Saturday, Jan 28


Fossil fuel-dependent economies across the world face a likely GDP loss – decline in government revenue and export receipts, from the transition to a lower-carbon economy over the coming decades. For those most-exposed to this imminent threat and do not adequately prepare for it, climate change stranded-asset risk, will be a catastrophic scenario.

Antonio Guterres, Secretary-General of the United Nations, in a prepared remarks of the findings of a new report released by the UN’s Intergovernmental Panel on Climate Change in August 2021, has warned that the high rise of global temperatures by 1.5 degrees Celsius over the next two decades is a “code red for humanity”. This sounds a death knell for coal and fossil fuels before they destroy our planet, he emphasized. Etched within this context, it appears that the transition from fossil fuels may even be faster than imagined. Yet, the extent and speed of the decline in demand for fossil fuels remain uncertain.

Where does Ghana fit in this matrix, given the global clarion call for the eventual retirement of hydrocarbon resources? Ghana, like other hydrocarbon-dependent African economies face a trilemma of issues: transition towards energy security, moving towards a low carbon emissions pathway and charting a growth and transformation plan that will have to lift millions out of poverty. 

Already, some experts are of the view that Ghana’s mineral resources that have been exploited since the colonial era, including its decade-long oil find, have not yielded maximum benefits; for the reason that the real value of resource wealth, has not brought prosperity to wider populations of the economy. 


As the world moves towards a fossil fuel phase-out, hydrocarbon resources– such as oil and natural gas and coal, are likely to become stranded. Statistics show that by limiting global warming to 1.5 or 2 degrees Celsius requires one-third of the world’s oil reserves, half of the world’s gas reserves and over 80 percent of the global coal reserves to be stranded.

For Ghana, a latecomer to the fossil fuel boom, this poses a serious risk in an era where climate change mitigation lies at the heart of a historic global climate activism. This call to action does not only have an economic dimension but also a political one that needs to be looked at holistically. In a much broader context, sub-Saharan Africa has about 115.34 billion barrels of oil and 21.05 trillion cubic meters of gas of undiscovered, but technically recoverable, energy resources.

These provide a real test regarding economies’ commitment to climate change and at the same time a hazard, inching towards stranding of such huge oil reserves. Currently, Ghana has witnessed a land mark exit from its upstream petroleum sector by oil giant- Exxon Mobil.

In fact, the tragedy in this unexpected and abrupt pull out by Exxon Mobil shades the country’s present ability to produce more than 200,000 barrels per day of oil – even to talk about reaching the 200,000 b/d mark, has been a hard-nut to crack. Meanwhile, the country’s yet-to-realize gas reserves in the three fields combined (Jubilee, TEN, Sankofa) are anticipated to be momentous, making up trillions of standard cubic feet. Currently, the country’s production capacity lies on two oil majors, Italy’s ENI and Tullow Oil plc.


Given this background, the risks and opportunities that the trending energy transition poses to Ghana’s economy must be considered from the impact on both the downstream and upstream sectors. Ghana is a heavy petroleum products-import dependent country and essentially, the country’s downstream petroleum sector thrives on imports of petroleum products from Europe.

With an already struggling refinery (Tema Oil Refinery), as the transition away from hydrocarbons gain grounds in Europe and leads to a drastic and rapid phasing out of oil production and refining, Ghana will face big hurdles in serving its downstream sector with petroleum products which may lead to dire consequences. To this effect, Dr. Yussif Sulemana, an Energy Analyst and a Senior Oil Production Operations Specialist with Petroleum Development Oman argues that “in the downstream, Ghana is heavily dependent on importation from Europe.

Assuming in Europe, the energy transition should take centre stage to the point that all their refineries are closed down, where are we going to get the products. And yet, we don’t have a running refinery locally? “…of course, there is gradual close down of refineries for lack of patronage because a lot of Electric Vehicles are coming to the stream. So, if that happens, the danger it will pose is that, we might not be able to get importation of finished goods and that is a dire energy security issue that we have.”

As much as this risk exists, there is an opportunity that can be utilized. That lies in the fact that the country’s refinery is currently begging for investment to be revitalized, he indicated. Ghana’s consumption of finished petroleum products ranges from 90,000 to 100,000 barrels per day. With this quantum of consumption on a daily basis and no robust and running local refinery(s), this is going to be a huge energy security issue for the country— cascading into a potential high prices due to demand and supply dynamics, he stressed. Another clear-cut opportunity will be to build and expand on the existing petroleum products storage capacity in the country.


“If renewables and Environment, Social Governance-ESG initiatives take the centre stage and investments into the world of hydrocarbons reduce, players will not find it easy to invest in the upstream sector. Because, it will simply not be economical. And so, when that does happen, the country will have a lot of challenges.” Investments in the upstream sector is driven by oil prices as much as the ongoing global energy transition.

The call for a decline in hydrocarbon investments, in addition to the oil price collapse in 2020— have cumulatively led to the exit of quite a number of players in the industry worldwide. Meanwhile, the bounce back in oil prices to as high as US$70 presents limitless opportunities for hydrocarbons, and lifts up some sense of hope for economies to act in a timely fashion.

According to the energy expert, “the transition is not going to be the same for every country. Every country at a point in time will depend on where they have strategic advantage, and so mostly, the speed and the momentum is high in Europe and America now. But in the Asian community (China, Japan), the Arab world and Africa, a lot is still dependent on the world of hydrocarbon. “So, for our part of the continent and Ghana, we need to be strategic to make sure that we are able to link our upstream and downstream sectors. This is so that when oil prices are collapsing or [trend on the high-side], we are not going to be affected.” 


In its Mid-year budget review, the Minister of Finance, Ken Ofori-Atta proposed that the Petroleum Revenue Management Act (PRMA) be amended to allow Ghana National Petroleum Corporation (GNPC) to enter into reserve-based lending transactions to raise funds so its subsidiary Explorco can acquire assets for hydrocarbon exploration. Following this, there are plans in motion, although wrapped in controversies, for GNPC to acquire majority stake in AGM Petroleum Ghana Ltd and Aker Energy Ghana.

These assets-purchase anticipated involve 70% stake of the South Deep Water Tano field operated by AGM Petroleum Ghana Ltd and 37% stake in the Deep Water Tano/Cape Three Points asset operated by Aker Energy. With a good turn of events, Dr Sulemana stressed that for Ghana to achieve energy security, there is the need for the country to be able to link the upstream and downstream sectors seamlessly. “If the country continues to operate its upstream and downstream sectors as independent entities, then it is bound to struggle in multiple fronts.

Because, the raw materials for the downstream [Refinery] is coming from the upstream— whatever is going into the refinery starts from crude oil. So, the idea of Ghana achieving self-reliance [in the upstream & downstream sectors] is all in the ambit of linking [both] together.” This notwithstanding, some experts suggest that countries on the continent must convert investments into renewable power now, because it makes economic and developmental sense in the long term.

However, the energy expert shared an opposing view, stressing that, countries on the continent and especially, Ghana should make efforts to take advantage of its hydrocarbon resources and “move fast, get the proceeds, but make a concerted effort to channel part of that into renewables for tomorrow.” He further indicated that countries invest where their strategic advantage is, and for instance, Ghana’s oil resources are being channeled into ‘Free SHS’, and implicitly, that appears to be where Ghana thinks its strategic advantage lies. 


Ghana’s Petroleum Sector Fiscal Regime currently is more tilted towards profit-sharing and royalties than towards a production sharing regime. Given the scope of profit-sharing and royalties exacted— hybrid model— whatever profits that are accrued is shared and then royalties are charged. Whereas a production sharing regime makes the country shares the production portfolio with the exploration and Development Company.

With the latter, Ghana increases its participating rights, and thus gains the largest shares in the portfolio. Commenting on the Petroleum Sector Fiscal Regime, the energy expert noted “Ghana operates a hybrid model. We operate a little bit of profit-sharing and then a lot of royalties. [Countries] have moved away from royalties.

Royalties is a lazy way— if you depend so much on royalties, you will end up with stranded assets. Because, you are just waiting for an International Oil Company to extract the minerals and give you your part as well as pay taxes.” By juxtaposing GNPC’s asset-buy of Aker Energy and AGM Petroleum which requires a loan of US$1.65 billion to complete the transaction, he intimated that, if Ghana had started with production sharing, this asset purchase would not have been necessary.

Because, Ghana could have acquired the largest share and therefore accrued the largest returns from the assets. “So, going forward, I think we need to gravitate into production sharing agreement model (PSA), because that is what is happening [in most places]. If you do production sharing agreement model, your percentage is going to be high.

But, your percentage will not be high if you are not able to pump more money into your sector. “Anyhow you look at it, you will come back to the fact that we have no other alternative than to make concerted effort to invest into our upstream, through our upstream portfolio.” Besides, it is argued that jurisdictions where there are rising financing costs are likely to face disinvestments, given the current global context of the oil and gas sector. As it stands, if Tullow Oil plc and ENI should exit from Ghana’s upstream sector, there is no upstream sector that Ghana could boast of any longer, he emphasized.


Ultimately, it is impractical for Ghana to make a 180 degrees turn overnight to renewable energies. In the next couple of years, hydrocarbon resources will still be a sought-after commodity, although the risks of a global transition to renewable energies still loom. Moreover, Ghana’s carbon footprint is quite negligible. In fact, the continent’s carbon emissions as compared to the global average is a mere 4 percent.

Thus, while the lustre in hydrocarbon resources last, the government must ensure that the upstream and downstream sectors are linked together. Furthermore, there should be the conscious effort to ensure that the National Oil Company’s (GNPC) role as an operator in the upstream sector, is done right and swift to inure to the benefit of the country. However, attention should not only be centered on the upstream sector exclusively.

While the government’s colossal investment of US$60 billion for the development of a petroleum hub is laudable, it must be strategic in the delivery of the project. The current context of capital discipline towards petroleum projects is a herculean task. Thus, the government must prioritize the establishment of a refinery(s) first, while the other segments follow later on.

Waiting to gather US$60 billion before anything is done will be misplaced, Dr. Sulemana asserted. Also, with Ghana gas now on-stream, there should be concerted efforts to develop Ghana gas to take up multiple streams and ensure that we maximize gas offtake from the three oil fields. This will facilitate the country’s production of oil, while also ensuring the transfer of gas supply from these fields to boost the country’s power generation.

Additionally, some of the fiscal terms with the IOCs can be re-designed to serve as an incentive to current investors to stay as well as stimulate other investors’ interests in exploration and development of oil and gas considering the finite nature of hydrocarbons.

Ghana’s Obsession With ‘Mineral Rents’

- What happened to value addition all these years?

Ghana is one of the few countries in the world with rich deposits of mineral resources, yet less optimal benefits have been accrued from these resources. This portends a big puzzle that remains unsolved even centuries into the ‘elite’ business of mineral production. The country since time immemorial has shyly looked on value addition, as though a ‘forbidden practice’. However, feeds its obsession with seeking mineral rents (royalties, taxes, shares, and other revenues) to a very large extent.

It is almost a cliché that has been told by governments and sector ministers over and again that: value addition, however simple and compelling, is but challenging to practice. While true in some respects, there are quite a number of stories showing progress across some African countries, in this regard. Thus, the potential dividends to be accrued through going the way of value addition are evident, and to delay this further is to lengthen the current phenomenon of the paradox of owning abundant of mineral resources, yet poverty-ridden.

Besides, the true worth of the country’s mineral resources is yet uncertain. With mineral resources being non-renewable, finite and depletive, the government should be concerned and start considering the development of a national plan which expresses with clarity what economic transformation the country requires from its mineral resources using an ‘at-all-cost’ approach to realizing it.

Having a long-term nature (value addition), but sure benefits, the design of a national plan on this path must involve stakeholders and experts in the field, and painstakingly avoid any political barriers whatsoever.

Current Fiscal Regime For Mineral Resources

Over the years, reforms in Ghana’s fiscal regime for mineral resources have mimicked happenings within the global landscape, reflecting price hikes in mineral resources, and more broadly, the quest to exact more returns from mineral resources due to the assertion that mining companies are taking advantage of loopholes in the tax administrations.

These conditions, with much emphasis on the latter, have in turn, skewed government’s focus towards optimizing economic rents from mineral resources, whilst driving farther away the need for investments toward value addition.

Looking at the issue more specifically, some commitments toward value addition have been realized in smelting and refining gold ore, diamond processing, and recently bauxite, but still so far below optimum levels. The short-time horizon which governments face and the accompanied fiscal pressures divert attention from this important venture for quick-fixes.

Overtly or covertly, the country’s focus has hugely centered on fiscal returns from mineral production and sales. The table below describes the current fiscal regime in the mining industry.

Table 13x

Considering the foregoing, latest data provided by the Bank of Ghana in its Statistical Bulletin indicate that in 2020, mineral royalties reached GHS1.38 billion up from GHS1.007 billion in 2019. Also, for the first quarter of 2021, mineral royalties accrued to the country stood at GHS323.18 million.

Moreover, corporate income tax (CIT) amounted to GHS2.139 billion in 2020, employee income tax (PAYE) was GHS641.868 million, among other sources within the fiscal structure, according to the Ghana Chamber of Mines.

However, the following are incentives backing special contractual agreements between the government and mining companies. Indicatively, the latter enjoys: (a) concessionary rate for the payment of custom duties on Plant, Machinery & Equipment exclusively for mining operations as approved; (b) Holder of mining lease is entitled to the capitalization of expenditure on reconnaissance and prospecting approved by the Minister on the advice of the Commission where the holder starts development of a commercial find; (c) Royalties paid is tax deductible; (d) Retention of a portion of export proceeds in an external account to finance purchase of inputs; (e) Immigration quota in respect of approved number of expatriate personnel in line with Minerals and Mining (Local Content & Local Participation) Regulations, 2020 (L.I 2431).

While Ghana’s fiscal regime for mineral resources has not changed substantially over the past years, the mining industry remains the most taxed as a result of the various tax components indicated earlier. This has led some corporations within the industry to engage in illicit financial flows, transfer mispricing and mis-invoicing, in order to evade paying these taxes.

According to Dr. Ali Nakyea, a tax expert, in a recent interview, he indicated that losses as a result of illicit financial flows in the mining sector are in excess of US$6 billion every year. Noting this claim, however, the Chamber of Mines strongly contends that the government should allow tax exemptions to mining corporations, as the country is losing mining exploration investments to neighbouring countries in the region.

Over-Focus On Mineral Rents But Little Achievements To Show

Experts in the industry are persuaded by the fact that evidence is rife considering the potential gains Ghana stands to benefit from focusing on value addition, than excessive fiscal returns from mineral resources.

Broadly speaking, mining communities have for all these years benefited meagerly from the extraction of minerals in their communities; unemployment continues to remain a burden (partly explaining illegal mining activities); low levels of income, et cetera. Although, over the years, some improvements have been made but this is far from expected.

For instance, in 2020, despite the fact that revenue from mineral resources increased, as did royalties, the government did not render to mining communities their just due. Mining communities only received 13 percent of total royalties to the government, 7 percent deficit below the 20 percent mineral royalties required by law to be transferred to mining communities.

According to the Minerals Development Fund Act 2016 (Act 912) mining companies are to pay up to 5% of their total revenues as royalties to the state, and of that, the government transfers 20% to the Minerals Development Fund.

Of this amount, 4.95 percent accrues to the respective District Assemblies, another 4 percent to the Mining Development Scheme (MCDS). Essentially, this in no way suffices for the development of mining communities as they continue to remain among the poorest, and the allocations evidently minimal.

Table 23x

‘Extra’ Value Addition In Minerals Long Overdue

It is evident now that value addition, described as the means of processing of minerals such as refining of ores or smelting of metals is not sufficient. Going the way of ‘extra’ value addition requires providing the building blocks for creating and strengthening linkages between the extractive sector and other sectors of the economy.

A well-designed transition should be developed, which emphasizes manufacturing intermediate and final products to make better people’s lives and livelihoods, and to strengthen domestic supply chains so that local businesses can effectively participate in extractive industries.

These linkages come in the form of forward linkages into mineral beneficiation and manufacturing; backward linkages into mining capital goods, consumables and services industries; spatial linkages into infrastructure, including power, logistics, communications and water; and knowledge linkages into skills and technological development.

Since 2019, Ghana has been the largest producer of gold within the sub-Saharan Africa region. Recent data by the Ghana Chamber of Mines indicate that, despite the effect of the COVID-19 pandemic on extraction activities, limiting the quantum of output produced, Ghana still maintained its position.

However, the country’s gold production saw its highest decline in 2020 by 12.1 percent on a year-on-year basis since 2004. The total volume of gold produced locally declined from 4.577 million ounces in 2019 to 4.023 million ounces in 2020.

It is noteworthy to mention that since Ghana gained its current status as the largest gold producer in Africa, and seventh largest in the world, discussions have largely centered on whether the country is receiving its fair share from its gold resources. This is partly so because, increase in volumes of gold produced indicate more rents (in terms of taxes) accrued to the country, all else equal.

Meanwhile, its fierce competitor, South Africa, is exploring extra value addition more vigorously compared to Ghana. More importantly, there is no single evidence that shows that resource-rich nations have developed largely from focusing on fiscal returns from mineral resources. There’s global consensus that it is no optimum strategy for a country to maximize benefits from its mineral resources by focusing excessively on the rents paid by mining corporations.

However, Ghana’s mining sector procures 80 percent of its inputs from abroad, which costs the country US$1 billion, according to Mr Kwaku Addai Antwi-Boasiako, CEO of Minerals Commission, Ghana. He also indicated that the country exports the vast majority of its minerals as unprocessed ores which cost the country US$ 5.1 billion in lost revenue each year.

This shows the dearth in progress that the country has made in terms of value addition. More preferably, investments must be channeled to build supply-chain linkages between the mining sector and other sectors of the economy.

For the record, as of 2020, revenue generated from the export of minerals increased from US$ 6.678 billion in 2019 to USD 6.998 billion padded by the galloping price of gold, due to its safe haven nature as investor’s restructured their asset portfolios to hedge against the fall in value of liquid assets as a result of the economic effects of the pandemic.

Although there have been some attempts to go the direction of extra value addition in Ghana, such moves have always ended up in failures- efforts have been truncated due to mismanagement of funds, among others. A critical example was in the year 2004 when the government announced a revolving credit of unrefined gold for the purpose of promoting increased jewellery production and sales. The programme was to be assisted by AngloGold Ashanti and Gold Fields. However, in less than two years into the programme, the unrefined gold was mismanaged and the credit consequently terminated. Since then, steps to this end have been negligible and slow.

Therefore, successive governments have seemingly been disinterested in ensuring the country benefits from the greater prospects accrued in value addition.

More so, forums, high-level meetings have become platforms where governments over the past years have made hints of accelerating the process, only to revert to the status quo with little to no commitments whatsoever.

Government’s Renewed Focus Towards Value Addition

These notwithstanding, the government of Ghana has recently announced its intention to shift from the focus of fiscal returns on mineral resources to value addition.

Obviously, for the country to optimally maximize the benefits from its mineral resources, diversification is the key rather than excessively seeking rents from mineral resources.

However, robust systems and policies must be put in place in order to avoid the occurrences of mismanagement as have been the case in previous attempts. It is expected that after a century of engaging in mining activities, the country moves beyond the rhetoric of being in the midst of abundance but poverty-ridden.

Considering the new direction that governments of developing economies are expected to turn Post-COVID, diversifying the operations of the mining sector would rake-in more dividends beyond the rents (Taxes). That said, more value addition remains a potentially viable way to maximize benefits from the extraction of Ghana’s minerals.

While capital is expensive to kick-start and streamline the processes for value-addition, amid a COVID situation that has had a heavy toll on the economic affairs of the country, government’s considerations of potential collaborations with the private sector (Public-Private Partnerships) in order to attract the right and needed investments should be explored.

Should the government put in twice as much of the efforts and commitments towards dealing with the ‘galamsey’ menace into value addition, the country should be able to reap enormous benefits from its mineral resources.

Following the steps of countries such as Chile, which has become a success story in this regard, the government can consider adopting Chile’s model and vigorously chart the path to move beyond mere obsession with mineral rents.

Ghana To Practice Resource Nationalism?

Ghana To Practice Resource Nationalism?

It is a maxim for every natural resource-rich nation to maximize the benefits attainable from its resource endowments. In the quest of doing so, such countries have gone through cycles of asserting control over natural resources in their territories — including but not limited to making reforms to resource-exploitation agreements and increasing taxes or royalties from multinational corporations. While such moves are in the interest of the imposing country, they rather conflict with the interests of multinational corporations operating in such environments.

Meanwhile to impose or not to impose depends on the game that is being played. Ordinarily, resource-rich nations and multinational corporations operate a non-zero sum game— a situation where one’s win (or loss) does not necessarily result in the other party’s loss (or win). However, resource-rich nations ‘now’ feel as though agreements with multinational companies have switched into a zero-sum game— a situation where one’s win means the other party’s loss.

Within this context, resource-rich nations assume that if multinational corporations are gaining from exploiting their resources, then they must be losing. Hence, they are more likely to assert control over their resources to recoup potential benefits they deem to be losing.

Recent findings by Verisk Maplecroft, a risk consultancy firm, in its ‘political risk outlook 2021’, indicate that resource nationalism is on the rise, and COVID-19 has worsened the outlook.

According to the report, in 2020, “34 countries have witnessed a significant increase in risk on our Resource Nationalism Index (RNI). Reasons for the recent surge vary but one thing is clear – the economic impact of COVID-19 has aggravated an already growing tendency for government interventionism in the natural resource sector.”

The bullish run of commodity prices, especially mineral resources, during the heat of the Covid-19 pandemic is considered to be one of the major factors for countries’ increased risk towards resource nationalism.

“With 18 of these countries dependent on the minerals and hydrocarbons they export, we expect the threat to expand over the next two years as their governments try to claw back the financial loss.”

Verisk Maplecroft, specifically cited Ghana among the 18 resource-rich countries experiencing significantly high risks to resource nationalism. It asserts that the economic impact of the pandemic has heightened the already growing tendency for resource nationalism.

Meanwhile, resource nationalism is the tendency of people and governments to assert control over natural resources located on their territory.

Then the question, is Ghana intending to practice resource nationalism?


After 100 years of exploiting mineral resources in Ghana, practically little has been achieved as benefits from these resources. Further perspective of Prof. Daniel K. Twerefou suggests the benefits from these resources have only been marginal including employment and taxes.

According to the Associate Professor of Economics, “[In] Ghana, we have gold, [and] other resources, the question is how much do we get from it? As far as I know, some employment is being generated directly or indirectly, corporate and some other taxes are being paid to government. Apart from that, we don’t get anything from [the sector].

“… If you look at the data, the mining sector, for example, has not contributed more than 5% to GDP, even though we have more than 40% of all investments going into the sector.”

He also noted “…the implementation of the local content law is not the best. There is nothing like real serious local content… I have had the opportunity to review the implementation of the local content. What do we call local content? When you give catering services and the manufacturing of bolts and nuts, retreading of tyres to a company in Ghana, you call that local content after being here for over 100 years?...

“There are more serious components of local content like insurance, legal, banking services as well as many other items that are used by the mining companies that can be manufactured here and more revenue would accrue to the economy. We don’t go into those areas. Yes, there are supply constraints and we have been made to understand that some of the items cannot be manufactured here and we have accepted it. Can’t targeted government policies facilitate the production of such items? What we get from the implementation of the local content policy is very small; it is nothing good to write home about.”


Contrary to the assertion by Verisk Maplecroft, Ghana is currently not aggressively pursuing resource nationalism, Prof. Twerefou averred. Practically, the government has stabilized the fiscal regime in the mining sector for some time. As such one cannot conclude that the country is pursuing resource nationalism. He further indicated that there have also not been any significant reforms in the implementation of the local content policies.

“The fiscal regime in the mining sector has not changed. As far as I know the tax regime, the regulatory regime over the past 5 years or so, have not changed. If it’s going to change then based on the nature of the change, we can conclude the country is pursuing resource nationalism or not. The local content policy is there; it’s been there for a long time…

“If there is going to be an intensification of the implementation of that policy, then [that is another thing], but it has not changed. All the mines that we have in the country belongs to foreigners with government having about 10% stake. How can one conclude that Ghana is pursuing resource nationalism?”

However, he indicated that if going forward, the government is going to assert control over these natural resources “then we can say that we are moving towards resource nationalism.”

This notwithstanding, the government has begun rolling out actions in the small scale mining sector to clamp down on illegalities and protect the nation’s resources. He underscored that those actions have no semblance with resource nationalism and are rather required due to the intergenerational implications of illegal mining activities.

In responding to recent calls by the government seeking reforms in mining regulations to recover benefits from the sector, he hinted that this has arisen due to the government’s inability to ascertain the true cost of production of mining firms.

“In theory, governments are not supposed to charge royalties. We are supposed to allow the companies to mine the resources, be honest with us in terms of their cost, and then once they have taken out a reasonable profit that can be determined based on the interest rate in the sector, what is left is the resource rent which should be given to the government and then we plough back to support the environment or sustainable development. It is because we do not know the true cost of production that royalties are prior determined.”

“Unfortunately, in many cases, we don’t know the true cost of production of the mining companies. Mining companies are not angels. In the Board room, they think about how to make money for the shareholders more than thinking about Ghana… that is where the issue is. There have been allegations of transfer pricing and over-invoicing by the companies that make it difficult for us to know their true cost of production.”


One determinant invariably used to identify resource nationalism is the upswing in market cycles: a rise in primary commodity prices portends a high tendency for countries to adopt resource nationalism. On the other hand, when prices plummet, mining firms possess greater leverage and are able to push governments to adopt more favorable regimes.

The Environmental Economist indicated that the possibilities cannot be ignored. “It will all depend on the exigencies on the market. It also depends on how interest rates may change with time and [volatilities] on the stock market.”

He further noted that in a case where the government implements the Agyapa deal and goes further to raise royalty rates for the purpose of raising more income to defray the debts, this will affect investors. And obviously, such an action may go a long way to affect the country’s current status as the largest gold producer on the continent.

“But, one has to be very careful, because, implementing the Agyapa deal and raising rates will lead to a situation where the country becomes risky [and] many people will not put their money in the sector.

“So one has to study the variables that affect the amount government needs to pay in future and how government will deal with those variables. This will inform government’s decision in raising rates or otherwise and consequently help us to know if the country is pursuing a resource nationalism or otherwise.”


Undoubtedly, Ghana’s mining sector faces an avalanche of problems that require long-term solutions. The issues, for the most part, have been tackled as fiscal issues, thus, the delay in addressing them. And Agyapa deal is not a solution that suffices for the problem, Prof. Twerefou asserts.

The Agyapa deal, is one of the government’s resource-financing strategies which involves the sale of about 76 per cent of the country’s future gold royalties to a special corporate entity, Agyapa Royalties Company. In return for giving out such a large share of these future royalties, the government has argued that it could raise US$500 million in capital to ease growing debt crisis by listing the remaining 49 per cent of shares.

According to the expert, “these are short-termist sort of decisions that are unsustainable and has more political advantage than economic. Because, you get the money today, you spend and then [people] know you are doing well as a government. The people in the village do not know where the money is coming from but they know things are going on in the country. This is not the best way to go. The money will be paid in future. There is no free lunch anywhere.

“Agyapa deal is just like borrowing. You are going to borrow, you will pay later with the royalties… Adding value to the resource, ensuring the real implementation of the local content policy and being transparent to the people through good governance is the way to go. We are even not talking about the environmental problems that we are causing now.

“…your rivers, your trees, your cocoa, your soils are all being degraded. This is going to be a serious conflict in our rural areas in the next 10 to 20 years, when all your water bodies are bad and you cannot drink them, when all the land is degraded and there is no land for agriculture in certain parts of the country. But, we are just overlooking it.”

Prof. Twerefou then suggested that ensuring the mining sector is vertically and horizontally linked with the economy, would greatly improve the country’s fortunes. For a long time, the country has focused incessantly on raising revenue from taxes without equal attention to adding value to the raw metal, he further noted.

“Look at countries like Saudi Arabia, they don’t have any gold. The value addition is what is allowing them to grow. But that direction [value addition], we pay less emphasis on and the people who are supposed to ensure this are just relegating it to the background.”

Overtly or covertly, playing the cards of resource nationalism has the tendency of undermining investments in the country’s natural resources. Having recently surpassed South Africa as the largest producer of gold in Africa, the government may risk these feat implementing policies that may worsen the sector’s woes.

 Daniel Kwabena Twerefou

Prof. Daniel Twerefou
Dept. of Economics


DRC’s Cobalt surges as production for electric-vehicles booms

DRC’s Cobalt surges as production for electric-vehicles booms

The electric-vehicle (EV) revolution is ushering in a golden age for battery raw materials, emphasized by a dramatic increase in demand for two key battery commodities: lithium and cobalt.

In addition, the growing need for energy storage, e-bikes, electrification of tools, and other battery-intense applications is increasing the interest in these commodities.

Countries are also announcing plans to reduce greenhouse gas emissions to net zero in the near future with UK’s Prime Minister, Boris Johnson declaring that new cars and vans powered wholly by petrol and diesel will be completely banned in the UK from 2030 with some hybrids still allowed.

Cobalt is essential to power the rechargeable lithium batteries used in millions of products sold by Apple, Google, Dell, Microsoft and Tesla every year. It is an essential mineral for the lithium-ion batteries used in electric vehicles, laptops and smart phones. It offers the highest energy density and is key for boosting battery life.

The insatiable demand for cobalt, driven by desire for cheap handheld technology, has tripled in the past six years.

The Katanga region in the south of the Democratic Republic of Congo (DRC) is home to more than half of the world’s cobalt resources, and over 70% of the current cobalt production worldwide takes place in the country. Demand for cobalt is projected to surge fourfold by 2030 in pace with the electric vehicle boom. Because of the huge mineral deposits available in the country, it is often the only sourcing option for companies.

However, mining in the Democratic Republic of Congo is risky because of the prevalence of artisanal small-scale mining. Artisanal mining is often carried out by hand, using basic equipment. It’s a largely informal and labour-intensive activity on which more than two million Congolese miners depend for income and this mining method comes with major human rights risks such as child labour and dangerous working conditions. Fatal accidents in unsafe tunnels occur frequently and there are detailed reports such as the one by Amnesty International on the prevalence of child labour in these operations.

Because artisanal miners frequently extract cobalt illegally on industrial mining sites, human rights issues cannot be excluded from industrial production. Artisanal-mined cobalt also often gets mixed with the industrial production when it is sold to middlemen in the open market.

Typically, it is then shipped to refineries in China for further processing and then sold to battery manufacturers around the world. In this complex supply chain, separating, tracking and tracing artisanal mined cobalt is almost impossible.

International human rights organisations have identified human rights abuses, putting pressure on multinational corporations that buy Congolese cobalt.

Recently, Apple, Google, Dell, Microsoft and Tesla have been named as defendants in a lawsuit filed in Washington DC by human rights firm International Rights Advocates on behalf of 14 parents and children from the Democratic Republic of the Congo.

The lawsuit, which is the result of field research conducted by anti-slavery economist Siddharth Kara, accuses the companies of aiding and abetting in the death and serious injury of children who they claim were working in cobalt mines in their supply chain.

In response to these pressures, some automotive and electronics companies are currently not sourcing cobalt from the Democratic Republic of the Congo because they want to avoid tainting their brand image.

But that strategy doesn’t look sustainable as no other country will be able to satisfy the rising demand for cobalt. The production of other cobalt-exporting countries such as Russia, Canada, Australia and the Philippines accounts for less than 5% of the global production.

How companies in the cobalt supply chain can source responsible cobalt from the Democratic Republic of the Congo amid these human rights risks therefore needs to be addressed.

The study by Amnesty International has already determined that "major electronics and electric vehicle companies are still not doing enough to stop human rights abuses entering their cobalt supply chains."

According to the Centre for Disease Control and Prevention (CDC), "chronic exposure to cobalt-containing hard metal (dust or fume) can result in a serious lung disease called 'hard metal lung disease'" – a kind of pneumoconiosis, meaning a lung disease caused by inhaling dust particles. Inhalation of cobalt particles can cause respiratory sensitization, asthma, decreased pulmonary function and shortness of breath

The health agency says skin contact is also a significant health concern "because dermal exposures to hard metal and cobalt salts can result in significant systemic uptake." 

Sustained exposures can cause skin sensitization, which may result in eruptions of contact dermatitis, a red, itchy skin rash.

Despite the health risks, researchers with Amnesty found that most cobalt miners in Congo lack basic protective equipment like face masks, work clothing and gloves. 

Artisanal mining is a difficult, dangerous and under-regulated business and there is currently no common understanding of what “responsible” artisanal cobalt should entail. The quest for responsible mineral sourcing is not a cobalt-specific challenge and cuts across various mining sectors especially on the African continent.

Looking to realize common standards, the Congolese mining code has been reformed to include certain basic standards such as the prohibition of miners under the age of 18. There are also requirements to register as an artisanal miner and become a member of a mining cooperative.

This initiative means the creation of official areas where artisanal mining can take place, which lends the mines a legitimacy that makes it easier for miners to form cooperatives, borrow money and bring in bigger equipment to make mining safer.

The reform, however, hasn’t yielded full results. To begin with, not all DRC artisanal mining cooperatives represent their members’ interests. Some are owned by representatives of the political elite and demand unofficial payments from their members that can amount to 20 per cent of their production.

One approach towards common standards will be to mount “artisanal and small-scale mining formalisation projects”. The few existing projects establish rules for the mining site that are defined and enforced by the project partners. These usually consist of cooperatives, mine operators and buyers.

It is widely expected that formalisation will be a viable path to making artisanal mining safe and fair. Formalisation works because operational measures are put in place to mitigate safety risks. For example, the extraction is supervised by mining engineers. Also, the project site is fenced off and has exit and entry controls. This ensures that no underage, pregnant or drunk miners work on site.

But for formalisation projects to yield “responsible” artisanal cobalt, common standards and consistent enforcement are necessary. Currently, formalisation means different things in different sites.

National standards for mine safety exist, but they need to be enforced uniformly. Where current standards fall short of reassuring buyers, further measures need to be developed by a consortium of the key players. This should involve mining cooperatives, concession holders, the government, civil society organisations, and other companies along the battery supply chain. The amendments to the mining code has introduced a legal basis for the subcontracting of artisanal miners by industrial mining companies.

Image 2

In January 2020, the Congolese government created an entity that will oversee artisanal and small-scale mining activities. The development of artisanal mining standards through a process involving key players needs to build on and strengthen these existing national laws and strategies.

Furthermore, private actors should support government efforts by identifying parameters and means of evaluation to ensure the consistent enforcement of these standards. A discussion about responsible sourcing strategies and practices is indispensable for all brands that care about the human rights implications of their operations.

Companies behind the technologies of the “clean energy revolution” clearly want to be associated with sustainability, not human rights abuses. More are now willing to admit there are serious problems that can no longer be ignored. However, awareness and commitments have not translated into action across the global supply chain.

These companies need to carry out due diligence in line with international standards to avoid making it difficult to establish a viable market for more responsible sources of cobalt. This is especially true given that Chinese battery producers are gearing up to meet expected demand for Chinese-manufactured electric vehicles.

image 3

Given the scale of the problem and exponentially growing demand for cobalt, more must be done to protect the well-being of Congolese miners. The human cost of cobalt mining, once a problem largely hidden from end-users of the mineral has now been highlighted more broadly, and the eyes of the world, especially consumers, are open.

Remodelling Upstream Oil and Gas Activities Post-COVID

Fall in crude prices and reduced demand from end-user markets during the COVID-19 pandemic has significantly impacted the oil and gas industry, forcing companies to postpone investments and stall existing projects until the situation improves.

The pandemic has resulted in a historic plunge in oil and gas prices, way below projections of many oil-based entities and budgets of national governments. Consequences, therefore, emerge for revenues, debt financing, development and production. 

The oil and gas industry has also experienced its third price collapse in 12 years. After the first two shocks, the industry rebounded, and business continued as usual. Today, with prices touching 30-year lows, and accelerating societal pressure, executives sense that change is inevitable. Hence, the COVID-19 crisis is accelerating what was already shaping up to be one of the industry’s most transformative moments.

On its current course and speed, the industry could now be entering an era defined by intense competition, technology-led rapid supply response, flat to declining demand, investor scepticism, and increasing public and government pressure regarding impact on climate and the environment.

However, under most scenarios, oil and gas will remain a multi-trillion-dollar market for decades. Considering its role in supplying affordable energy, it is too important to fail. The fundamental question thus remains; how can value be created in the next normal?

To change the current model, the industry will need to dig deep and tap its proud history of bold structural moves, innovation, and safe and profitable operations in the toughest conditions. The successful ones will be those that use this crisis to confidently reposition their portfolios and transform their operating models. Companies that don’t will restructure or inevitably shrivel.

Upstream Oil and Gas Operations

Upstream Oil and Gas operations or production refers to companies who identify, extract, or produce raw materials. These companies also identify deposits, drill wells, and recover raw materials from underground.

Upstream Oil and Gas companies are often called exploration and production companies. This sector also includes related services such as rig operations, feasibility studies, machinery rental, and extraction of chemical supply. The Upstream part of the industry is able to locate and estimate reserves before any of the actual drilling activity starts.

Examples of large companies that focus on upstream operations include the China National Offshore Oil Corporation and Schlumberger (SLB). There are also many large upstream operators that are major diversified oil and gas firms like Exxon-Mobil (XOM).

Impact of Covid-19 on upstream operations

All companies are rightly acting to protect employees’ health and safety, and to preserve cash in particular, by cutting or deferring discretionary capital as well as operating expenditures and, in many cases, distributions to shareholders.

The upstream sector is witnessing a reduction in production, drilling suspension, and stalling of projects in the short-term. These actions will, however, not be enough for financially stretched players and is likely to create an opportunity for a profound reset in many segments of the industry.

A broad restructuring of several upstream basins will likely occur, reinforced by the opportunity created by balance-sheet weaknesses, particularly in high-cost mature basins like the US onshore. In the long-term, upstream companies are expected to restructure their business and focus on cleaner options such as gas, light oil, and renewables.

This could see the US onshore industry for instance, which currently has more than 100 sizable companies, consolidate very significantly, with only large at-scale companies and smaller, truly nimble, and innovative players surviving.

Broad-based consolidation could be led by “basin masters” expected to cut down unit costs by exploiting synergies. It is estimated that economies of skill and scale, coupled with new ways of working could further reduce costs by up to $10/bbl. in the shale patch alone improving its supply resilience.


Some companies whose business models or asset bases are already distinctive can thrive in the next normal. But for most companies, a change in strategy is imperative. By mixing and matching the following practices, depending on their circumstances, companies can reduce costs, enhance development opportunities, and reduce the carbon intensity of assets in each strategic group. Implementing the following practices could improve the development of brownfield assets, considerably extending their useful life.

Learn from others

It is instructive to seek inspiration from other industries that experienced sector-wide change, and how the leaders within these industries emerged as value creators. The common thread in how these leaders achieved success includes large reallocation of capital informed by a deep understanding of market trends and future value pools, the value of focused scale, and a willingness to fundamentally challenge and transform existing operating models and basis for competition.

Rationalize activity

Inertia is a powerful force which causes activities to go on and on with no systemic contemplation of their value. This results in a waste of time and money, diverting resources from areas where they could be put to better use.

The better approach, being adopted by some operators now is to use simple time-based programs with clear deadlines to dictate the work. Two factors required for successful rationalization are Zero-based planning and High-quality data.

Zero-based planning involves scrutinizing every planned activity in the field and prioritizing them methodically, based on added-value potential whiles High-quality data encompasses establishing live-streaming data capabilities to evaluate asset conditions. This allows for more targeted and efficient interventions.

Make bold M&A moves

The fallout from the pandemic could potentially trigger another age of Mergers and Acquisitions (M&A) in the oil and gas industry. Mergers can bring economies of scale and scope, as well as more efficiently allocate spend across a larger, consolidated portfolio of shale assets, as opposed to the patchwork more common in the oil patch today.

The need for companies to rebalance their portfolios, create scale efficiencies and improve capital access should encourage companies to pursue M&A. For optimized results, these companies will need to focus their investment strategy squarely on scale and synergies.

In these disruptive and volatile times, the industry should focus on acquisitions that will add synergies, can be captured immediately and create sustained value. Any deals that do close in the face of these torrid times are almost certainly going to be led by strategic buyers, especially for upstream assets.

Winners will emerge with advantaged portfolios that will be resilient to longer-term trends. They should settle for nothing less than the absolutely best positioned assets in upstream, refining, marketing, and petrochemicals.

 Centralize activities

As operators buy and sell assets, they may end up with an ineffectual kind of decentralization as time goes on, with different processes and overlapping services which can get expensive.

Evaluating and deciding where activities should be executed (offshore/onshore) and what activities can be shared centrally can enhance operational efficiency. There are good examples of companies that have moved toward centralizing onshore support for the offshore workforce. The best are characterized by real-time collaboration with frontline workers, who are able to communicate what is going on and identify emerging issues.

Upstream Oil and Gas companies can establish the right capabilities in the onshore central team to improve technical capabilities. This can involve rotating equipment maintenance skills and make sure to include subject-matter experts (SMEs) in technical areas.

Also, Digital enablement should be considered by providing effective and real-time collaboration between offshore and onshore teams, with the onshore team providing technical expertise and support.

Consider Multi-Skilled Employees

Functional organization models comprising of various isolated teams have contributed to offshore inefficiencies therefore increasing the maintenance workload even of routine activities and decreasing the attention given to more critical tasks.

Multi-skilled employees can ensure operations are conducted with a reduced number of employees which can be vital with the advent of the pandemic. For example, production technicians can be trained to perform first-line maintenance tasks whiles managers are trained to oversee a broader range of activities. 

Transition to Agile

Onshore structures are usually organized traditionally, with a number of disconnected teams and numerous layers of hierarchy. There is often not enough focus on integrating to create value or accountability for end-to-end-delivery. This results in longer-than-necessary lead times, lower quality of output, and limited sharing of best practices.

Installing “agile” teams, that is, groups that can quickly reconfigure strategy, structure, processes, people, and technology can increase organizational efficiency and decrease reaction time. The core principle of agility is to transform traditional teams into cross-functional squads, each with a specific business focus and a value-creating mission.

The Covid-19 pandemic has changed upstream gas and oil operations fundamentals and the rules of the next normal are still being discovered.  It is uncertain when the current quagmire impacting oil and gas operators will pass or if prices will rebound to the pre-crisis levels in the medium term.

What is assured, however, is that only innovative operators with superior operating models, resilient portfolios and innovations will come out this crisis ready to handle the instability and to sustain future growth. The time for visionary thinking and bold action is now.



Indeed the global landscape is ailing with the sinister assault of a virus which seems to relish in incapacitating not just biological organisms but also crippling the very infrastructural foundation of nations, no matter how relatively inert it may be. With such intense frictions adversely disabling the very engine of economies from restarting, focus by most countries is more attuned with health enablement. Oiling clogged sectors and gassing up the ignition will take more than putting pen to paper. The energy to drive and propel the efforts of powering backing the bustling and fluid element reminiscent of our oil and gas industry is going to require a multi-dimensional approach to traverse the impact of the pandemic. The global oil and gas industry is experiencing one of the most grueling times as the COVID-19 pandemic endures almost indefinitely with no finish line in sight. True to form, the challenges within the sector is not only premised on a decline in global demand for energy commodities but to a larger and more significant extent concerns are more gripping when it comes to the future of the extractive industry.

Extractives held hostage by pandemic

Goldman Sachs in a research note published on 30th March, said global oil demand has fallen 25% in the wake of the Coronavirus. They added that “not only is this the largest economic shock of our lifetimes, but carbon-based industries, like oil, sit in the cross-hairs as they have historically served as the cornerstone of social interactions and globalization– the prevention of which are the main defense against the virus”. The reflex reaction will be developed countries should have much better prospects of getting past the phase and recovering more swiftly, but they are in a pretty dark spot, casting a rather long shadow on developing countries. In a World Bank report, the continent of Africa will face its first recession for the region in 25 years as growth declines from 2.4 % in 2019 to between -2.1% and -5.1% for 2020, with oil and gas industry.

The pandemic has hit the buzzer of cancellation and halted some major projects in the oil industry as oil companies are moving to slow the pace of production. Expansion of storage capacity is ongoing as attempts are being made to market crude oil with the best sales and purchase agreement. In spite of their exclusion from lockdown imposition, operations within the sector will become increasingly difficult due to workforce shortages influenced by employees being infected by the coronavirus. Deloitte has revised its 2020 GDP growth estimates for Ghana from just under 7% to less than 3% in light of the Covid-19 crisis, as the country’s economy faces disruptions from a variety of directions. The country is also expected to face significant losses in tax revenue.

The biggest hit is expected to come in the form of revenue shortfalls. Deloitte reports that the country has already faced a “fiscal impact” of more than 9.5 billion Cedi, due in part to revenue shortfalls, which includes nearly GHC600m that has been deployed specifically towards fighting Covid-19. The Deloitte report categorically states that, “the economy could suffer from significant decline in Government revenue and expenditure resulting in potential job losses.

This could, in turn, erode the economic gains achieved in recent years and significantly slow down Ghana’s economic development.

Plummeting oil receipts in Africa

Figures in books may indeed give telling tales of the actual situation on the African soil, but statistics only tell half of the story as the visceral emotion and comprehensive impact accompanying the pandemic in Africa’s oil and gas industry is one for a nightmarish thriller. 

In a report, Africa’s biggest exporter, Nigeria sought $7bn in emergency fund as it forecasts recession. The country’s projection of 2.1m barrels a day of oil production has been reduced to 1.7m barrels. Nigeria relies heavily on crude receipts for more than half of government revenue and virtually all of its foreign exchange. Both Fitch and S&P have, however, downgraded Nigeria’s credit ratings in recent weeks on the oil slump, with Fitch adding ten Nigerian banks that were at severe risk because of their exposure to the oil sector. Sadly, “the oil price drop has forced government to remove the petrol subsidy, which had fixed fuel at N145 a little and absorbed billions of dollars in spending”.

Deloitte predicts that Ghana’s reliance on the oil and petroleum sector also factors in to the Covid-19 impact, in light of shortfalls across the board in petroleum receipts. If this scenario persists unmitigated, it would have adverse consequences for Ghana’s economy going forth.

One would never have expected countries such as Nigeria, Ghana, Angola, Algeria, Congo, Gabon, Equatorial Guinea and Libya whose budgets are greatly dependent on oil revenues to ever come so close to a significant decline in income.  For instance, Nigeria’s 2020 budget was based on an oil price of USD57 per barrel and Angola USD 55 per barrel.  Both countries derive approximately 90 percent of their export earnings from the sale of oil and as a consequent are susceptible to a collapse in oil price and send government to the review desk, renegotiate investments and finance projects.  When push comes to shove and negative oil prices become a tendency, it will send oil exporting countries on a cliff-edge.

Impact on oil producing countries

In sub-Saharan Africa, the impact will be felt even stronger because the pandemic is being combined with a notable crash in oil prices, putting pressure on state budgets and testing the resilience of the continent's strongest energy companies.

The immediate effect of Covid-19 for the sector has been on the demand for crude oil, and on its prices. Most analysts and operators now agree that 2020 could see a negative demand growth for oil globally as industries shut down and countries around the world go on lock down. The effect on prices has been nothing short of devastating: they have reached their lowest levels since 1991.

According to Africa oil and power, oil and gas producing countries are expected to brace themselves as a much stronger blow of recession is about to hit them especially with the snowballing glide of the pandemic which has caused an incredible drop in energy demand for oil.

Africa’s largest producing oil country Nigeria, has paid the greatest price as the countries that import the majority of Africa’s commodity, including China, the US and Europe are having their economies being cut down to size. Demands have plummeted by 30 million barrels per day during the pandemic, as over 4 billion people were forced to stay home, with Nigeria and Angola seeing a 7% growth fall in export.

For Africa, this means an immediate pressure on state budgets and macro-economic stability. Apart from South Africa, the continent's biggest economies rely heavily on oil revenue to fuel state budget and public spending and ensure macro-economic stability. All sub-Saharan Africa's producers had budgeted. Owing to the outbreak of coronavirus in China, which is the main driver of oil, the Organization of Petroleum Exporting Countries’ (OPEC) outlook for the increase in oil demand this year has been considerably reduced. It said,

“evidently, the timing of the outbreak exacerbated the impact on transportation fuel demand in China, as it coincided with the Chinese Lunar New Year holidays, as millions of Chinese return home to celebrate with family members and friends, or travel abroad”.

Oil prices on the hangman’s noose

This pandemic is really undertaking a segregation posture with the ‘black gold’, by sequestering the haves and have-not (oil and gas) into a place of paucity particularly in Africa as its annual growth is predicted to drop to 1.8% from a previous estimate of 3.2%. Simultaneously, the continent’s oil-reliant economies could actually incur up to $65bn of income according to the International Institute for Environment and Development. Exports have been affected due to the falling prices introduced by the pandemic; the Institute said Nigeria and Angola reported about 70% of their April-loading cargoes of crude oil remained unsold in March, collectively losing revenues for close to 70% of their national budget. As a result of low oil demand, “the supply glut from exporting countries will increase the revenue margins for terminal and large crude oil vessel owners in Q2 2020,” according to the oil and gas research team at Acuity Knowledge Partners.

Credendo reports that, Oil accounted for about 20% of export revenues in Ghana in 2018. As the price of the Brent barrel tumbled down in the midst of the COVID, the lowest level since 2002 and nearly half of the projected oil price for 2020, export revenues from oil are expected to significantly decrease. A large decrease of Ghana’s current account receipts is therefore in the cards. Indeed, despite the 15% rise in the average gold price in the past months vis-à-vis 2019 (accounting for roughly 23% of export revenues in 2018), it is not expected to reverse the negative trend in export revenues. Hence, Ghana is likely to experience a wide current account deficit in 2020, significantly higher than the previous forecast of around -4% of GDP. On top of that, FDI and portfolio inflows, the two main sources of financing of the current account deficit, are likely to drop because of the large outflow of capital from emerging markets.

Brookings is of the view that while oil accounts for 90% of Nigeria’s exports, the decline in the demand for oil and oil prices will affect the volume and also value of net profit. The steep decline in oil prices advanced further by the pandemic has forced the government to cut planned expenditure. Amongst their policy recovery methods, the official exchange rate has been adjusted from 306 to 360 Naira. A large score of experts are actually predicting a fall in the prices of these once sought after commodities as the pandemic shows no indication of falling out on the human stock market.

For all it’s worth, the world must be a hundred years too early to collectively cope with the pandemic. The chairman of the African Energy Chamber NJ Ayuk said,

“we are seeing force majeure in Cameroon, in Senegal. Exxon Mobil is delaying gas project in Mozambique. In Uganda, some companies are delaying exploration. Frankly most projects are going to get delayed”.

Mr. Ayuk deepens the wounds on the industry by saying,

“2020 is going to be a tough year for everybody and everyone needs to buckle for the ride… You have twin issues of the price war and the coronavirus– you can’t make this up. Hollywood couldn’t have written this script. 2020 is done! So you have to look at 2021 and form the policy that will drive you forward”.

That notwithstanding, measures are being taken to address the crisis and ratify the depressing oil glut which has no outlet, but “you have to be in a strong position to go forward and really deal with a future that works for the industry”.

World Bank has also advised reforms for developing countries as the plunge in oil prices continues, in the form of energy-subsidy reforms. It is of the view that these reforms “can help free spending for urgent pandemic-related purposes, discourage wasteful energy consumption and reallocate spending to programs that better target the poor”. It will not be a lost cause after all, because all the murky ‘black gold’ needs are a few financial rub and some good ‘yes’ to regain its appealing sparkle on global trade.