Bloomberg News

Ghana’s Oil-Driven North-South Divide Erodes Support for Mills

February 07, 2012

Feb. 7 (Bloomberg) -- Mustapha Faisal surveys a pile of rusty scrap metal that he sells on the roadside in Accra, Ghana’s capital, and sighs as he talks about wishing to go home to his village in the northern region.

Faisal, 34, who came south a decade ago to find work, says he can’t afford to return because the jobs are in the south, where economic development has long outpaced the arid north.

That divide in West Africa’s second-largest economy after Nigeria has deepened as cocoa and gold production rose in the south and oil output began off the Atlantic Ocean coast. It may erode support for President John Atta Mills and his ruling National Democratic Congress in a re-election bid this year after he won in 2008 by less than 1 percentage point.

“We voted for Mills and the NDC because we expected things to get better, but it’s rather worse,” Faisal said in an interview last month, gesturing at the other scrap dealers. “We will definitely think twice in this year’s elections.”

Ghanaians such as Faisal, who said he earns 250 cedis ($148) each month, have carved out a path from the north to the south, seeking opportunities in a resource-rich area where poverty may be largely eliminated by 2030, according to the World Bank.

In the drought- and flood-prone north, home to about 17 percent of Ghana’s 24.2 million people, little is produced other than locally consumed staple crops. Three-fifths of the population lives on less than $1.08 a day in 2009 prices, according to the bank.

Tullow, Newmont

The divide has been deepened by Ghana’s oil boom, sparked by the 2007 discovery of the offshore Jubilee field by London- based Tullow Oil Plc. As oil companies such as Eni SpA and OAO Lukoil joined gold producers Newmont Mining Corp. and AngloGold Ashanti Ltd. in the southern half, northerners headed there too, looking for work in Accra and the oil hub city of Takoradi.

Oil has also helped weaken the cedi as companies seeking to invest in the oil-driven economy exchanged the currency for dollars to buy equipment from overseas. The currency has slumped 2.7 percent this year and hit a 17-year low last month. It was little changed at 1.6849 per dollar yesterday as of the 4:00 p.m. close in Accra.

Mills, who started production at Jubilee in a Dec. 15, 2010, ceremony with a promise to use oil for a “major industrial takeoff,” is banking on crude to boost the country’s $31 billion economy and create jobs.

Since that day, though, oil has missed production targets. A peak output of 120,000 barrels a day from Jubilee was delayed until 2013, at least a year later than planned, because of technical issues, Tullow said Jan. 18. With less money from oil, Mills may not be able to bring development in time to win northern votes in the December contest. He faces Nana Akufo-Addo of the opposition New Patriotic Party, whom he defeated in 2008.

Votes Needed

“It would be fatal for one to lose there, or not to have substantial votes from there,” said Emmanuel Gyimah-Boadi, head of the Accra-based Center for Democratic Development, a non- profit research group that gets funding from the United Nations and the aid departments of foreign governments.

Should Mills lose, investment in agriculture, which along with fishing employs 48 percent of the country’s work force, may dwindle. During his tenure, cocoa production jumped to a record of more than 1 million metric tons, a buffer-stock program was created to buy up excess crops and spending on fertilizer rose 61 percent to 55 million cedis last year. The economy expanded 12 percent in the third quarter of 2011 from a year earlier.

Even with the agriculture spending, it’s oil that has driven the economic hopes of northerners.

No Better Roads

“The discovery of oil came with very high expectations of better roads, education and health care, but we haven’t seen anything,” said Cliff Maasole, a political science lecturer at the Wa, Upper East region-based University of Development Studies, by phone. “Mills is a fine gentleman but he hasn’t done much to win the hearts of northerners,” he said in December.

Ghana’s divide is rooted in the West African slave trade, when the north was a major source for human trafficking, said Yao Graham, coordinator of the Accra-based Third World Network, a non-governmental organization that advocates for rights in developing countries.

As a colony under the U.K., the south, then known as the Gold Coast, was closely ruled while the north was left as a military-led protectorate and a source of conscripted labor for cocoa plantations and gold mines, Graham said in an interview.

In the south, “roads and railways were built to facilitate the transportation of minerals like gold and bauxite as well as timber and cocoa for export to Europe,” he said.

Beef and Tomatoes

Ghana’s first president, Kwame Nkrumah, included the north in his development plans and oversaw the construction of state- owned factories to process beef and tomatoes there during the 1960s. Decades of economic downturn following military coups, including the one that ousted Nkrumah in 1966, left northern development faltering, Graham said.

Mills is counting on a government effort to help bridge the divide. Ghana’s Savannah Accelerated Development Authority is meant to attract investment in infrastructure including roads, irrigation dams, health clinics and electricity and water production, said Alhaji Gilbert Iddi, chief executive officer of the authority, in an interview.

The authority “is a big project and adopts an integrated approach to try to bridge the developmental gap,” said Mark Woyongo, government minister in charge of the Upper East region, by phone. “We are hopeful it will stem the tide of migration to the south.”

Another sign of hope for the north is its reserves of gold, manganese, iron-ore and limestone, according to Ghana’s Geological Survey Department.

Iron Ore

Ghana National Petroleum Corp., the country’s state-owned oil company, said in April it would spend $40 million to gather seismic data to look for crude in the onshore Volta River basin, which covers about 40 percent of Ghana’s land area. Cardero Resource Corp. of Vancouver and its Ghanaian partner, Emmaland Ltd., were given permits to explore for iron ore at Sheini in the northern region, the company said Jan. 31.

Mills’s party has historically been strong in the north, said Kojo Asante, a senior research officer at the democratic development center, in a telephone interview yesterday. Still, Mills had to win it back in 2008 after the region voted for the other party in 2004.

“The fact that the NDC gives more representation to northerners as compared to the NPP may be the reason for the North’s alignment,” he said, adding that the south swings because urbanization brings in different voters each election.

For many of the north’s economic migrants who have headed south, their perception of Mills’s presidency lies in their success in finding work.

“Most of my colleagues cannot read and write and we really regret coming to Accra,” said Osman Abdul Rauf, a 29-year-old bricklayer who left his home of Bolgatanga in the Upper East region to come to the capital in 2007, the year the Jubilee field was discovered. He now drives a motorcycle taxi, a service that’s illegal yet popular in the congested city. “We would go back home today if there were jobs for us.”

--Editors: Emily Bowers, Anne Swardson

To contact the reporters on this story: Moses Mozart Dzawu in Accra at mdzawu@bloomberg.net; Ekow Dontoh in Accra at edontoh@bloomberg.net.

To contact the editor responsible for this story: Emily Bowers at ebowers1@bloomberg.net.


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