Assessment of Oil Revenue and Its Impact on Human Development in Ghana

Abstract

Ghana discovered oil in commercial quantities in July 2007 and production began in December 2010. Despite the rapid boom in economic activities over the last decade in the Western region of the country where the discovery and production has been taking place, the benefits of the investments of the oil revenue by government to the ordinary Ghanaian, have not been fully accessed. This research establishes the relationship between the petroleum revenue from the upstream sector collected by the government and the Human Development Index (HDI) of Ghana using simple regression analysis. Quarterly data of oil revenues from 2010 to 2018 were obtained from the Ministry of Finance while data on the livelihood of Ghanaians proxied by the HDI were obtained from the UNDP. The study revealed a weak negative relationship between petroleum revenue and HDI. It was also observed that an increase in petroleum revenue either showed little or no impact on HDI. This is against the usual notion that an increase in oil revenue should action an improvement in the livelihood of countrymen. Further probe revealed that the quality of spending was low even though government increased revenue and could not be seen in the livelihood of citizens. The study recommends government to focus on strengthening its Public Interest and Accountability Committee in exercising oversight responsibility on quality of spending to ensure value for money for the state and its impact for the citizens.