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23.04.2009 Feature Article

A NEW LOOK AT PRIVATE CAPITAL AND INDUSTRIALISATION: THE AGREEMENT APPROACH METHOD

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England, France, and many other European countries as well as the South American countries gained a great deal during their industrialisation through the help received from private capital. Ghana's industrialisation would therefore require the aid of private capital in order to accomplish its tasks that are ahead. What differentiate private capital from national capital and what makes its requirements necessary in the attempt to industrialise? What conditions make these capitals attractive and what can be done in order to make the flow of these capitals commence into this country? What is the “agreement approach” in the principle of imitation, and why it is necessary to utilise this approach in the attempt to attract both foreign and domestic capitals into the country?

Traditionally, important countries such as Great Britain, France, and the United States have been the countries that had invested in other countries in the Third World with enormous capitals to channel their interests in those countries. These national interests had been motivated by attempt to show that their forms of government, especially democracy and capitalism, are the best forms of government as compared to communism or socialism. The capitals that were invested in these countries in the Third World were not rationalised, as there was no need to make many arguments to show to the governments at home that these other forms of governments were bad and therefore they had to be impeded by such approach. As a result, these national capitals were huge and could be invested with the purpose of either gaining something back or not. Countries that gained from such forms of capitals were Hong Kong, South Korea, Taiwan, South Africa, and many others. In the case of Soviet Union, one can name Cuba and probably North Korea. The national capital may not be easy to acquire now probably because of the general conditions in the world at present, which concern the fact that there are no political threat going on around the world. Also there is a general recession in the world, which makes the idea of protectionism another form of threat to the world. This can be experienced not only concerning trade but also the manner capital will flow to any other parts of the world in the near future.

It seems, therefore, that the opportunity for Ghana to attract national capital at the moment is very slim but there is an opening to the attraction of private capital, which is simply because of the general recession that has hit hard that many investors want to invest their capital looking for potential countries where big gains will be made. Private investments play considerable role when the industrial revolution began in England and later spreading into the rest of the continent to reach France and Germany; and later to other countries around. Private capital was the main source of the bulk of capital that helped these pioneering countries to complete their industrialisation. These capitals come in the form of ownership of industries which produce manufactured goods for export or home consumption, or ownership of shares in mining companies in the host countries. In fact, even such bulk works of roads and railways that require huge sums of money from the nationals, those days were acquired by certain countries through the private capitals. Private capitals helped Western Europe and other Eastern European countries to embark upon their industrialisation which took place soon after the Second World War. In fact, many countries that lie in isolation in the Northern Hemisphere gained later in their industrialisation through the help of private capital which became abundantly available when many Nazis ran away from countries such as Germany and France and made their way there into these other countries through successfully making name changes. It can therefore be asserted that though some countries in the Northern and Southern Hemispheres had gotten national capital by way of common interest they had, the majority of countries in the Northern and Southern hemispheres gained tremendously through these private capitals that originated from private individuals or organisations interested in making gains or profits.

Having asserted that many countries were successful in their industrialisation through the help they gained from private capitals what can be done in order to attract private capitals into Ghana? Private capitals are owned by individuals who had already made their gains somewhere in another country but now wish either to make money or heuristically enjoy the business of investing in other countries. Some may like to enjoy new environments which they find them peaceful and enjoyable. They may prefer to move and stay there and enjoy their riches; therefore, it is very common to see these people surveying potential countries whether they enjoy peace and freedom in order to move there. Therefore, in order to attract these persons into a serious community or a potential country, the following need to exist. These things are not extraordinary needs that are difficult to obtain, but the majority of countries in Africa do not consider them as necessary. In fact, my meticulous studies made in ancient as well as modern countries that gained during the industrial revolution in Europe and elsewhere showed that these things to be named below comprise fifty percent of the work of industrialisation. As soon as any country on this earth, has these ingredients of industrialisation this particular country can easily get a major push into completing its industrialisation.

1. ROADS: There must be appropriate roads in the country which will allow not only people to move easily but also goods and services to flow normal without much hindrance. And these roads must conform to the standard seen everywhere in the world, especially, those found in the civilised world.

2. RAILWAYS: The railway lines must be modernised to conform to the ones found in the developed world so that foreign firms that need to bring their own train to carry their products could utilise these modern lines. The trains should be able to run fast like those that are found abroad.

3. HEALTH: There should be modern hospitals to care for other foreigners that come in to invest and also for those that choose to live in that country. The number of hospitals is not the essential but how efficient they are is important. They should be visible in any urban area and they must be capable of maintaining modern equipments sent there by these investors to be used for their workers and families. Good drinking water is very important and if they are not available they must be able to import into the country.

4. SUPERMARKET: There must be good supermarkets where food from different countries that have been packed could be bought. Where they are located is not important but their availability is very essential.

5. MILITARY INFLUENCE OR GOVERNMENT BACKED BY MILITARY SHOULD BE AVIODED: These investors are very careful with the form of government in the country, especially whether the country is indirectly being ruled by the military. They laugh in front of dictators turned democratic but they will prefer to have governments where there are no sign of military personnel involved. The use of security officers harassing and threatening people calls to mind a communist country more than a democratic country. It does not say well of the country and its leadership.

Now to come back to the agreement approach method: What is the “agreement approach” procedure in the principle of imitation, and why it is necessary to utilise this approach in the attempt to attract both foreign and domestic capitals into any country?

THE AGREEMENT APPROACH
The Agreement Approach is where a country discusses with another sovereign country, like say Great Britain or France, by indicating to this particular country, that is, the latter its intention to develop or become industrialised in no time. The former with a high delegation makes official agreement with the latter that they would like to have them as a mentor to coach them on how they can develop or use their available resources to help them industrialise. (Now, this has nothing to do with a nation being inferior just because it wants to contact another superior for this kind of help. It is like hiring a good teacher for your children or piano teacher to give lessons to your children you want to grow up to become a star or a superstar).

Money may be involved and so the novice country agrees how much it will want to pay. For the purpose of secrecy involved in this, a nation may discuss in parliament how much it will be willing to pay. This amount cannot be made known to any body apart from the Council of Chiefs, in the case of Ghana, or a traditional body in any country that have succession practice. This amount cannot be made known to the citizens of the country but only to the traditional body that has succession to document it and to be kept secret for its release at a future date. They can be made available in future but not in the current state when this development is going on or to be commenced. Documents are kept in the state with the President and with the Council of Chiefs knowing about the whereabouts of these important documents.

By this agreement, it will be possible to acquire loans from this mentor nation or organisation that can even be rewarded with interest that may be cheaper than those obtained from the banks. The mentor nation does its job (which may take some years 15-30 years) and is paid directly or through instalments which is possible because of the succession agreement that is attached to this business venture. It is a business that has no strings attached and each partner gains because no one losses in the venture. The mentor is guaranteed of his money because of the agreement which is witnessed by the traditional rulers of the land who become witnesses and at the same time debt guarantors that make modern way of life and production come to the whole citizens who have also their allegiance to the succession leaders.

The agreement approach is a method that gives a hundred percent assurance to those countries that engage in it to become industrialised in the future. It offers jobs to both mentor countries' citizens and the novice countries' citizens. It calls for a higher activity level in both countries since the growth ascribe to the novice reflects at the same time to the mentor and there is a guarantee growth of at least between 15-35 years. It is a modern method that is geared toward globalisation and can be a future way of dealing with our global economic problems that will lead to enormous success.

In conclusion, it can be stressed that nations that want to really get their country industrialised should follow this method which has a hundred percent guarantee of being successful. Especially in the Third World, and specifically Africa, where often money borrowed by the leaders from IMF and leading Banks are pocketed by the leaders and do not accomplish the intended project. We have also discovered that the oil revenue of certain countries Africa is usually diverted into other funds abroad that the authorities are not capable of accounting for that. A loan of say I billion USA dollars to the development of infrastructures can be kept by these corrupt leaders that is all the more reasons why they will not like to have a foreign cooperation like the Agreement Approach Method being followed.

Desmond Ayim-Aboagye (Ph.D.)
Desmond Ayim-Aboagye (Ph.D.), © 2009

The author has 154 publications published on Modern Ghana.Column: DesmondAyimAboagye

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