Ghana's economy, like many others, depends heavily on foreign investments. That is why former President Kufuor invested significant resources and time in promoting Ghana's economy to foreign investors. Mr. Kufuor and his Ministers worked assiduously to present Ghana as the “Gateway to West Africa.” That effort was rewarded with significant debt forgiveness by Western countries and the World Bank, as well as with significant investments in Ghana's economy. According to some wags, even God pitched in, revealing the existence of significant quantities of oil through the work of GNPC and Kosmos.
Unfortunately, since the advent of the NDC administration, there has been a determined effort by the new administration to undermine our economy, to buttress their campaign mantra that the Kufuor government mismanaged our economy. This has involved the subtle refusal to honour investment agreements reached by the Kufuor government, the encouragement of lawlessness by NDC foot-soldiers and a campaign of vilification against former government officials which has fostered uncertainty in the business community and thus discouraged investments.
Against this background, when the World Bank Country Director, Mr. Ishak Diwan, went on the “Citi breakfast show” on the 14th of April, expectations were high that he would candidly explain how the NDC has been undermining our economy and urge them to mend their ways in the interest of Ghana. Unfortunately, instead of discussing the prospects of Ghana's economy, he decided to do political bashing—of the former government along the familiar and false lines developed by the NDC in the last year. He accused the NPP of indulging in reckless spending in its last year in power.
Said the World Bank Country Director, “The spending was very large. I mean look at Greece these days. Everybody talks about Greece having huge deficits, its undermining the whole EU and they have a deficit of 9 to 10% of GDP. Ghana had deficit of 20% of GDP, this is World record, it is reckless.” While it is difficult to see how Mr. Diwan's criticism of the past NPP government would help our economy now, he also got his facts wrong. As Dr. Anthony Akoto-Osei, former Minister of State for Finance and Economic Planning and MP for Old Tafo pointed out, in an earlier letter written to the Board of the World Bank, Mr. Diwan had reported Ghana's deficit for the period in question as 14.5%. Indeed, even the NDC with all the political motivation to misrepresent the facts, had never put the deficit they inherited beyond 15%. Even this figure had been disputed vigorously by the NPP who insisted they had left a deficit of 10%.
Of course, Mr. Diwan's attack on the former government was in line with a longstanding and disgusting tendency of the World Bank to agree with incumbent governments while blaming former governments. It would be recalled that the Rawlings regime had been hailed for their management of the Ghanaian economy by the World Bank both in the 1980'S and the 1990'S before the institution turned around to agree with the Kufuor government that our economy was mismanaged under the first NDC government.
Aside from getting the details of the NPP deficit wrong, Mr. Diwan also got the substance of his argument wrong. Indeed, most of the deficit spending by the Kufuor administration in 2008 was not reckless at all. Except for a few expenditures, like the Presidential Palace and the Presidential jets, the spending was visionary and pro-poor.
There was spending to cushion the poor against the escalating prices of petroleum and the energy crisis. There was spending to cushion the poor against the over 50% rise in the prices of basic foods. These same increases in food prices were ignored in other places and led to riots in Zambia, Egypt and Haiti, to mention just a few. It is interesting that when the super-powers eventually awoke to the magnitude of the financial crisis facing the world, many of them resorted to deficit spending. This happened in America, Britain and many EU countries. Indeed, currently, America has historic deficits as the Obama administration struggles to end the recession triggered by the global crisis.
If Mr. Diwan had focused on the damage being done to our economy now, he could have sounded alarm bells about how the NDC is driving our economy into the ground by discouraging foreign investors. It seems that NDC II has picked up all the vices of NDC I without missing a beat. These alarm bells are already being sounded in the West to wary investors. In an Editorial titled “WHY AFRICA IS POOR” in its February 18th edition, the influential WALL STREET JOURNAL said eight months after President Obama praised Ghana's growth and its example that “development depends on good governance”, the Mills government is turning the nation into a cautionary tale for investors. After a detailed account of the NDC administration's amateurish and unprincipled attempt to block the sale by Kosmos of its 4 billion US Dollar share to Exxon, the influential US paper stated “That's the kind of official thuggery more frequently associated with the likes of Nigeria, where the vast oil and gas resources have driven corruption and exploitation while the people continue to live in poverty.” The paper revealed that other foreign investors are also getting the “Kosmos treatment”. It mentioned the British company, Vodaphone and the Norwegian oil company, Aker. The Vodaphone case is so well-known that it needs no elaboration. After getting a license for off-shore exploration in November 2008, according to the paper, the Norwegian oil company was told this year that its license was invalid, even though the agreement had been UNANIMOUSLY APPROVED BY THE GHANA PARLIAMENT. An Aker official said the government's position had “no basis in law or fact.” Continuing the assault on Ghana's reputation as a safe place to invest, Chuck Neubauer reported in the Washington Times of 26th March, 2010, that Ghanaian officials are trying to stop the Kosmos-Exxon deal so that the GNPC can buy the Kosmos stake at a cheaper price and resell to another company at a profit. According to the story “Ghanaian President John Atta Mills' administration, according to critics, has targeted foreign companies that invested heavily in Ghana under the prior administration.”
Ironically, it is this kind of conduct that the 1992 constitution sought to prevent. Under Chapter 6, the DIRECTIVE PRINCIPLES OF STATE POLICY, there are clear and unambiguous prohibitions against the conduct of the current government.
Article 35:7 states that “As far as practicable, a government shall continue and execute projects and programs commenced by previous governments.”
To buttress this point in the area of foreign investments, article 36:4 states “Foreign investments shall be encouraged within Ghana, subject to any law for the time being in force regulating investments in Ghana.”
Of course, where investment agreements were clearly affected by corruption, they must be reviewed, using due process. As the Mabry and Johnson scandal and the earlier SCANCEM scandal, both involving high-ranking NDC officials show, Ghanaian officials can be corrupted. However, in the same manner that the NDC administration has been determined to respect the rights of those implicated and to honour agreements related to those scandals, they must do the same with respect to other agreements.
Furthermore, Parliament's ability to conduct EXECUTIVE OVERSIGHT must be strengthened and made more transparent so that when they finally approve agreements and treaties, they will not be second-guessed. In seeking to void the AKER deal which was approved by the NDC caucus in Parliament, is the NDC implying that their MP's were behaved corruptly when they approved the AKER deal?
As a country, we must stop cutting our nose to spite our face repeatedly. One of the biggest problems we face is high unemployment. Instead of seeking to obstruct foreign investments that can create good, well-paying jobs, our governments must seek to remove obstacles in the way so that these investments can create jobs. Even while this discussion has focused on foreign investors, it is indisputable that governments that treat foreign investors badly treat all investors badly. Thus the treatment of the foreign investors described here can only diminish the confidence of local investors in our economy.
Indeed, aside from the global financial crisis, one of the biggest factors that have slowed investments in Ghana by Ghanaians in the Diaspora is the widespread perception that the NDC government is anti-business. Let the government act to prove the critics wrong. Let the World Bank country Director address those who are killing out economy now instead of attacking those who are no longer in charge of the economy. Let the President, after improving his government's behavior, present himself more often in the highest councils of the World, to make the case that Ghana is still the “Gateway to West Africa”.
Let us move forward, together.
Credit: Arthur Kobina Kennedy