- Ghana’s oil and gas sector scores a satisfactory 67 of 100 points in the global Resource Governance Index (RGI).
- Index results confirm challenges with national budgeting; rules specific to petroleum revenues do not provide for adequate safeguards against budget deficits and debt accumulation
- The Ghanaian Stabilization Fund is the index’s second-best-governed sovereign wealth fund
- Ghana’s state-owned oil company is well governed but should aim even higher to achieve global best practices
- Index shows significant gap in governance quality between Ghana’s oil and gas and mineral sectors
- Ghana’s mining sector scores 56 of 100 points and ranks 24th among 89 assessments in the index
ACCRA, 28 June 2017—A global index assessing 81 countries’ oversight of natural resources has found that Ghana performs satisfactorily in many essentials of resource governance. Ghana is one of eight countries in the index for which both mining and oil and gas sectors were assessed, and researchers reported significant variations in governance between the two sectors.
Ghana’s oil and gas sector scores a satisfactory 67 of 100 points in the 2017 Resource Governance Index, making it the best performing extractives sector in sub-Saharan Africa. In oil and gas, Ghana performs consistently across all three components of resource governance—value realization, revenue management and enabling environment. However, within the revenue management subcomponent, its performance varies considerably, from good sovereign wealth fund governance to poor national budgeting.
Adams Fusheini, NRGI Africa parliamentary capacity development officer, said: “Resource governance in Ghana is improving, and the media and civil society are well positioned to hold governments and companies to account here. The country has performed well as an oil producer, but macroeconomic concerns threaten the chances of benefits reaching citizens.”
The Ghana Stabilization Fund is the index’s second-best governed, behind only Colombia’s Savings and Stabilization Fund. Ghana’s fund was found to be better governed than many with much greater assets, including those of many oil-rich states in the Persian Gulf. Ghana’s good performance is a result of clearly defined rules for deposits, withdrawals and investments, audit and parliamentary oversight mechanisms and adherence to these requirements.
Despite these positive findings, governance of revenue management in Ghana falls behind that of some other states with emerging hydrocarbons sectors. Uganda, for instance scores more than 10 points higher than Ghana in the national budgeting category.
The country’s mining sector performs better than equivalents in many of its African neighbours. However, it is older and longer established than Ghana’s hydrocarbons industry. The latter has evolved during an era of more stringent governance and of more modern institutional structures. This has led to an 11-point performance gap between the two sectors’ governance scores. Indeed, Ghana’s gold mining company, Sankofa Prestea, scores far below its petroleum sector peer and parent company, Ghana National Petroleum Corporation (GNPC).
Ghana performs well in taxation in both sectors. Disclosures are better and more timely for oil and gas as compared to mining, though contracts with extractive companies are not disclosed.
“It’s good news that Ghana is performing better than many other African countries – particularly in terms of the governance of its sovereign wealth fund,” said Adams. “But there should be no complacency in Ghana – there is still plenty of room for improvement to bring the nation up to international best standards.”
Full results from the Resource Governance Index globally are available at www.resourcegovernanceindex.org
Note to editors:
The Resource Governance Index is the sum total of 89 sector-specific assessments in 81 countries (in eight countries NRGI assessed both oil and gas and mining sectors), formulated using a framework of 149 critical questions answered by 150 researchers, drawing upon almost 10,000 supporting documents.
For each assessment, NRGI has calculated the composite score using the scores of three index components. Two of the components comprise new research based on expert answers to the questionnaire, and directly measure governance of countries’ extractive resources.
The first component—value realization—covers the governance of allocating extraction rights, exploration, production, environmental protection, revenue collection and state-owned enterprises. The second—revenue management—covers national budgeting, subnational resource revenue sharing and sovereign wealth funds. The index’s third component assesses a country’s enabling environment. This componentdraws on pre-existing research to measure the broader governance context.
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