Accra, Nov. 15, GNA - Nana Dr Samuel Kwadwo Boateng Asante, President of the Ghana Academy of Arts and Sciences, has said the private sector must be strengthened as engine of growth and development and a magnet for attracting Foreign Direct Investment (FDI). Delivering a presidential lecture in Accra on Monday, Nana Dr Asante said FDI could make a strong contribution to the nation's development, however, it should not assume the primary task of fostering development.
The lecture, on the theme: "Trans-national Corporation, Foreign Direct Investment and Development," formed part of the 46th Founders Week of the Academy spanning November 14 to November 18, 2005, under a broad theme: "From Stability to Growth: Challenges of National Development."
Nana Dr Asante said the policy measures already in place for attracting FDI should not be abandoned, but rather the cost and benefit of each FDI package should be scrutinised and policies redefined and refocused.
He cited the Volta Aluminium Company (VALCO) Project, which had the benefit of foreign exchange to amortise Ghana's loans from international lenders for the construction of the Akosombo and Kpong Hydro Electric Dams.
Other benefits were the generation of tax and employment and the reservation of a substantial volume of power at cheap rate to VALCO. There was, however, a failure to develop Ghana's bauxite reserves to an integrated project involving the mining of bauxite, the conversion of bauxite into alumina and the processing of alumina into aluminium. Nana Dr Asante re-echoed the need to revisit the recurrent themes of costs and benefits.
This would ascertain whether promised investment capital constituted real foreign exchange resources, or a hop-notch of old machinery already depreciated for tax elsewhere.
Nana Dr Asante, who has ever worked for 16 years with the New York based United Nations Centre for Trans-national Corporation, said the lack of a highly skilled labour force, inadequate infrastructure, comparatively weak domestic private sector and low level technology had inhibited FDI flows and were gaps in the State's development. "If FDI will not come because of these deficiencies, then the question arises as to whether we should not tackle them ourselves as part of our development strategies in any case", Nana Dr Asante said, and asked: "Is it r ealistic to count on elusive FDI as a major factor of our development?"
He stated as an instance that Ghana must have its own strategy for technological development and called for a sobering evaluation of the possible contribution of Trans-national Corporations (TNCs) to national development.
Nana Dr Asante, who was once Ghana's Attorney General, observed that global competition for FDI was very keen and the nation's capacity to induce TNCs to opt for Ghana, as favourite investment destination, in the manufacturing sector was limited by a comparatively small market and a deficient physical and social infrastructure.
"Whiles we can attract significant FDI inflows into the mining sector, because resource seeking TNCs or foreign companies would go to the location of the resources even at considerable risk, we cannot effectively compete with China, Indonesia or Nigeria, countries with vast markets in attracting TNCs.
"This means that we may have to target medium-sized TNCs or companies from developing countries that are prepared to take advantage of the impressive governance record and macro-economic policies. An UNCTAD World Investment Report of 2005, Nana Dr Asante cited showed an increasing trend in the total FDI inflows in Ghana from 2002, which fell from 89 million dollars in 2001 to 59 million dollars in 2002.
The figure shot up to 137 million dollars in 2003 and 139 million dollars in 2004.
Also according to the second report of the Ghana Investment Promotion Centre (GIPC), July 2000, the total investments in the non-mining sector comprising the manufacturing, service, tourism, building and construction, export trade, agriculture and general trade in Ghana was 33.44 million dollars, and the main sources of the investment were India, China, Lebanon, USA and Germany. Nana Dr Asante stated that empirical evidence from developing countries was that technology was hardly transferred by TNCs and called for a deliberate policy and strategy to develop the technology needed for the nation's industrial and agricultural growth.