5. What is the difference between the approach of Nigeria toward oil revenues and that of Ghana (the Nigerian experience is documented in the Country Focus feature in this chapter)? Which approach is in the best long-run interests of the country?

The West African nation of Ghana has emerged as one of the fastestgrowing countries in sub-Saharan Africa during the last decade. Between 2000 and 2013, Ghana’s average annual growth rate in GDP was over 7.5 percent, making it the fastest-growing economy in Africa. In 2011, this country of 25 million people became Africa’s newest middle-income nation. Driving this growth has been strong demand for two of Ghana’s major exports—gold and cocoa—as well as the start of oil production in 2010. Indeed, due to recent oil discoveries, Ghana is set to become one of the biggest oil producers in sub-Saharan Africa, a fact that could fuel strong economic expansion for years to come.
It wasn’t always this way. Originally a British colony, Ghana gained independence in 1957. For the next three decades, the country suffered from a long series of military coups that killed any hope for stable democratic government. Successive governments adopted a socialist ideology, often as a reaction to their colonial past. As a result, large portions of the Ghana economy were dominated by state-owned enterprises. Corruption was rampant and inflation often a problem, while the country’s dependence on cash crops for foreign currency earnings made it vulnerable to swings in commodity prices. It seemed like yet another failed state.