Can Winning Government Contracts Be Considered As Showing Business “Acumen”?

It seems to me that there is a confusion in this country regarding the difference between what is “business proper” and “business by patronage”.

The true definition of “business proper” would be this: someone thinks of an original idea – say, to convert the oxygen in the air to energy that can be used by machines (!), in the same way that oxygen can be used to provide energy for humans, other animals and plants.

The person then tries to raise “capital” to turn the idea into reality. He writes a good paper demonstrating that since oxygen is both abundant and free, whoever can capture it and use it to power machines that produce saleable goods, would make enormous profits. But the capital needed to actualise the idea can only be obtained by going to a bank to borrow money; or by floating a company and inviting the public to buy shares in it.

A commercial bank is usually not a good choice, for two reasons: (1) banks want to be absolutely sure that they will get their money back and do not like the “risks” associated with turning a clever idea into a money-making enterprise without first obtaining financial backing elsewhere; and (2) banks also demand that the borrower pays interest on any loan he's given. And they may also ask for “collateral” which can be sold to pay back the loan if the business fails!

The offer of shares in a brand new company to would-be investors in the company also has its drawbacks. Until recently, “start-up” companies (as they are known) were frowned upon by the investment world. So “start-ups” must buy sponsorship by known "financial houses" and back it with expensive public relations services, to publicise their offers. Which takes money!

All of this suggests that unless the owner of an idea can back it with his or her own money, the idea might not take off at all. All the “genius” with the brilliant idea can do would be to apply for a “patent” for it, and hope that someone else would be able to bring the idea to reality, and pay a percentage of his/her profits to the patent-holder in the form of “royalties”.

n other words, getting a company to start – and be profitable – is no child's play. But if such a company manages to overcome the difficulties and become both productive and profitable, everyone would accord it enormous respect. Some of the big trans-national corporations that rule the world today started in that way. A Henry Ford would get the idea to make motor cars, use his family money or if that's not possible, raise money from elsewhere, and make a go of it. If the idea was as good as he thought it would be, he would become very rich.

But whilst such individuals with imagination and business flair can become rich legitimately, others rely mainly on political connections to enrich themselves. Many of the pioneer railway companies in America, for instance, started off with politicalsupport. Friends in high places would help steer proposed railroad “concessions” through legal and political obstacles.. Secret information was often passed to businessmen. There are never enough companies, owned by any government, to carry out all the projects needed to ensure the public welfare, and so, Governmental patronage is valued greatly by many businesses. Unfortunately, in our part of the world, that is often ALL that a company has got!

Indeed, in countries like Ghana, going into "proper business” is not too popular, and so clever methods are often resorted to by businessmen -politicians to achieve their alleged "success".. Companies that are dead are revived and their names used to lend “cred”(-ibility)to newly-formed ones. What happens next can be quite sordid: the company owners would receive information from political associates about the budgeted cost of certain projects; at what time period bids on the projects would be advertised; and so on.

A favoured company thus possesses a jump-start ahead of all its competitors. Care would be taken to tip it off in advance that there would be, say, complex electronics/mechanical engineering involved in executing the project. Once that's done, it can make approaches to well-known figures in that field, beforehand, to team up with it (for a fee). It can then throw dust into the eyes of the public by parading these “experts” in its public relations exercises, though they might not have done a day's worth of real work for the company.

In other words, if a Government that is carrying out a project wants a particular company to secure the contract for implementing it, there are ways to ensure that the company will get it. "Independent selection through bidding" becomes a mere "floor-show".

Even if the media get wind of what's going on and make noise, the Government can close its ears, can't it? Besides, even if a scandal breaks out, the “friends” of the company's owners who are inside the Governmental apparatus, would take care to "manage" if not "buy" the silence of any of their colleagues who might be worried about the implications of the scandal might mean for the Government as a whole.

This, in summary, is how the fact that complex and highly-technical projects have been awarded to certain companies, sometimes (unashamedly) on a “single-source” basis, may be viewed. “Single-source” contracts, in particular, are a puzzle to most decent-minded people. Was the company that won a “single-source” contract approached by the Government or did it (the company) do the approaching? If the former is the case, howdid the Government get introduced to the company and bywhom? If the latter is the case, howdid the company hear of the project while its putative competitors did not?

These are important issues that impinge on governmental integrity and must be aired because public projects constitute an enormous proportion of economic activity in every country. In fact, in many cases, to corner Government contracts amounts to being given a licence “to print money”. That's why contracts like those awarded to Ameri (to supply power and make a profit of over $150 million!); to Zoomlion (to dispose of rubbish or millions of dolars) GYEEDA (to find ways of giving useful employment to the youth); SADA (to develop the neglected savannah areas) and so on, have attracted a great deal of derision amongst the media and the public in Ghana. If the work is not properly done (Zoomlion), or if the costs are too prohibitive (Ameri), the public can smell a rat. And usually, the rat exists!

Now, questions by the public about such projects will not die down just because some highly-placed current or former officials of the state assert -- without providing any discernible evidence to support their assertions -- that the companies are well-run and are being demonised” because they are "successful". The officials would say that, wouldn't they? Success, I am afraid, must sell itself.

Nor will the questions of the sceptics cease just because the owner(s) of the company are touted to be so “devout” that the “tithes” they pay to their churches are rumoured to be so enormous in quantity that the cash is "driven to the church in security vans with armed personnel on hand to protect it!" You give Ghanaians such reasons to malign you for hypocrisy and trust me, they will go to town with it.

By the way, it isn't only in Ghana that private individuals make, or have made, money out of what ostensibly appear to be essential public projects. When the state-owned British Telecom was privatised, some Britons complained that those who had had the ability to buy shares in the new private company, had reaped huge profits. But that didn't stop another Conservative Government from selling the British Post Office in much the same way as British Telecom and British Gas were sold. The British satirical magazine, Private Eye, has a long-running column entitled H P Sauce, that chronicles the octopus-type relationship between business and officialdom in the UK and elsewhere.

Of course, such actions leave a bad smell in the air which affects -- unfairly -- even innocent people, for the public, to the surprise of politicians, is sometimes left suspecting (after hearing about the shenanigans that officials indulge in) that anyone who dares to defend such methods of transferring public assets into private hands, might have benefited from such actions himself.

Such suspicions, once sown into people's minds by the defenders themselves, can never be easily dispelled. And that threatens to smear the entire political class -- unless it takes good care to be adjudged trust-worthy.