Beware of Dutch Disease; Prof. Asenso-Okyere warns

By Ebenezer Hanson

Former Vice-Chancellor of the University Of Ghana, Prof. Kwadwo Asenso-Okyere, has advised Ghanaians to beware of the Dutch disease that afflicted the Netherlands when they totally neglected the development of other sectors of their economy following the discovery of gas.

According to him, the retrogressive decision created opportunity for only a tiny minority to enjoy the benefits of the new discovery rendering the vast majority poor.

“There should be holistic development of the economy regardless of the fact we have discovered oil else we risk what the economist call the Dutch disease ”.

He proposes that instead of just releasing funds from the oil revenue into the economy, it should be mobilized into a fund for massive poverty reduction programmes, which would translate into tangible improvement in living standards of the Ghanaians.

The term Dutch Disease was coined in 1977 by The Economist to describe the decline in the manufacturing sector in Netherlands after the discovery of natural gas in the 1960s.


Prof. Asenso-Okyere said these when he delivered a lecture on the theme “Living at the Expense of Future Generations: Innovating for Sustainable Development ” in Accra last Wednesday. The lecture was under the aegis of the Institute of Democratic Governance (IDEG) and brought together Parliamentarians, academia, policy analysts, mass media, business executives and civil society.

Prof. Asenso-Okyere, who is currently the Director of the Addis-Ababa based International Service for National Agriculture Research (ISNAR), observes that while the size of the world is fixed, world population keeps on increasing while natural resources keep on shrinking.

“ The result is the frequent clashes over pastoral lands, mining concessions and lands in general be it for agricultural or construction purposes. There is also intense pressure on water bodies and if we don’t manage them properly then we would be bequeathing a bleak legacy for coming generations,” he predicts.

He forecasts that if the trend is not reverse those who will bear the brunt are those living in the rural areas because currently, 86 % of those living below the poverty line in Africa are in the rural areas.

Though he admits that Ghana is an emerging successful story with an annual average growth rate of 5.5% over the last few years, he argues the country has to accelerate its growth rate to 7% by 2015 before it could reach middle-income status.

Prof. Asenso-Okyere, who holds a PhD in agricultural economist, lamented those although development growth strategies have improved macroeconomic stability it has also contributed to the widening of the gulf between the rich and poor.

“ The high rate of rural-urban migration is leading to the development of mega cities with a high demand for housing and social services. The increasing urban population, without commensurate employment avenues, has contributed to increased crime while loose lifestyles, especially in the cities have led to a high incidence of diseases,” he adds.

He called for an appraisal of consumption habits and production strategies in order to mitigate the their adverse effects on the environment, and conserve the livelihood of future generations. He points out that “ poverty begets poverty and unless social protection programmes are built into development strategies to assist the poor and vulnerable, we will be recycling poverty from one generation to the other.”

Prof. thus called for the scaling up of social interventions in all countries in Africa and for that matter the School Feeding Programme, the Capitation Grant, National Health Insurance Scheme, among others in Ghana.

He also called for massive reforms in agriculture, education, energy and other key sectors of the economy that would ensure sustainable development and stem rural-urban migration.

During the discussion session, some participants complained about the indiscriminate use of land. “ Farm lands are now being turned into residential areas and if this is not checked the results in the long run would be disastrous, ” a worried participant pointed out.

The CEO of the Ghana Chamber of Mines, Ms. Joyce Aryee, called for a sustained campaign to change the mindset of the Ghanaian from the wrong notion that the natural resources available to us is infinite “The resources available to humanity is finite and this should be impressed upon then Ghanaian,” she said.

The Chairperson for the event and first Ghanaian female Scientist to be admitted into the Ghana Academy of Arts and Sciences, Dr. Leticia Obeng, urged all Ghanaians to take our water resources seriously. “ We should always bear in mind that as we use and foul water, it is a limited resource. Though bland and an unacknowledged resource, there is no substitute for water and we must accordingly have respect for it.”