Nduom – The man who believes in himself

There is something unsavoury about the rhetoric of the Convention People's Party flag-bearer, Paa Kwesi Nduom. Something just doesn't sit right.

Throughout the presidential campaign he has been outlining a socialist vision of state ownership and control of much of the economy, paid for by taxing people. He's sketched an outline of this plan which would have new or expanded government agencies taking control of almost every element of Ghanaians' lives, from town planning to waste collection.

That is the domestic vision – one where the state is better at spending wealth than private citizens. His international vision is equally exclusive – he has spoken (in self-contradicting terms) about turning his back on investment in Ghana from abroad. This fits rather well with his domestic policy, as it keeps control in the hands of the government. This is a familiar, unreconstructed version of socialism – familiar from the disastrous economic policies of the fifties which hamstrung the country for two generations, and familiar from the global Communist experiment which was abandoned by all sides around the time of the fall of the Berlin Wall twenty years ago. The world is in agreement – socialism was a cruel and damaging mistake.

The problem for Dr Nduom is that he knows all of the above. He knows that his policies wouldn't work in practice. The facts are so self-evidently supportive of this conclusion that it is astonishing to hear Nduom continue to muddle along with his CPP agenda.

How do we know that Nduom does not believe in the CPP's policies? Because of his own past actions, and because he still occasionally lets slip his true opinions which are so patently at odds with most of what he proclaims on the campaign trail.

Ghana's state-owned enterprises have performed poorly, not only during the economically disastrous period of the 1970s and early 1980s, but also since the government introduced the Economic Recovery Programme in 1983. The way forward for Ghana's SOEs was seen as the introduction of a performance contract system and a programme of divestment. It has been argued that the past experience of state ownership has been disappointing, mainly because of the low political cost of government interference in the operation of SOEs. This, according to an article in 1998, became "one of the reasons why the government has quite recently resorted to divestment, which seems to be a more efficient way of reviving SOEs than the performance contract system proved to be. Initially, political obstacles hampered the divestment programme, but increasingly the government has been able to overcome these obstacles, such that the programme can be expected to alter the political economy of Ghana in a radical and irreversible way."

As a man who has enjoyed every opportunity through his education and his career, it is not surprising that Nduom secretly knows that the only route to prosperity and freedom in a country like Ghana is through encouraging the private sector to grow strong. He was, after all, one of the great champions of the private sector (and continues to be with his chains of hotels and securities exchange firm) until he took the reins of the CPP. Otherwise, he would hardly have been chosen by the NDC government as a consultant to the State Enterprises Commission, which saw to the divesting of more than 300 failing state enterprises because government could not run them as well as the private sector.

The NPP government, under which Nduom served longer than Nana Akufo-Addo, saw the wisdom in government undertaking bold and prudent steps to stabilise the country's macroeconomic environment, and to ensure an enabling microeconomic environment which would allow the private sector to crank the nation's engine and growth. What the NPP has always believed and history has vindicated the party is that government should not manage firms, and to define in which industries the country should be competitive. Rather, government should only be active in areas where firms are unable to act (e.g., trade policy, exchange rate stabilisation). Indeed, the bridge purchases of Westel, GT and Valco all attest to the fact that the NPP understands the need for some intervention to rescue crucial, potentially viable but failing businesses.

It would be helpful for Nduom to tell Ghanaians how he intends to go back to economic statism. While at it, it would also be useful for him to tell Ghanaians how he intends to create the jobs that he is promising. The more Nduom seeks to distance himself from the NPP and criticise the policies that he worked with for over seven years the more unprincipled he sounds. In fact, he was forced to resign (on protest) from the government that he now finds fault with.

Nduom would not have accepted President Kufuor's offer of a post as Cabinet Minister in his first government – it is inconceivable that any man of principle would join an NPP government if they did not believe in the central tenet of the NPP's philosophy, which is the importance of promoting the rights of the individual. As Energy Minister Nduom spearheaded the sale of Westel, again because it was a wasteful state business which could only continue to provide jobs and incomes to Ghanaians if in private hands. Later in his time at the Energy Ministry he was a major advocate of the merger of Ashanti Goldfields with Anglogold.

Before he even came into government, of course, Nduom had to be prised away from a role with Deloitte & Touche, the global accounting and consulting giant with a reputation as a ruthless driver of private sector efficiency.

His lifelong embrace of an American-class small state supporting private ownership should tell us that his recent conversion to the opposite credo of large state ownership is not genuine. And it has come through on the campaign trail this year. While happy to reject Foreign Direct Investment during the IEA debate, he had already declared himself the most able candidate to travel the world in search of investment, just days earlier. Why would a president need to travel the world to secure "Domestic Direct Investment"?

And again, when searching for a role model nation which has developed in a way that should be learned from, Nduom cited South Korea. As everyone knows, South Korea was a country born out of the ideological dispute of the cold war, and its own development was possible only with the massive and long-standing support of the Americans, on the condition that they not fall into the trap of socialism.

Of course Nduom knows that the next president will have to embrace foreign investment to ensure Ghana's continued development, and that South Korea is a success story because of its acceptance of foreign support and encouragement for the private sector. Why can he not just say so?

Between 1987 and 1999, Ghana's privatisation programme generated revenues for the government equivalent to about 14 per cent of GDP from a moribund public sector which had previously been dependent on state subventions, and thus succeeded in fulfilling a key role in easing the fiscal crisis and in fostering the Structural Adjustment Programme. The big question remained, however, whether the privatisation process would help the growth of Ghana's economy and help maximise political gains. This article reviews the experience of Ghana in privatising public enterprises, and assesses the impact of the ongoing privatisation programme on the Ghanaian economy. It suggests that, in spite of the high proceeds, the net direct revenues from privatisation have been relatively modest, due to the high outstanding credit sales, the high costs of divestiture and high outstanding liabilities of privatised firms. It also appears that the programme has placed too much emphasis on public finance rationalisation and faith in the market system, and too little on sociopolitical and regulatory issues. Equally, the inadequate attention given to post-privatisation regulation of privatised businesses, and the use of the divestiture programme as a political patronage instrument to reward the regime's friends and political insiders, has conferred limited success for privatisation in achieving its goal of enhancing efficiency, private sector investment and employment.

In the end, it probably doesn't matter that Nduom knows his policies would be a disaster – because he has no illusions about getting elected to the presidency. Nonetheless, it constitutes an unpalatable deceit to use the nation's lasting respect for its first leader and his party for the promotion today of one man and his ego.

Credit: Kwame Okoampa, Accra. [ghanalert@gmail.com]

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