A former Governor of the Central Bank of Nigeria, Prof. Charles Soludo has cautioned Ghana to consider investing revenue from natural resources into capital investments that will be beneficial to other generations.
Prof. Soludo, who was speaking at a forum held to commemorate the first anniversary of the passing of former Vice President Kwesi Amissah Arthur, said Nigeria’s management of natural resources must provide a cautionary tale for Ghana.
According to him, although there are laws that prescribe how revenues from oil resources should be managed, successive Nigerian governments have dedicated such revenues into consumption while funds for infrastructure have had to be borrowed at an extra cost.
On institutional arrangement to manage natural resources for intergenerational equity, I plead with you in the name of God, don’t learn from Nigeria. In Nigeria, we treat oil price boom as a permanent shock and every downturn as temporary.
All the revenue is for us to consume; nobody cares about tomorrow, let tomorrow care for itself… Over time, consumption has been ratcheting up successive governments. Because we treat every downturn as temporary, we continue to borrow with the hope that the price will go up.
Because of that, we have built a humongous unsustainable consumption pattern…over time our recurrent expenditure exceeds government’s revenue including oil revenue…in the name of God, I am begging you, don’t learn that thing from us,” Prof. Soludo said.
The management of oil revenue in Ghana is guided by the Petroleum Revenue Management Act (Act 815) which details how revenue from oil must be utilised.
The law, among other things, saw to the creation of the Annual Budget Funding Amount (ABFA), which is the portion of oil revenue spent in the budget as well as two contingency funds, Stabilisation Fund and Heritage Fund which is being kept for future generations.
With the Heritage Fund over the years accumulating lower interest rates, there have been suggestions from some quarters that government cannot keep borrowing at higher rate while this Fund rakes almost zero returns annually.
Prof. Soludo stated that such resources belong to different generations and proceeds must also take into consideration these generations as well.
The maiden Amissah-Arthur Economic Forum was on the theme “Making sense of economics” and was attended by the family of the late vice president as well as former president John Dramani Mahama and other current and former government officials.