Ghana’s free Senior High School policy at risk as oil revenues decline
Ghana’s flagship education program, the Free Senior High School (FSHS) policy, which was introduced in 2017, is facing an uncertain future due to the impact of the energy transition process on oil revenues. The Ghanaian government has been urged to consider diversifying the funding sources for the program to ensure its sustainability. The country’s reliance on oil revenues as the only funding source for the FSHS policy poses a significant risk, as the energy transition process is projected to adversely impact the country’s oil revenues.
The Chairman of the Civil Society Platform on Oil and Gas (CSPOG), Dr. Steve Manteaw, has cautioned that oil revenues are volatile, and relying solely on them to fund the FSHS program is perilous. Dr. Manteaw suggested that the government should consider diversifying the funding sources for the program to include other critical minerals and commodities, such as gold and cocoa, and centralizing all existing scholarship programs by extractive companies to support financing for the flagship education program.
The Ghanaian government has traditionally relied on oil revenues to finance critical sectors of the economy, including education. The Annual Budget Funding Amount (ABFA), which receives 40 percent of the country’s petroleum revenues, has been a critical financing source for the country’s budget for the past decade. Physical infrastructure and service delivery in education, one of the 12 priority areas under the ABFA, has so far received 21.74 percent of the ABFA allocations, with the FSHS policy accounting for a chunk of education spending. Disbursements to education from 2017 to 2021, according to the Public Interest and Accountability Committee (PIAC), amounted to some GH¢2.24 billion.
However, Ghana’s National Energy Transition Framework aims to decarbonize the energy sector and achieve net zero by 2070, and the country’s upstream petroleum sector is expected to decline as revenues from oil production decrease. The impact of the energy transition process on fossil fuel assets, including fossil fuel reserves and capital goods used for the extraction, processing, and transportation of fuel, is generally expected to have a negative effect on the industry.
Ghana has already seen a dip in its crude oil production despite making significant gains in revenue due to price increases of the commodity on the world market. This development, coupled with the projected decline in oil revenues, has put the FSHS program’s sustainability at risk.
Dr. Manteaw, who is also Co-chair of the Ghana Extractive Industry Transparency Initiative (GHEITI), advocated a moderate or pragmatic approach to the energy transition goal at a workshop in Accra organized by the Natural Resource Governance Institute (NRGI). The workshop focused on the impact of energy transition on domestic resource mobilization in Ghana and aimed to equip civil society organizations and media with the necessary knowledge and skills to provide input on the energy transition process and ensure accountability in revenue collection and investment decisions.
The focus of Ghana’s energy transition framework suggests that in the next half-century, the government will mainstream energy transition in all critical areas such as investment and expenditure decisions and the broader fiscal policies to meet local and global targets. Against this background, a capacity-building program to equip civil society organizations and media on the subject is a timely intervention.
As the energy transition process accelerates globally, it is crucial for Ghana to diversify its funding sources for critical sectors such as education to ensure their sustainability. The government should heed the call to consider alternative funding sources, including critical minerals and commodities, and centralizing existing scholarship programs by extractive companies to support financing for the flagship education program. This approach will not only ensure the sustainability of the FSHS policy but also strengthen the resilience of Ghana’s education system in the face of future economic shocks.
