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Concentrate petroleum revenue on few key sectors of the economy – IMANI

OilThe Think Tank IMANI Centre for Policy and Education has suggested that the budgetary allocations from petroleum revenues should be concentrated within only a few priority socioeconomic areas to maximize impact.

The Think Tank believes that petroleum revenues are being used over too many sectors.

“The success stories of resource-endowed nations show that petroleum revenues were extremely focused on few, critical sectors of their economies”, the organisation said on Friday.

For the purpose of maximizing the impact of Ghana’s petroleum revenue, Section 21 of Ghana’s Petroleum Revenue Management Act 2011, specifies that in the absence of a long term national development strategy, the petroleum Annual Budget Funding Amount (ABFA) shall be allocated to a maximum of four socioeconomic areas by the minister, out of a list of 12.

According to IMANI, all 12 areas have benefited at a point in time from the ABFA.

The 12 areas are: agriculture and industry; education, science and technology; water and sanitation; telecoms and transport; health; housing delivery; environmental and natural resource protection; rural development; alternative energy; governance and state institutions; public safety and security; social welfare and protection of the disadvantaged.

The Think Tank believes that this wide-ranging utilization “has diluted the impact and effectiveness of ABFA funds” and Ghana could have nothing to show for it when the nation’s resources have been depleted.

The group noted for instance that the portion of the Annual Budget Funding Amount allocated to the education sector, was spent entirely on basic education in 2012, tertiary education in 2013, and largely on technical and vocational education in 2014, sending the signal that government was “merely spreading petroleum revenues across the various levels of education, without undertaking any rigorous needs assessment for each level.”

In that regard, IMANI said an assessment of which level of the education system requires the most attention, is imperative.

“If the country stands to reap any tangible socioeconomic development from petroleum revenues, then significant portions of the revenue must be allocated to pro-poor sectors – education, health and agriculture. These sectors are essential and must receive considerable funding for capital projects if the nation is to realise full benefits from the oil find.”

According to the Centre’s analysis, of over GH¢1.3 billion spent from 2011 to 2013, 41.2 per cent was spent on road infrastructure while only 1.49 per cent (GH¢19.6 million), was spent on education.

The health sector also had only 0.02 per cent and the agriculture sector had 14.41 per cent of over GH¢1.8 billion in disbursements from 2011 to 2014.

By Emmanuel Odonkor

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