Policy Inconsistencies, Underinvestment Undermining Ghana’s Oil Revenue Growth – Prof Lord Mensah
Financial Economist and Head of Local Government Services, Professor Lord Mensah, has attributed the steady decline in Ghana’s oil revenue to years of inconsistent fiscal and investment policies in the petroleum sector, cautioning that the country is now “paying for its past policy indecisions.”
Speaking on the NorvanReports, Economic Governance Platform and Ghana Anti-Corruption Coalition X Space Discussion, themed “Beyond Declining Barrels: Can Ghana’s Petroleum Revenues Still Power Development?” on Sunday, October 19, 2025, Prof Mensah observed that Ghana’s oil receipts, which accounted for about 9.4% of total revenue and grants in 2023, have fallen on the back of reduced investment and unstable tax policies that have discouraged investor participation.
“If we are losing 10% of total revenue that comes from the oil sector, it’s quite tough, especially when the economy is overly concentrated on gold, oil, and cocoa. Once one of them gets hit, the economy suffers,” he said.
He explained that the country’s offshore oil operations require significant long-term investment, but the absence of a stable investment framework and unpredictable fiscal policies, such as frequent changes in corporate tax rates, have weakened investor confidence and slowed exploration activity.
“There was a time we kept changing corporate taxes from 30% to 25% and back again during mid-year reviews. These tax inconsistencies have a way of scaring investors, and now the country is paying for it,” he stressed.
Despite the current challenges, Prof Mensah maintained that hope is not lost, pointing to emerging diversification efforts such as the establishment of the Gold Board and the government’s drive to develop alternative revenue sources beyond oil.
He added that while declining oil prices negatively affect fiscal revenues, they could boost household disposable income by lowering fuel and energy costs, producing a short-term benefit for consumers.
“When global oil prices dip, even though the state loses revenue, households benefit through reduced fuel costs, which increases disposable income,” he noted.
Touching on the use of petroleum revenues, Prof Mensah argued that Ghana should prioritise investments with immediate social and economic impact, particularly infrastructure and road development, to stimulate productivity and reduce fuel consumption through improved transport efficiency.
“If we invest in roads, it reduces travel time, fuel consumption, and overall demand for petroleum products. That’s a direct economic and social benefit,” he remarked.
He further advised that proceeds from oil should be channelled into projects that promote economic diversification, including agriculture and export-oriented sectors, to reduce Ghana’s overdependence on crude oil revenue.
“We should use oil proceeds to promote diversification, investing in agriculture and export sectors that can reduce our reliance on oil. Ghana doesn’t control global crude prices, so the smarter path is to build resilience,” he added.
Prof Mensah also cautioned that global investment in oil is declining, with major producers like Saudi Arabia now channeling capital into renewable and climate-friendly energy alternatives, a signal that Ghana must not ignore.
“The global trend is clear, investment in oil is being redirected towards renewable and sustainable energy. Ghana must align with this shift,” he advised.
Petroleum Revenues Drop by 56% in H1 2025
According to the Public Interest and Accountability Committee (PIAC) in its 2025 Semi-Annual Report on the utilisation of revenue from the country’s crude oil production, Ghana’s petroleum receipts for the first half of 2025 fell sharply by 56 percent year-on-year.
The report revealed that a total of US$370,343,681.17 was lodged into the Petroleum Holding Fund (PHF) for the period under review, compared with US$840,765,265.80 recorded in the same period of 2024.
PIAC attributed the decline to lower crude oil liftings and a drop in global oil prices, which affected export revenues across Ghana’s producing fields — Jubilee, TEN, and Sankofa-Gye Nyame (SGN).
The 2025 first-half petroleum receipts were derived from Corporate Income Taxes (CIT), Carried and Additional Participating Interest (CAPI), Royalties, Surface Rentals, and Interest on the PHF.
