Ghana Oil and Gas for Inclusive Growth (GOGIG)

Without careful oversight, newfound natural resources can trigger the so-called ‘resource curse’ where an abundance of mineral wealth actually leads to worse development outcomes. This is especially the case in countries such as Ghana, where the necessary policy and regulatory frameworks are not sufficiently developed at the commencement of production. The DFID-funded Ghana Oil and Gas for Inclusive Growth (GOGIG) programme was established to help fill these gaps by improving the capacity of government agencies involved in the management of Ghana’s nascent oil and gas sector, as well as engaging with a variety of accountability actors involved in improving public scrutiny of the sector.

Our Accra-based team is implementing the programme, working closely with a range of stakeholders including government ministries, civil society organisations and parliamentarians to address and alleviate the remaining gaps in legislation and regulation, as well as supporting efforts to maximise revenue capture from the sector and the overall management of those revenues. In the long run, by strengthening the capacity of the institutions responsible for managing the sector, the programme will help ensure that the potential benefits from extractive industries are maximised for improved human development outcomes across Ghana.

Challenges

The discovery of oil and gas reserves in Ghana in 2007 led to a surge of interest and investment in the sector, with commercial production commencing three years later. Although the revenue gained from natural resources can act as a valuable facilitator of development, the oil and gas sector is highly complex. The process of transforming natural resources in the ground into tangible benefits for citizens involves a long sequence of policy decisions, and a swathe of technically complex legislative, regulatory and administrative processes spanning across several years, increasing susceptibility to external shocks and political cycles. In addition to being technically difficult, the management of oil and gas revenues is highly political – where there are large rents up for grabs, there is more than the usual scope for corruption.

Ghana has moved from the discovery of oil to production in a very short space of time - and the institutional framework underpinning the governance of that process has only recently been passed by parliament. Ghana is still looking to further develop key pieces of legislation and policies that are central to the management of the sector and to building vital linkages for delivering inclusive growth, including with the energy sector. Delivering these policies and laws requires significant efforts to further develop the capability of key institutions.

Our approach

The challenge for GOGIG lies in being able to navigate the complex political environment to build the capacity and will of government institutions with a mandate for managing the sector. Drawing on our successful track-record in managing the Facility for Oil Sector Transparency and Reform in Nigeria (FOSTER) programme, we will adopt a flexible, adaptive, political economy driven approach, identifying and leveraging opportunities for reform as they arise.

The programme will combine strategic interventions with government counterparts with a responsive and opportunistic approach towards supporting accountability actors. GOGIG will focus much of its effort on supporting government to develop its policies, processes and systems for carrying out its mandate. This will be complemented through support to a variety of accountability actors – such as parliament, media and broader civil society – to encourage greater public scrutiny and debate on key issues of concern.

Within this context the GOGIG programme is designed to deliver:

• Enhanced policy and regulatory coherence across the oil and gas sector by clarifying policy and regulatory frameworks and building capacity within ministerial and regulatory agencies
• Improved systems of revenue capture to maximise the direct benefits from the oil and gas sector, by building technical capacity of the authorities involved in collecting royalty payments and tax revenues
• Improved revenue management to avoid adverse macroeconomic consequences associated with natural resources windfall gains
• Enhanced sector oversight by facilitating cooperation between government and accountability actors.

We are working closely with a range of stakeholders: supporting the Ministry of Petroleum and the Petroleum Commission in developing laws, policies and implementation strategies; the Ghana Revenue Authority to build capacity in oil and gas sector monitoring and auditing; and the Ministry of Finance and Bank of Ghana to strengthen petroleum sector revenue management, forecasting and investment. We are also working closely with civil society, the media and parliamentarians, strengthening accountability and increasing public awareness and engagement.

 

Outcomes

The GOGIG programme is ambitious in objectives and complex in delivery. The challenges that Ghana faces from oil and gas are essentially challenges of good governance. This programme will help to address the missing pieces in the legislative framework and strengthen the capacity of government agencies in exercising their mandate to manage the sector. By strengthening regulation and improving revenue collection and management, the programme will maximise the potential for more inclusive economic growth, ultimately promoting improved human development outcomes.

More broadly, by drawing on insights from similar approaches, this project will provide a body of evidence of what works and what doesn’t in different socio-political contexts, supporting the development of a scalable blueprint for sustainable reform in the extractives sector.