By Amos Safo
The Ghana Government has mooted an innovative idea to start swapping gold for oil. Perhaps, the Government’s response is an attempt to reduce demands for dollar for oil imports and to ease the pressure on the national currency, the cedi. The decision to use commodities as a medium of exchange is in response to global economic meltdown, which is having an excruciating impact on Ghana’s economy, especially the rapid depreciation of the cedi and spiralling inflation.
Already, Russia, one of the largest producers of gas and oil in the world has stopped accepting the United States dollar for her commodities. Ghana is one of the leading producers of gold and cocoa in the world, but reaps little profit from the raw sales of the commodities due to the control of the two commodities by western countries. Perhaps, more commodity producing countries need to consider swapping their commodities for foreign imports as a means of reducing the pressure of on their currencies. If actualized, the policy will insulate the cedi against increasing demands for dollars foreign imports. Also, this innovative idea will beatdown the cost of oil and its effects on the Ghanaian economy, especially on the transportation of food.
Western media
Quite expectedly, the western media (Reuters and BBC etc) and some of Ghana’s media have put a spin on the Ghana Government’s plans to swap gold for money, describing the move as an attempt by Ghana to stop using the dollar for international trade. To all intents and purposes this western media interpretation is designed to cause a diplomatic spat between the Ghana Government and the Government of the United States of America. The stance of the western press is part of the neoliberal agenda to demonise African governments trying to wean themselves from western domination. In fact, the western media constitute one of the strongest neoliberal tools western governments continue to use to cast Africa in bad light and to keep her people down the water. In their book “The global media”, Edward S. Herman and Robert, W, McChesney described the western media as the “New missionaries of corporate capitalism.”
Ghana’s Vice President, Dr. Mahamudu Bawumia who broke the topic on social media has been explaining the rational of the gold for oil deal. According to the Vice President the intension is not stop using the dollar for international trade as the western media are projecting, but more of easing the pressure on oil imports, which constitutes Ghana’s biggest import bill. So, what will the government be doing wrong if it decides to swap gold for oil? As a sovereign country shouldn’t we have any rights to make sovereign decisions in the interest of future? Because the American economy is the largest in the world and the whole world depends on the dollar for international trade, they printed trillions of dollars as part of COVID recovery without anyone raising an eyebrow.
Oil imports
According to figures from the Ministry of Finance, currently Ghana uses US$400 million a month to import oil, twice as much the amount a year ago. Cumulatively Ghana used an estimated US$3 billion in oil imports over the last two years. This huge import bill, mostly in dollars is the cause of a drastic drop in the country’s import cover, as the government dug into the foreign reserves for dollars to import oil. Therefore, it makes sense that a government under such economic pressure will think outside the box basically to restore confidence in the economy through cutting inflation.
How will the gold for oil deal work out? I have gathered that the Government of Ghana has agreed with major gold producers to sell 20 percent of their gold to the Bank of Ghana. The Bank of Ghana buys the gold in cedis and holds them as a store of value. Globally even non-gold producing countries use gold as a store of value, why not Ghana. So, beginning 2023 Ghana Government will search for oil producers and marketers who wish to take gold for oil. If this works, it will reduce the U$400 million monthly oil imports, hence, there will be no need to be chasing dollars for oil imports. In honesty, what is wrong with such a move? Unfortunately, apart from the spin put on the idea by the western media, some opposition elements are hoping that this policy will fail at birth.
Africa’s resources
Ordinarily, the challenges arising from the global economic challenges should not be biting Africa as it is now, given the huge natural resources the continent is endowed with. Africa is home to 60 percent of global arable lands, 90 percent of all raw material reserves, 40 percent of gold reserves, 33 percent of diamond, 95 percent of world uranium deposit, has the largest bauxite reserves in the world, besides huge manganese, crude oil and iron deposits. Yet, the continent is described in derogatory terms as the poverty capital of the world. Ex- President Jacque Chirac of France is quoted as confessing that “we bled Africa four centuries, we looted their raw materials, then we told them lies that the African is good for nothing. In the name of religion, we destroyed their culture, we became rich at their expense, we now steal their brains through education and propaganda to prevent them from demanding retribution against us.”
Truly for over four centuries, Africa has never been in control of her huge resources. A study in 2016 by War on Want, an international NGO revealed that a total of 101 British companies control U$305 billion worth of platinum reserves in Africa, $276 billion worth of oil and $216 billion worth of coal, all at 2016 market value. In addition, these British companies own mining and mineral licences in 39 African countries and control vast swathes of Africa’s lands, four times the size of the United Kingdom.
Besides, the study revealed that Africa subsidizes the rest of the world by $32 billion annually. A 2017 study by Global Justice Network estimates that $161.6 billion came to Africa in the form of aid and loans, while $202 billion left the continent in the form of interest payments on loans in the same year. For example, in 2017 Africa received $19.7 billion in aid, and paid $18 billion in debt repayment, a clear case of giving with the left hand and taking it back with the right hand. In short, Africa’s biggest headache is the debt burden, as most countries, including Ghana have borrowed between 25 to 75 percent of their gross domestic product, but with little or nothing to show.
Yet, the global economic and financial system is designed to ensure that Africa never rises from the ashes of slave trade and colonialism. What else can explain why amid the global difficulties, the western rating agencies only chose to downgrade African economies, while other European economies are doing worse. The obvious intention is to compel African economies to borrow at high interest rates, which will further worsen their debt condition and keep them under the water forever.
As if that was not enough, while diaspora remittances to Africa is estimated at $32 billion annually, multinational companies siphon $32.2 billion in profits each year out of Africa. Also, an estimated $29 billion is stolen out of Africa through tax holidays, illegal logging and mining. How can any can continent develop such with gory statistics obviously in the interest of western countries.
Leadership
An analysis of current global trends calls for a new African leadership that will try to control our resources and make us benefit from what nature has endowed us with. I think this is exactly what President Akufo-Addo’s government is trying to do with the “gold for oil swap.” The government should, however, be mindful that this initiative might not yield the needed results easily. I can foresee the western countries, suddenly devaluing the price of gold and cocoa, just to tame Ghana. Nevertheless, African leaders need to cultivate a new sense of patriotism. At this critical stage of transition Africa needs selfless and dedicated leaders to pursue the course of economic emancipation, selfish and clueless leaders. It is our collective responsibility to protect and defend Africa. We need to do this through liberating our minds by refusing to play second fiddle to any race. In the past slavery destroyed our dignity, religion divided us, ignorance is controlling us, and truth scares us. With these retrogressive forces working against us Africa will remain a dark continent to the delight of the west. Remember whoever controls Africa, controls the world, and that is why major economic blocks have launched initiatives to improve and stratify economic ties with Africa.
Responding to the news of his overthrow, Kwame was reported as saying, “It is only Ghanaians and Africans who can genuinely develop our continent. We can produce what we need, instead of going cup in hand begging for handouts from those whose only wish is to exploit us or make us secondary to their interests. We must cultivate a sense of national dignity. We need a new phase of African revolution for the economic emancipation of the continent after political independence.” Undoubtedly, Kwame Nkrumah’s words and vision are even more relevant today than in 1966 when he pronounced them. Are our leaders ready to fight for Africa’s economic emancipation?
