Rising joblessness a decade after oil find funfair…. Where did we go wrong?
Adnan Adams Mohammed
Eleven years after the oil and gas discovery funfair and
excitement, ironically graduate and skilled labour unemployment rather appears
to be worsening and becoming a national security concern. The Ghana Labour Force Survey Report
commissioned by the Ghana Statistical Service (GSS) estimated that, more than
1.2 million persons from 15 years and older are unemployed in Ghana,
representing the total unemployment rate of 11.9%, as at 2015. Also, the
National Service Secretariat has estimated that, only 10% of students who
complete their national service get employed.
These are staggering figures which portray the high rate of
jobless youth in the country. Governments over this past decade have been
compelled to adopt what appears to be firefighting and short-term measures to
deal with a challenge that require long term and sustainable solutions. Youth
Employment Authority (YEA), Youth in Agricultural Programme (YAP), Youth
Enterprise Support (YES) and the newest National Builders Corp (NABCo) are some
of the short-term vehicles to deal with the rising youth unemployment. But couldn’t
a more strategic policy direction in our oil and gas industry provide us with
sustainable ways of addressing the unemployment challenge?
Ghana in 2010 begun commercial production of oil and gas
from the Jubilee Oil Field, a record three years after discovery. According to
energy and labour experts, the multi-billion petroleum sector holds a great key
to solving the unemployment situation by providing very lucrative and a wide
range of professional, skilled and unskilled jobs. As it is known, the
petroleum sector value chain cut across all the sectors of the economy;
agriculture (food services), transportation services, professional services
(legal, insurance, accounting, management and engineering), hospitality
services (accommodation), logistic supply and metal fabrication and welding
services among others. These sectors if well developed can provide meaningful
jobs for the teaming youth coming out of school each year.
The huge potential of the oil and gas industry is obviously
not oblivious to the authorities and that might have informed the relatively
quick passage of the Local Content and Participation Legislative Instrument.
The clear aim is to promote the use of locally made goods and services and also
define local content targets across 10 main upstream supply chain sectors
within the oil and gas value-chain to create massive job opportunities for
Ghanaians. Each year a conference on local content and participation is
organised by the Petroleum Commission, ostensibly to deepen the participation
of the Ghanaian. However, participation by local companies in these areas
remain low.
An Ernst & Young (EY) Ghana market study to assess the
viability of the upstream supply chain sectors in Ghana, to increase local
content at the speed and level stipulated by the local content regulation (LI
2204), reveals that in spite of the vast opportunities available, local
participation is very low due to high barriers of entry. Partner advisor for
EY, Mr. Michael Sackey, explained that “there are more foreigners than local
companies in the upstream sector for a number of reasons. One is capability;
today, as we speak, we don’t have the capability and it also takes a long time
to build the capability: up to ten years.” The other reason he cited is about
capital requirement. “We just don’t have the financial muscle to get into that
space. While you have the foreign companies, who have been doing this for
years,”, he explained.
According to the survey report, activities such as well
drilling services are in high demand and attract the highest capital
expenditure across the upstream value-chain. However, existing capacity of
local suppliers to service the sector is low due to high requirements in
skills, capital, HSEQ and technology. This is the area which creates more
employment and business opportunities. “Well drilling services will attract the
biggest spend up to 2024 in the industry despite the fact that local capacity
is quite low.” Meanwhile, local capacity exists in the transportation &
supply, HSE and IT & communications areas, yet, these areas do not create
many job opportunities. But even in these areas, we share the spoils with
foreign interests.
The complaints about lack of capacity and inadequate capital
by local companies and individuals have remain the same a decade after
discovery of the resource. Much as one concedes that these are real challenges,
for these complaints to remain with us even after a decade suggest some lack of
seriousness to address them. Considering how worried we seem to be about the
worsening unemployment situation and the employment potential of the oil and
gas industry, one would have expected a strong effort to address the challenges
in order to enable more local content and participation, which will give us the
jobs we so badly need.
The other leg of the challenge is enforcement of the local
content regulations particularly for Joint Venture (JV) companies. Players in the
industry are all blaming the Petroleum Commission (PC) for failing to execute
its mandate appropriately. Interacting with some local companies, a major issue
that kept coming up was the sharing of the scope of work under contracts. In
undertaking projects as subcontractors for the main Operators (International
Oil Companies), it is a requirement to state the scope of work and how it is
divided between the partners at the time of tender submission; it is also a
requirement to ensure that this agreed scope of work is actually carried out by
the JV; it is the responsibility of the Operator to see to it that these
requirements are carried out as enshrined in the Petroleum Agreements ; lastly
it is the role of GNPC as the business owner, and PC as regulator, to ensure
that the Operators carry out their duties and that the sub-contractors of these
operators follow the rules of engagement and the award conditions. Enforcement
of these requires will certainly deepen local participation and create more job
opportunities for citizens. But it appears the enforcement is lacking. In a
shocking revelation, the former Boss of GNPC, Alexander Mould conceded that,
“in practice many subcontractors under the watch of the Operators
(International Oil Companies), the National Oil Company (GNPC), and Regulator
(Petroleum Commission) flout this rule of engagement; the excuse is
simple......‘because they can!’.”
It is obvious that there is the need for a strong will on
the side of the government to have a clear policy towards using oil and gas as
a major avenue for job and wealth creation and implement it effectively. Also, the
regulator of the industry (Petroleum Commission) as a matter of urgency and
importance should ensure that the regulations are enforced effectively and
efficiently across board including the various JV arrangements. The Commission may
also have to review aspects of the regulations to clear all ambiguities in the
provisions of the law and also streamline the provisions a well as set realistic
targets that reflect best practices in the industry in comparable countries. Only
such deliberate and effective approach will bring us close to the excitement
were expressed in June 2007, otherwise joblessness will remain a security
threat even with all the natural endowments. There however are indications that
the current management of the PC is desirous of deepening local content and
participation but that must be quickly backed by real action, otherwise the
value will remain the same and in the abundance of water, we will remain
thirsty.
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