. Knowledge deficit is largely to be blamed therefore for the continued poverty despite the being enormously endowed with mineral resources. The issue of expertise and relevant technologies has been another significant hindrance to Ghana’s development socially and economically. The lack of these two has rendered the country unable to puts resources into use that brings benefits is people. Most of the valuable natural resources for instance will mostly be present in places that are obscure and therefore high calibre and sophisticated work of engineering to extract. Some mineral deposits are buried deeply in the earth; others are in mountainous regions and even are on the ocean floor. Getting to access and them thus calls for technological resources, infrastructure, and technical know-how and more importantly for developing countries such as Ghana financial resources. It is a sad reality that Ghana as a nation lacks these important factors of production and has to depend on foreign explorers who in the end carry the raw materials away to other continent for industrial processing. The implications of the lacking technology, capital, knowledge and expertise are far reaching and unfortunately working in the undoing of the country’s socio-economic development. It for their absence that Ghana’s traded is dominated by exportation of raw materials. The same holds the answer as to why the country is faced with perennial poverty and hunger even with the natural resources abundance that it has. Absence of necessary technologies, technical knowledge and infrastructure at the national level in Ghana explains why its oil & gas sector dominated by players such as Texaco, shell, BP, Total, ExxonMobil and many others all of which are foreign companies. When such foreign owned firms are controlling the nations important industries then the benefit to local citizens is minimal as technology is foreign, expert workers are foreign, the infrastructures are foreign and in the end profits are expatriated. The situation is the same with exploration of minerals and other strategic natural resources; they are similarly dominated by companies that are not local for the single reason that these companies come with relevant technology, knowledge and the technical human expertise that is needed. Some of the largest world economies today such as Japan do not own natural resources but have been able expand and eliminate poverty due to their ability to process resources imported from elsewhere into useful finished goods and export the same at better prices. The situation is different in Ghana and most of the African continent; here raw materials are exported cheaply and bought back after industrial conversion at exorbitant prices. The net effect is that Ghanaians miss on what is rightfully theirs because of lack of knowledge and technology. As such therefore Ghana may be richly endowed with natural resources of economic and industrial importance but will remain poor for as long as the government will not in place measures the enable inward knowledge and technology transfer as well as infrastructure that enable the large scale industrial extraction and conversion of their raw materials into useful products. The situation will not change unless the government in Ghana equips its human capital with the infrastructure for research and knowledge development to enable relevant utilization of her natural resources. The government in Ghana will not have assisted its citizens it does not put its finances on the right projects and create an enabling environment for the country to industrialize to the level of being capable of converting its natural resources into end products or at least semi-finished products of economic significance. In conclusion therefore Ghana as a nation and Africa as a continent is rich in natural resources but must put these resources into useful use in order to alleviate her pandemic poverty. Very many Ghanaians are living below the poverty line and are even hunger stricken in a nation that has the resources necessary to feeds her people without depending on the support of other nations. The main reason is that the country does not have the relevant technological resources, human technical expertise, know-how and infrastructure that enable large industrial kick off. The country is also poor and therefore not able commit the huge financial capital required for research and industrial development. The vast natural resources are export in the raw form earning economically nonviable income. They are converted into useful products elsewhere and exported back at prices that are almost entirely untenable. The end result is that Ghana has continued remain in the league of the world’s poor nations amid abundance of natural resources. The Ghanaian government must therefore rethink its trade strategy and invest more in the development of knowledge, human expertise, industrial technology and infrastructure to enable full utilization of its natural resources and ultimately alleviation of poverty (Kaufmann, 2012). Works Cited. 1. Bhattacharyya, Sambit; Collier, Paul. “Public Capital in Resource Rich Economies: Is There a Curse?” Oxford Economic Papers, 2014, 1-24. doi: 10.1093/oep/gps073 2. Daniel Kaufmann. “Poverty in the Midst of Aundance: Governace Matters for Overcoming the resource Curse.” Brookings, 2012. Avaiable at: http://www.brookings.edu/research/opinions/2012/09/13-poverty-governance-kaufmann 3. George Owusu and Francis Mensah. “Non-Monetary Poverty in Ghana.” Ghana Statistical Services, 2013. Available at: www.statsghana.gov.gh/.../Non-Monetary%20Poverty%20in%20Ghana 4. Heizel-Ferguson E., “Managing Ghana’s Oil Revenue and Expectations,” 2009 . Available at: http://news.peacefmonline.com/features/200911/31278.php 5. Johnson K. Efavi and John K. M. Kuwornu. “Harnessing Natural Resource Wealth for Development: The Case of Ghana.” Public Policy and Administration Research, 2013. Vol 3(3). Available at: www.iiste.org/Journals/index.php/PPAR/article/download/4917/5000 6. Joseph Stiglitz. “Africa’s Natural Resources can be a Blessing, not an Economic Curse.” The Gordian, 2012. Available at: http://www.theguardian.com/business/economics-blog/2012/aug/06/africa-natural-resources-economic-curse Read More