Aiding stakeholder capitalism: donors and the contentious landscape of transparency reform in Ghana

ABSTRACT

Despite the growing invocation of transparency norms as the panacea for addressing the challenges associated with natural resource wealth, there is considerable ambiguity about how they shape market regimes in the global south. Drawing from empirical insights on government-donor engagements around the Extractive Industries Transparency Initiative (EITI) that were pieced together from multiple rounds of fieldwork in Ghana between 2012 and 2016, this article recounts the distinctive ways that such ambiguities around transparency reforms work to deepen the logics and mechanics of global capital in the extractive sector, with substantial gaps in labour market protections and domestic ownership. The author argues that the EITI’s successes in this endeavour reflect a more structural dynamic that is tied to donors’ parallel role as intermediaries of extractive governance norms and brokers of a distinctive form of stakeholder capitalism. This observation underlines changes in the global architecture for aiding the expansion of Western capital by forging expanded networks that preclude alternatives to neoliberalism.

RÉSUMÉ

En dépit des appels croissants à la création de normes de transparence – perçues comme une panacée face aux défis de la gestion des ressources naturelles – la manière dont ces normes influencent les régimes de marché dans le Sud global est encore le sujet de beaucoup d’interrogations. Nous basons notre analyse sur des données empiriques portant sur les relations entre le gouvernement et les donateurs dans le contexte de l’Initiative relative à la transparence des industries extractives (ITIE). Ces données ont été recueillies lors de plusieurs enquêtes sur le terrain entre 2012 et 2016. Le but de cet article est d’analyser les différentes manières selon lesquelles l’ambiguïté quant aux réformes sur la transparence mène à un ancrage des logiques et mécaniques du capital global dans l’industrie extractive, et à un grave manque de protections du marché du travail et des propriétés nationales. Nous suggérons que le succès de l’ITIE reflète une dynamique plus structurelle liée au double rôle joué par les donateurs, qui sont à la fois médiateurs des normes de gestion des ressources naturelles, et agents d’une forme distincte de capitalisme participatif. Nos observations soulignent des changements dans l’architecture globale de l’expansion des capitaux occidentaux dus à la création de réseaux plus élargis, et menant à un abandon des alternatives au néolibéralisme.

KEYWORDS:

• Transparency
• stakeholder capitalism
• contentious politics
• markets
• Ghana
• EITI

Introduction

From the Logone Oriental region of Chad, where the World Bank led a consortium of multinational firms to dictate the terms of oil-backed expenditure, to the growing coalition of activists, business leaders and policy makers who profess abiding faith in the capacity of transparency norms to offset the detrimental effects of natural resource endowment, ideas about governing natural resources have revived donor-backed neoliberal reform in the twenty-first century. In the 2010s, these changes in the global aid architecture coincided with a resource boom for many African countries, resulting in a deeper alignment between conditionality-based lending and the penetration of global capital in the extractive sector (Oppong, Patey, and Soares de Oliveira 2020). Nonetheless, while much of the scholarly debate around resource politics has tackled the dynamics of transparency norms, there has been surprisingly little detail about how they intersect with markets in resource-rich countries. Through the combined lens of stakeholder capitalism and contentious politics, along with empirical detail of government-donor relations around the Extractive Industries Transparency Initiative (EITI) in Ghana’s oil industry, this article addresses this imbalance by recounting how ambiguities surrounding transparency norms shape the logics and mechanics of global capital penetration into the extractive sector. Foregrounding the analytic around the means by which transparency norms foreclose neoliberal alternatives that guarantee protections for labour and public ownership, the main argument advanced here contends that government-donor relations around the EITI reflect a more contested dynamic associated with donors’ parallel, and ambiguous, roles as intermediaries for resource governance norms and brokers of a distinctive form of stakeholder capitalism in Ghana.

Since its introduction in 2003, the EITI has attracted plaudits for forging a ‘global alliance’ for an open and accountable management of natural resources (Eigen 2009). With over 60 implementing countries across the globe (EITI Secretariat 2022), along with support from leading financial institutions and multinational firms, several analysts have often relied on the EITI to claim a convergence around transparency norms in the extractive sector (Eigen 2009). In the 2010s, this invocation of the EITI as the Gold Standard for managing resources invariably shaped the contours of government-donor relations. Indeed, notable donor initiatives such as the Multi-Donor Trust Fund (MDTF), through which technical and financial assistance to implementing countries is provided, and the Norway’s Oil for Development programme contain stringent requirements for EITI compliance (Kolstad, Wiig, and Williams 2009). Consequently, various accounts from the EITI literature have narrowly cast donors as agents for the diffusion of global transparency norms, with compliant countries locked in a more passive role as ‘norm takers’ (Winanti and Hanif 2020). What is rarely acknowledged in this fast-building literature is that beyond this rather narrow unidirectional view of the flow of EITI norms from active donors to passive implementing countries, government-donor relations often typify a more contentious space for negotiating the overriding contours of politics and markets in the oil industry.

By combining the lens of stakeholder capitalism and contentious politics, conceived here as the diversity of conflicts and disputations that shape the outcomes of institutions (Oppong 2020b), the article frames the analytic in terms of the intersecting logics, institutions, and politics that cast transparency norms as active tools of market and political power. Stakeholder capitalism conveys an industrial structure and regulatory regime that entails a market-oriented environment, dispersed corporate ownership, labour market flexibility and a complex interdependence between multiple institutions and actors (Tiberghien 2007). The term sprang from the scepticism among corporate management and organisational theorists about whether managers should be solely responsible for the needs of their stakeholders, irrespective of consequences for employees, suppliers, customers, and communities (cf. Sunley 1999). Instead of normative commitments that emanate from decisions and acts of firm managers, however, comparative political economists view stakeholder capitalist systems as the outcomes of state-brokered political bargains that involve all actors to create formal and informal norms to ensure economic competitiveness and social stability (Tiberghien 2007, 3).

Far from the precepts of reputational intermediary, therefore, the account offered here connects the logics, institutions, and the politics of government-donor relations that enable us to position the EITI as an active tool of market and political power. This approach adds to the existing literature in three main ways. The first relates to how we connect instruments of market reform to what Doumou (1987) characterised earlier as communities of economic life in low-income countries. Indeed, while the EITI is often tied to the upsurge in market-based solutions and the neo-liberal world order (Haufler 2010), there is a dearth of insight into how its implementation shapes the context of social bargains and institutions that sustain market regimes. As detailed further below, Ghana’s experience underscores the EITI’s strengths in shaping the contours of investments in the extractive sector, while de-emphasising critical areas like labour rights protection and resource nationalism. Secondly, although political economists continue to grapple with the variety of economic outcomes that emerge from stakeholder systems in countries within Europe, North America and South-East Asia, there remains an oddity about how market-enhancing governance reforms work in the global south. This rather blatant omission stems from a tendency to exaggerate patterns of ‘primitive accumulation’ without a deeper interrogation of the market forms that can be conceptually extracted from the chaotic and messy terrain of policy bargains (see Booth and Golooba-Mutebi 2012). An account of the relational dynamics of donor engagement with the EITI offers an entry not only into its linkages with market outcomes in specified domains of the extractive sector, but also distinctive bargaining processes that sustain EITI implementation. The third contribution relates to the situated trajectory of markets and politics in Ghana. Indeed, the role of donors in steering different paths of economic and governance reform has attracted much attention, with a stark contrast between those who have underscored their overbearing reach in policy spaces, such as Libby’s (1976) grim account of the usurpation of the Progress Party’s agenda in the 1970s by international financial institutions, and others who point to the agency of domestic elites (Oppong and Andrews 2020). These studies have enriched broader discussions around the changing machinery of development aid and how it has driven concrete outcomes in diverse areas like democratisation, poverty reduction, mining sector reform, youth development and public finance management. Nonetheless, the EITI literature on Ghana rarely positions the initiative as part of the country’s aid architecture. This is a surprising omission, especially given the growing centrality of the EITI to donor programming over the past decade. Notably, the report of the Independent Commission for Aid Impact of the UK government identified support for the EITI as crucial elements of its goal of facilitating effective oversight of oil revenues (Independent Commission for Aid Impact 2020). At the global level, donor agencies like USAID have entered into different strategic partnerships with the EITI to drive country-level reforms in areas like contract transparency and enforcement of other extractive governance norms (EITI Secretariat 2020). Also, as detailed further below, the EITI Multi-Donor Trust Fund, which is administered by the World Bank, has become a crucial vehicle for donor harmonisation and governance reforms in the extractive sector. The account here, therefore, underscores the crucial relational processes that drive donor engagements with the EITI and points to their conflictual and material outcomes in the extractive sector.

To develop the conceptual essence of this article, the next section maps out the landscape for donor engagements with the EITI, underscoring how it reflects contending global norms of transparency and pro-market regimes. This is followed by an account of the evolving context of stakeholder capitalism in Ghana, highlighting how it shaped the initial contours for donor engagements in the extractive sector. The final sections connect the insights from the country’s stakeholder capitalism with the distinctive nature of government-donor interactions around EITI and the oil industry. The article draws from fieldwork that initially formed part of my doctoral study between 2012 and 2016, with a subsequent follow-up fieldtrip to Ghana in 2021. During both rounds of fieldwork, I sourced data from archival research, along with extensive notes from unobtrusive observation of three EITI dissemination workshops and various community meetings. I supplemented this data with 117 elite interviews with informants from the Administrator of Stool Lands, Ghana Chamber of Mines, along with individual consultants, extractive firms, donor agencies, NGO and community activists and think tanks that are linked to the mining and oil industries. I also conducted follow-up interviews in 2021 with representatives of organised labour, industry associations, and selected academics, to ascertain their reflection of EITI implementation in Ghana. The main arguments advanced by the article emerged from an in-depth analysis of interview transcripts, field notes, and data compiled from a longstanding interest in EITI trends in the media and official reports.

EITI and the contentious aid landscape

Much of the enthusiasm that has greeted the birth of the EITI has been inspired by a simple, but powerful, idea; that policy actors and organisations operate according to appropriate notions of rationality and market efficiency rather than instrumentality (Santiso 2001). Indeed, the twin pillars of transparency and multi-stakeholder deliberations, as espoused by leading activists and scholars in support of the EITI, maintain that sustained information disclosure will lead to broader public demands for accountability that will undermine perverse behaviour and, in turn, promote developmental outcomes in resource-rich countries (Oppong 2018, 62). This idea has inspired a broad range of scholarly interventions to capture the allure of the EITI as tool for the diffusion of governance norms (Fenton-Villar 2021; Andrews and Oppong 2022). The insights from these studies, along with critical feedback from country analysis of EITI, have proven relevant, especially in driving the expansion of its framework into an all-encompassing tool of reform that connects resources with sustainable development outcomes. However, by maintaining an epistemological orientation that often regresses EITI on variables associated with why countries comply with the initiative, the literature has, so far, left out the rich detail of bargains, contestations, and inter-subjective values associated with EITI implementation (see Oppong 2018).

A closer examination of government-donor interactions reveals critical insights that can help bridge the hidden tension between those who view the EITI primarily as a lever in the global apparatus for the diffusion of beneficial extractive sector norms (Eigen 2009) and others who consider it an instrument of power (Oppong 2018). While the role of donors in the EITI has rarely been the subject of much interrogation (notable exceptions include Kolstad, Wiig, and Williams 2009), accounts from the literature mostly cast them as gatekeepers for the diffusion of global EITI norms. According to Benner, de Oliveira, and Kalinke (2010), for instance, the EITI is part of the reset of the global aid architecture at the turn of the twenty-first Century that sought to draw a nexus between ‘good governance’ and natural resources. Leverett (2010) also links the EITI to the longstanding effort by OECD countries to shape the rules and governance framework of the global energy industry in response to the ascendency of OPEC and new power players like China and India. Among the conclusions of this literature, the norms associated with the EITI emerged from a top-down process that are deployed through the strictures set out by Western aid donors. Translated into the national policy landscape, this implies that EITI compliance represents an attempt by developing countries to gain access to what Gonzalez-Espinosa and Klein (2013, 113) described as ‘benevolence of the international community’.

The insight from the literature on donors’ role in driving transparency norms and the EITI is, thus far, invariably useful and faulted. Notably, recent events associated with how different low-income countries came to embrace the EITI affirm the presumptions about donors’ norm gate-keeper role. In Liberia and Cameroon, for instance, this entailed a more coercive form where donors explicitly tied debt relief to EITI compliance (Magno and Gatmaytan 2017). Also, as demonstrated by Nigeria where the initiative was pioneered, compliance with EITI is often used by national elites to signal their commitment to anti-corruption and governance reform (Gonzalez-Espinosa and Klein 2013; Magno and Gatmaytan 2017). Nonetheless, the unidirectional logic that suggests an active flow of norms from outside, via the intermediaries of powerful donors, along with presumptions about an outward and passive orientation for EITI compliance point to different faultiness in the account so far. These weaknesses stem from an underestimation of the marked contestations in the global community and local-level instrumental dynamics that occur within the bounds of competing claims over questions of sovereignty and distributional contestations.

The contested global terrain of the EITI was evident at the 2003 Lancaster Conference where the EITI was adopted. Prior the Lancaster meeting, the G-8 adopted an Action Plan on Fighting Corruption and Improving Transparency at Evian, which agreed to push for an ‘intensified approach to transparency’, on ‘a voluntary basis’ (G-8 2003). The Evian Plan also sought to ‘encourage governments and companies, both private and state-owned, to disclose payments and receipts to the IMF or another agreed independent third party such as the World Bank or Multilateral Development Banks’ (G-8 2003). However, the final EITI model that was adopted did not spell out any coherent role for the World Bank or IMF, as anticipated by the Evian meeting. Instead, third-party disclosure was entrusted to respective multi-stakeholder bodies that were mandated with overseeing country-level implementation. The World Bank quickly emerged as the foremost critic of the newly-established EITI and moved to roll out parallel resource governance programmes in various EITI implementing countries. The most dramatic form of this contestation came in 2008 when the World Bank proclaimed a ‘post-EITI’ era during the launch of the EITI++ to support ‘committed governments’ to implement ‘good policy along the entire natural resource value chain’ (World Bank 2008a). In correspondence with the EITI, the Bank argued that; ‘while the EITI is a crucial ingredient, it is not enough’ and that, through EITI++, it was seeking, ‘in collaboration with other partners’, to raise its ‘commitment to take a more holistic, integrative approach in how we support interested countries in their efforts to translate natural resource wealth into sustainable development’ (EITI International Secretariat 2008). As demonstrated further below, this tension within the donor community resonates domestically, in terms of parallel transparency programmes and support schemes in the extractive sector.

At the domestic level, EITI implementing countries mirror various structural contradictions that usually undercut donor leverage. Foremost among these structural limits are what Pogge (2002) has captured as the intricate ‘privileges of government’ which are conferred by territorial sovereignty over natural resources in the shape of ownership and proprietary rights, irrespective of normative orientations and wider distributional outcomes. Across the developing world, two main forces have accentuated the ambiguities around proprietary ownership of resources for the EITI and the extractive sector. Firstly, the development aid complex has witnessed a fragmentation, with a host of bilateral and multilateral aid agencies, including those from China and Russia, adding to the menu of options available to developing countries. Aid fragmentation has led to criticism not only against the poor record of aid transparency and high transaction costs for recipient countries (Easterly 2002), it has also revived passionate debates about sovereignty and non-interference in the internal affairs of countries, as opposed to the paternalistic and conditionality-based approach of Western donors (Cheru 2016, 593). Secondly, as observed by Oppong (2018), there is an equally problematic disconnect between the EITI and the conventional platforms of accountability, including the legislature and the other institutions of the state. Consequently, implementation of EITI often accords significant power to state elites, especially within the executive arm of government and bureaucratic elites, which have yielded varied outcomes that range from ‘mock compliance’ (Öge 2016), to elite instrumentalisation of reforms (Oppong and Andrews 2020). In the case of Tanzania, for instance, Sørreime and Tronvoll (2020) referred to such outcomes as ‘constructive ambiguity’ that have enabled the coexistence of competing norms of accountability between globalised norms that underscore liberal democratic principles and a particularistic domestic perspective that emphasised sovereignty, resource nationalism, anti-imperialism, and anti-corruption, which was shared to a significant degree by the Tanzanian government. As demonstrated further below, Ghana’s experience with EITI reflects this co-constituting assemblage of power, norms, and actors. However, unlike the constricted civic space that Sørreime and Tronvoll (2020) associate with Tanzania, Ghana’s EITI domain is marked by more open-ended contestations. Within this space, a much stronger domestic coalition involving domestic NGOs and the government have afforded the latter a much stronger leverage. As demonstrated further below, the cumulative effect is a distinctive form of stakeholder capitalism that secures commercial interests of donor countries.

The context of stakeholder capitalism in Ghana

A common thread that runs through academic and policy debates around EITI is an underlying concern for how it shapes the context for the efficient functioning of markets and the industry structure of specific sectors. At the first global meeting of the EITI at the Lancaster Conference, for instance, these concerns were expressed by business representatives who, among others, called for the need to ‘ensure that existing contractual agreements and commercially sensitive information are respected’ (ISIS Asset Management 2003). These concerns were eventually addressed in the final EITI framework which emphasised, among others, principles for voluntary compliance and ‘respect for contracts and laws’, along with calls for ‘enhanced environment for domestic and foreign direct investment that financial transparency may bring’ (EITI 2003). Hence, as Haufler (2010, 53) has observed, the EITI reflects a global normative environment in which ideas of limited democracy, market efficiency and corporate social responsibility dominate, as opposed to resource nationalism and preferential support for local capitalist class.

The dialectic between the EITI and the smooth functioning of markets has attracted much scrutiny, with several analyses connecting EITI implementation with increasing FDI inflow and overall improvement in the regulatory regime (Fenton-Villar 2021). For donors operating in the extractive sector, however, these changes often entail a double-edged sword: On one hand, bilateral and multilateral aid agencies such as the African Development Bank, the World Bank, and the UK’s Department of the International Development (now Foreign, Commonwealth, and Development Office) have devoted considerable energy and resources towards institutional strengthening and policy development across different sectors. And, while there is considerable debate about the impact of such reforms on institutional performance efforts (Buntaine, Parks, and Buch 2017), they remain visible components of the governance landscape of individual countries. On the other hand, there has been greater suspicion about how donors employ their overtures in the institutional domain primarily as a guise for market access. For instance, an account of the US food aid policy in Southern Africa by Zerbe (2004) averred that its aims were tailored to push recipients to adopt biotech crops as part of a broader effort to expand access to American transnational firms to the detriment of the smallholder producers. In Ghana, this overlapping and conflicting dynamic of the aid industry has shaped the distinctive nature of stakeholder capitalism with bargaining occurring around a diverse group of local actors and donor agencies.

Historically, the recent trappings of stakeholder capitalism in Ghana can be traced to various reforms that were launched by the Provisional National Defence Council (PNDC) in April 1983 as part of the Economic Reform Programmes (ERPs). Hitherto, a prolonged crisis in the Ghanaian economy in the shape of inflation, non-performing state enterprises, export decline, and rising unemployment, led to fundamental questions about the state-led approach to development that was adopted by successive governments after independence in 1957. While the history and impact of the ERPs continue to attract attention, its role in shaping up the evolving structure of stakeholder capitalism took three general forms: The first entailed attempts at restructuring public services and state institutions based on ‘new managerialism’ norms which sought to make public services operate based on private sector principles. These reforms, which witnessed the adoption of programmes such as the Civil Service Reform Programme and a requirement for all state enterprises to list as limited liability companies in 1992, raised the spectre of the potential erosion of the social case that underpinned state participation in the economy. Secondly, there were realignments of labour markets following wide-scale retrenchments of workers in the public sector and related decline in real wages, along with attempts by the government that undercut the power of unionised labour. In the mining and quarrying sectors, for instance, despite significant expansion in foreign investment and output, an estimated 6,700 jobs were lost in formal employment between 1987 and 1999 (Aryeetey 2005). The overall flexibilisation of labour reflected a third, and more critical, dynamic that accompanied what a Congressional delegation characterised as ‘unmodified import liberalisation’ (Weissman 1990) with associated consequences for the debasement of traditional local businesses and expansion in the informal economy (Kraus 2007).

Institutional arrangements for stakeholder capitalism in Ghana were, therefore, a response to some of the social and political questions that emerged from market restructuring of the Ghanaian economy. Following the return to democracy in 1992, this took the form of more assertive agitations from different social and political actors, acting in concert with the donor community, which steered the government’s drive to strengthen the norms of political and economic liberalism. Notably, in the early 1990s, the National Democratic Congress (NDC) government launched the National Institutional Reforms, which led to a reactivation of the National Tripartite Committee in 1995 to help manage and anticipate tensions with organised labour and other social groups. Stakeholder capitalism, thus, came to typify the broader scope for a new consultative approach to facilitate market reform and address what Western donors often conceive as the ills of the command economy in Ghana. These yielded some notable policy blueprints such as the Ghana: Vision 2020 development plan, the Structural Adjustment Participatory Review and the National Economic Reform in 1997. Donor engagements culminated into the Ghana – Enhanced Structural Adjustment Facility (ESAF) of 1998–2000, which was adopted as the framework for technical assistance from the World Bank, IMF, and other donor agencies.

Signs of contention emerged when the evolving regime of stakeholder capitalism struggled to cope with new and conflicting demands from the social partners. Notably, in 1995, violence broke out during the Kume Preko demonstrations, which were led by the Alliance for Change – a coalition of opposition parties and civil society organisations – against the Government’s introduction of World Bank and IMF-backed Value Added Tax (VAT) and general economic hardships in the country. As pointed out by Osei (2000), the demonstrations highlighted the dualism between the ‘old’ ways of policy exclusion and the new politics of public decision-making offered by the new democratic institutions. As ESAF envisaged building support for the implementation of the VAT, the run up to the 2000 elections opened further areas of contention between the NDC government and the donor community. Notably, the government was reluctant to adopt the automatic pricing mechanism for oil prices as set out in the ESAF, in response to the political pressures from different electoral constituencies. Donor concerns about the government’s commitment to ESAF reforms led to the country’s suspension by the World Bank in 1998. The Bank’s frustration was also captured in a diagnostic report of the National Resource Management Project (1998–2003), which bemoaned the ‘slow and uneven progress on policy reform’, absence of sustainable management practices, distorted incentive structures, lack of transparency, poor governance, and a declining importance of ‘non-productive’ environmental concerns to Government (IEG, 2008 in World Bank-IEG 2014, 1). This damning assessment therefore placed the extractive sector at the centre of any future engagements to restore donor confidence in the country.

The implementation of the EITI in Ghana, which followed the election of the opposition New Patriotic Party (NPP), led by John Kufuor, in the 2000 elections, offered that pivotal anchor to signal Ghana’s commitment to governance norms. The new tenor of government-donor relations that was set out by the Kufuor-led government revolved around the revival of Ghana’s regime of stakeholder capitalism, which has been maintained by subsequent governments. In addition to maintaining different avenues for participatory decision-making, this regime has included various sectoral reforms and flexible terms of labour and private investment. Notably, banking sector liberalisation was amplified with the adoption of the Financial Sector Strategic Plans (FINSSP) of 2003–2011 which expanded the diversity of the sector with the entry of several bank and non-bank service providers from within and outside Ghana. Similar reforms were adopted in the oil sector which led, among others, to the downgrade of the of the fiscal terms of exploration from 65–55 per cent to 45–55 per cent (Oppong 2020a), and set the stage for various mid-cap and independent service firms that emerged to cash in on Ghana’s oil find in 2007. Meanwhile, a longstanding negotiation within the tripartite system and the donor engagements culminated into reform of the industrial relations regime. Most significantly, the Labour Act, 2003 (Act 651) was enacted to streamline different laws on labour in conformity to the 1992 Constitution and several ILO Conventions that have been ratified by Ghana. As contained in the accompanying memo to Labour Bill, the law reflects the shift away from the state as the centre of employment and is designed to ‘enable the Government play its catalytic role of providing the requisite socio-economic environment and for the private sector to pursue its new function as the engine of growth of the economy (Government of Ghana 2002). Notably, unionised labour representatives described Act 651 as a ‘double-edged sword:’ on one hand, it institutionalised collective bargaining, ‘depoliticised’ dispute arbitration with the creation of the National Labour Commission, and provided other guarantees for occupational health and safety; on the other hand, they pointed to Section 18(4) of the Act which authorised termination of employment without notice and, in the case of other provisions concerning temporary and casual workers, an ‘employer may hire a worker on terms that suits the operations of the enterprise’ (interview with Ghana Mine Workers’ Union rep, 2021). The launch of Ghana’s Extractive Industry Transparency Initiative (GHEITI) in 2004 reflects an important component of the Ghanaian government’s desire to apply the terms and logics of this stakeholder approach to the extractive sector. Within this broader context, the government’s treatment of foreign multinationals and the enabling regulatory regime for capitalist accumulation proved pivotal for how the country reclaimed its status as an exemplar reformer.

Aiding extractive governance in Ghana

Ghana announced the discovery of commercial oil resources in the offshore West Cape Three Points and Mahogany exploration blocks of the Western Region in 2007 with renewed optimism about their prospects for energising a vibrant and inclusive economy and political stability, in a departure from other countries in the region, such as Nigeria and Angola. This optimism reflected a revival in donor relations that was nurtured and sustained through the implementation of various donor-backed governance reforms. In 2003, a Multi-Donor Budget Support (MDBS) framework was established by the World Bank, the European Union, the African Development Bank, and eight bilateral donors to harmonise development financing for various government programmes. This coordinated effort led to the adoption of various donor-backed laws and policies, including the Financial Administration Act, 2003 (Act 654), the Public Procurement Act, 2004 (Act, 663), and the Whistleblower Act, 2006 (Act 720) (Government of Ghana 2013). Between 1998 and 2004, for instance, the country’s annual share of net Overseas Development Assistance (ODA) doubled from an estimate of US$704 million to over US$ 1.4 billion (World Bank 2022). The link between these reforms and expansion in the country’s ODA share can be found in Annual MDBS reviews, including assessment of the country’s performance in areas such as, public finance, budgeting, decentralisation, public sector reform and governance, which are considered as ‘disbursement triggers’ for continued budgetary support (Government of Ghana and Development Partners 2003, 3).

EITI compliance proved influential in the renewed enthusiasm of the donor community in Ghana. Notably, in less than a decade after announcing a commitment to adopt the EITI standard at the Lancaster Conference, Ghana underwent a remarkable transition from inception to one of the initiative’s star performers (Oppong and Andrews 2020). As affirmed by the 7th Global Conference in Peru, where Ghana received the prestigious EITI Chair award for pursuing ‘far-reaching policy, regulatory and institutional reforms in its mining, oil and gas sectors’, the country’s recognition is often tied to benefits such as enhanced public revenues and contract transparency (Coomson 2016). This growing recognition from the global EITI community came to epitomise the low-hanging fruits of compliance with transparency norms that was envisaged by key local stakeholders to translate into long-term attraction of multinational capital.

Despite the notable inroads, Ghana’s EITI implementation journey reflects a more contentious domain with outcomes that mirror the constitutive nature of the country’s stakeholder capitalism and donor engagements in the extractive sector. Across policy circles these contentions entailed a push by senior government officials and the donor community for control over the trajectory of EITI implementation in Ghana. Government-donor contentions took on an even more dramatic dimensions with the discovery of oil, as an energised civil society coalition interspersed with remnants of the stakeholder economy to wrestle control over the industrial structure of the country’s newfound Black Gold (Oppong 2020a). Within the broader EITI community, these contestations evoke the initial ambivalence of its structure on the position of the multilateral financial institutions, especially the World Bank and IMF. For the World Bank, while the agency did not receive a more assertive mandate, as envisaged by the G8 at Evian, it secured subsequent mandate to manage the MDTF through which technical and financial assistance to EITI implementing countries is provided (World Bank 2014). While this new mandate strengthened the Bank’s status as the leading EITI financier, its engagements were further compounded by an equally nebulous distinction between the global and national realms of EITI implementation. Hence, the World Bank and many other donor agencies often conceive of the EITI as a global standard and are suspicious of attempts by national elites to tinker with its implementation. An Independent Evaluation Group assessment of the EITI, for instance, observed that although local ownership is essential for the EITI, conferring a high degree of autonomy for each country could lead to variability in quality and undermine consistency of the EITI standard (Independent Evaluation Group-World Bank 2011, 15). However, as demonstrated by various country experiences like the account of Nigeria’s Directorate of Petroleum Resources by Abutudu and Garuba (2011), many actors and organisations at the national level tend to be wary of any incursions into the policy space, beyond the provision of funds.

In Ghana, the context of donor engagements in the EITI has been shaped by a successful revival in relations since the early 2000s that positioned officials of the World Bank, IMF, African Development Bank, and other bilateral aid agencies at the centre of wide-scale reform programmes such as the HIPC initiative and the various Ghana Poverty Reduction Strategy Papers (GPRSPs). However, the inception of EITI saw a much stronger alliance between government officials and a select group of domestic NGO activists, which bolstered the drive for national variation of the global standard. During field interviews, key informants who were involved in the inception of GHEITI maintained that the overriding impression among domestic NGOs and the government at the time of its creation was that the EITI’s scope was too narrow and that it was important to take advantage of the EITI to build local capacity. They often referred to statements in the EITI SourceBook which specifically indicated that the ‘balance of responsibility for the progress lies with the government’ and that governments ‘need to ensure that the governance structures and processes, staff and financing mechanisms are in place’ (EITI International Secretariat 2005). As an official with Revenue Watch International (now Natural Resources Governance Institute) averred,

When we were thinking about how to design the Ghana EITI … one of the things which came out very clearly was that if this was just about how government was receiving and how much company was paying, that information is already there. Because the Minister of Information was putting information through the budget and even people were not paying attention to it. The Chamber of Mines had a lot of information even beyond what the EITI Initiative was requesting. (Interview, 2013)

The initial fissures that emerged from the global and national tensions around GHEITI took on a more dramatic turn during the procurement of a consultant to undertake the first country audit. The government, with the full backing of the newly-formed steering committee, underscored the need for experts ‘who had an understanding and appreciation of the challenges in the mining sector’ in the country (personal interview with a member of steering committee, 2013). Criticisms from some donor agencies against this position of the Ghanaian government came to a head when Boas and Associates, a domestic auditing firm, was contracted to conduct the first country aggregation covering the period between 2004 and 2006. The World Bank and some development agencies raised concern about the appointing process and preferred an ‘international’ aggregator (IDL Group & Synergy Global 2010; various interviews, 2013). When the Government insisted on maintaining Boas and Associates, the World Bank refused to release funds for the first GHEITI aggregation. The Bank’s move represented a demonstrable reluctance within the traditional donor community to cede EITI implementation to country-level control.

The standoff between the World Bank and the Ghanaian government opened further polarisations within the donor community. Notably, GIZ provided a limited amount of funding for the first GHEITI audit. As GIZ’s funding was devoted largely to the publication and dissemination of GHEITI reports, the agency enjoyed some more visibility in GHEITI than other donor agencies (personal interview with GIZ representative, 2013). Meanwhile, the World Bank, along with the development agencies of the Netherlands, United Kingdom, and France, as well as the European Commission launched the Natural Resources and Environment Governance Programme (NREG), with a series of loans meant to provide annual budgetary support over five years (World Bank 2008b). A Memorandum of Understanding between the Government and the supporting development agencies presented NREG as ‘fully owned by Ghana’s relevant governmental agencies’, envisaged to ‘address governance issues as regards natural resources and environment’ (World Bank 2009, 2). The NREG was fashioned along the lines of the EITI++ vision and positioned as complementary to the EITI in Ghana. These parallel programmes, as Oppong and Andrews (2020) have observed, epitomised different routes by which various development agencies have attempted to carve out niche areas within the broader spectrum of Ghana’s growing field of extractive sector ‘good governance’ engagements in Ghana. While noting the cumbersome bureaucratic quagmire that emerged from this competitive arena of the governance complex, these parallels demonstrated the resolve among key donors to maintain their role as the brokers and guardians of stakeholder capitalism in the extractive sector. The significance of this role became even more visible in negotiating the institutional machinery for the country’s oil industry in the 2010s.

Donors and Ghana’s oil complex

Commercial oil production in Ghana began on 5 January 2011, when Tullow Ghana Ltd and the EO Group lifted approximately 649,064 barrels of crude from the Jubilee Fields (GNPC 2011). As an academic and senior fellow of Institute for Democratic Governance observed, this newfound wealth stirred unease among the country’s traditional Western donors about the potency of conditionality-based lending to sustain governance reforms. The election of the NDC, led by John Atta Mills, a year after the discovery of oil in 2008 compounded such concerns as the new government signalled intent to revise various donor-backed programmes in the industry, including the Fundamental Petroleum Policy and Gas Master Plan, which was adopted in July 2008 as the government’s blueprint for petroleum policy months after the discovery (Oppong 2020a). During the 2008 election, the NDC campaigned on a promise to deepen ‘local content provisions’ and create a ‘petrochemical industry utilizing local and imported natural gas’ (National Democratic Congress 2008). In office, President Atta Mills embarked on a nation-wide consultation programme to receive public inputs towards an overarching institutional framework to govern the oil industry that culminated into the enactment of critical laws such as the 2011 Petroleum Revenue Management Act, and the Local Content Law of 2013.

As various informants recalled during field interviews, these laws foretold a drive towards nationalism that contrasted with the imperative for stakeholder capitalism. Notably, immediately after the discovery of oil, the NPP government signed an agreement with Norway to transfer information and expertise ‘on all issues relevant to Ghana’s national interests in the oil and gas industry’ (Government of Ghana and Kingdom of Norway 2008). However, the Mills administration expressed preference for the ‘Trinidad Model’ which it framed in terms of a deeper emphasis on local content (personal interviews, 2013). Consequently, the government adopted a policy blueprint for local content, which set requirements for purchased goods and services from 10% (at the start of license), through 50% (within five years), to 60%–90% (within 10 years) (Government of Ghana 2013). A local content legislation also required 100% recruitment of Ghanaian expertise within 10 years of licensing. These provisions stirred government-donor contestation that placed the oil industry firmly in the arena for negotiating the boundaries of post-colonial sovereignty and the interests of multinational firms. As various representatives of the donor agencies told me, these targets were ‘unrealistic’ and argued that local content regime contained ‘harsh’ penalties that were ‘detrimental’ to the operations of foreign companies (personal interviews, 2013).

The Ghanaian government’s newfound assertiveness in shaping the trajectory of the oil industry also entailed a broader effort to diversify the portfolio of development finance through engagement with countries, especially China and Russia. China, for instance, underwrote concessional loans for large-scale infrastructural projects, firmed up earlier under President Kufuor through the construction of the Bui Dam – a new hydro-electric project, estimated at US$600 million that was built by Sino-Hydro and the China Exim Bank (McCaskie 2008). In August 2011, the Ghanaian parliament approved a Master Facility Agreement for a loan with the China Development Bank (CDB) amounting to US$3.0 billion to undertake various infrastructural projects, including a gas processing plant in Atuabo (Parliament of Ghana 2013). The loan agreement which followed a state visit by President Atta Mills to China was signed in the wake of a protracted impasse between Ghana and Kosmos, an American energy firm, over the sale of its stake in the Jubilee Fields to Exxon Mobile in 2009. The Government’s failed attempt to take over the shares of Kosmos through a bid from GNPC in partnership with Cnooc Ltd – one of China’s leading oil companies – raised doubts about its relationship with Western companies. In a series of leaked cables from the US Embassy in Ghana, for instance, these apprehensions were expressed by officials of the US administration who voiced concerns about the ‘radical change’ in Ghana’s relationship with the American companies, and the Government’s option for other less market-friendly models of petroleum management (US Embassy-Ghana 2008). This impasse took centre-stage during a visit in February 2010 by Johnnie Carson, an Assistant Secretary of State in charge of Africa. As reported in the leaked cables, during a meeting with President John Atta Mills, Carson ‘stressed the importance of respect and openness in the way oil companies engage with Ghana, highlighting Kosmos Energy as a case where he felt that was lacking’ (US Embassy-Ghana 2010).

The US government responded with a more explicit involvement in the oil industry, including the militarisation of the Gulf of Guinea littoral (see McCaskie 2008). There has also been an open push for the entry of American companies in gas processing and petroleum extraction, along with different programmes that have sought to fix what some American firms consider as ‘complicating bureaucratic process’ and the ‘politicisation of the bureaucracy’ (US Embassy-Ghana 2010). Indeed, this trend is not exclusive to the US government. Notably, Dypedokk (2010, 2) has observed that the agreement between Ghana and Norway under the Oil for Development programme did not only consist of technical cooperation on policy and legislative issues, it also expanded the ‘Norwegian market sphere’ as leading Norwegian oil firms like Statoil rolled out operations in Ghana. Thus, donor entanglements in Ghana’s oil industry reflect a complex mix between commercial interests, diplomatic engagement, and governance norms. In the 2010s, these entanglements added a new impetus to stakeholder capitalism in two main respects: The first entailed support for collaborative initiatives with civil society and a redefinition of the conditionalities attached to aid programmes to make governance norms more explicit. The second aspect involved expansion in new frontiers of Western capital accumulation often characterised by visible deployment of consultants and state-backed companies.

The tenor for this new donor strategy was set on June 21, 2012, with the signing of a Partnership Compact for 2012–2022 (Government of Ghana and Development Partners 2012). Under the Compact, the Government reluctantly agreed to wean itself of ODA within a decade. The Compact also contained, a series of ‘good governance’ measures that would guide Ghana’s ‘partnership’ with the development community during the period. In the years that followed, the networks that were forged by donors in the early stages of the oil industry proved pivotal in the incorporation of governance norms and the creation of institutions, such as the Public Interest and Accountability Committee (PIAC) – a citizens-led oversight accountability mechanism which was set up to promote effective management of oil revenues, despite well-known opposition from government ministers and members of parliament (Oppong 2016). Meanwhile, MDBS Annual Reviews also expanded into the oil sector with widespread calls on the Government to commit to a range of reforms and policies across the value chain of the oil industry. Under the NREG programme, for instance, the World Bank invested a total of US$57.80 million to, among others, ‘help improve public management and regulatory capacity and enhance sector transparency’ of the oil industry (World Bank-IEG 2014). The World Bank-funded Oil and Gas Capacity Building programme and the Norwegian Oil for Development initiative were also instrumental for the institutional realignments that led to the creation of the Petroleum Commission and the Ghana Gas Company. As demonstrated by the Millennium Power Compact agreement that was signed between Ghana and the US to secure private sector participation in the oil sector, such stringency in conditionality-based lending became more pronounced in the years covering the aid compact (Acheampong 2021).

Market reform of the energy sector also moved apace with multi-donor support for NGO-led campaigns for governance programmes. Specifically, initiatives such as Strengthening Transparency, Accountability and Responsiveness in Ghana (STAR-Ghana),¹ were unveiled to provide funding and other forms of technical support for civil society engagements on ‘good governance’ in the oil industry. GHEITI’s extension to the oil industry immediately came to epitomise this new collaborative space between Western donors and the NGO community. Notably, despite the initial reluctance to fund GHEITI, NREG financed the production of GHEITI reports for 2006–2009, while the World Bank supported the production of 2010–2012 reports (World Bank-IEG 2014, 28). Other donors like the GIZ also seized upon their involvement in GHEITI to nurture a broader civil society partnership that proved crucial in applying pressure on the government to extend the initiative into the oil industry.

Over the past decade, the EITI has proven remarkably effective in shaping up a distinctive investor-friendly stakeholder capitalism in Ghana’s oil industry. Its most visible dynamic relates to how its convening power nurtured a strong network of reform in the oil industry. During the first round of field research in 2013, for instance, various local and foreign companies voiced less enthusiasm for GHEITI. In a meeting with GHEITI, a petroleum lobby known as the E&P Forum argued that the scope of GHEITI is ‘incongruent with international practice’, given the fact that the EITI is a voluntary process, and represented a duplication of extant public audit institutions, including the PIAC and Ghana Revenue Authority (GHEITI Secretariat 2014, 28). However, during the latest round of field research in 2021, the attitude of oil companies to GHEITI had not only been positive, their support for steering committee deliberations also underpinned important reforms such as the amended Companies Code, a Petroleum Register, and a revised Exploration and Production Law, which have opened new disclosures around contracting, beneficial ownership, and carbon emissions. This change reflects the EITI’s often understated power in altering the landscape and outcomes of societal bargains that drive specific changes in market domains of the extractive sector.

Another dimension of EITI’s influence on the industry’s stakeholder capitalist orientation is associated with its role maintaining the market-oriented nature of the oil industry and participation of various Western firms. As outlined in Section 3.3. of the Revised Memo that expanded GHEITI in the oil industry, GHEITI’s mandate is circumscribed within public disclosures that are not ‘prejudicial to contractual obligations or proprietary interest of the extractive industry company or sovereign obligation of Government’ (Government of Ghana 2009). This pro-market stance of the EITI has added to the industry’s growing attraction, especially for Western oil firms. Along with a budding group of indigenous companies and others from Russia (Lukoil) and China (UniPec) who are involved largely in mid-downstream operations, the vitality of the industry has included a more visible presence of companies that originate from EITI backers and major donors such as Aker ASA (Norway), Tullow and Kosmos Energy (USA), and ENI (Italy).

The EITI’s successes, especially in expanding the market orbit for companies that originate from leading bilateral donors in Ghana also reflect the limitations associated with stakeholder capitalism. Notably, while GHEITI has produced a compendium of aggregation reports and other commissioned studies, there are noticeable information gaps around changes in labour market and employment practices in the extractive sector. As various informants from organised labour observed, their concerns about terms of employment and the decline in ‘decent work’ pillars have rarely appeared in GHEITI’s reports (personal interviews, 2021). Although some labour activists conceded that the EITI has been beneficial as a deliberative and oversight tool, they maintained that it has largely failed to alter the fundamental logics of extraction that privileges capital extraction over labour. This observation ties in with the broader trend in the flexibilization of the labour embedded in the dynamics of stakeholder capitalism. Notably, while the use of the non-standard employment practices following the continued deployment of supply chain business models is prevalent in the oil industry, GHEITI’s structures were deemed largely inadequate in addressing them. While these underscore EITI’s effectiveness as a reputational intermediary, its broader implication for understanding the contested terrain of stakeholder capitalism relates to the agency it affords national elites to also influence market outcomes in the extractive sector.

Conclusion

The growing salience of transparency norms as part of the broader global response to the challenges associated with natural resource endowment has come with some ambiguity about their intersections with markets and politics. Since the turn of the twenty-first century, this ambiguity has been pivotal in firming up alignments between conditionality-based lending and distinctive forms of capital accumulation, particularly in resource-rich countries across Sub-Saharan Africa. The preceding accounts of Ghana’s EITI and the added insight of its linkages with the contested terrain for stakeholder capitalism in the country offer an important counterpoint for a much sharper entry into the political economy dynamics of neoliberal reform across the region. In this sense, while transparency norms and other governance instruments partly reflect the overriding hegemony of Western donors that cast initiatives like the EITI largely as reputational intermediaries that enables governments in developing countries to secure concessionary loans and grants, the distinctive trajectory of stakeholder capitalism in Ghana points to a more sophisticated dynamic. Rather than simply providing access to global financial markets and external loans, the EITI has worked as a critical tool by which external donors and the domestic elites negotiate the terms and functioning of stakeholder capitalism in the oil industry. This observation has broader implications for how we view the EITI as an instrument of political and market power. While the networks that the EITI has forged among critical stakeholders continue to enable governments and community activists to retain some political agency over the terms of resource governance, its market power lay in how it has worked to legitimise the spinoff outcomes to sustain appropriation of resources by multinational firms and encase alternative models like resource nationalism and labour protection. Contrary to the 1980s and 1990s, therefore, aiding stakeholder capitalism via the instruments of transparency norms remains the most significant force for maintaining the neoliberal status quo.

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Additional information

Notes on contributors

Nelson Oppong

Nelson Oppong is a lecturer in the Centre of African Studies at the University of Edinburgh, where he also serves as director for the M.Sc. in Africa and International Development programme. His research explores the politics of natural resources, state building, and related global processes in low-income countries. Some of his peer-reviewed works on these themes have appeared in journals such as Review of African Political Economy, Globalizations, Commonwealth and Comparative Studies, Oxford Development Studies, Contemporary Social Sciences, and the Journal of Energy & Natural Resources Law.

Notes

1 The list of STAR-Ghana donors includes DFID, DANIDA, EU and USAID. Kasa initiative is funded by the Netherlands, CARE-Denmark, Inter-Church Organisation for Development Cooperation (ICCO), and Netherlands Development Organisations (SNV). Kasa, in the local language, means ‘Speak out’.