Little drops

Nana Yaa Ofori Atta

When the Auditor General’s (AG) statutory report on the spend by Ministries, Municipalities and District Assemblies (MMDAs) in 2016 is officially presented to Ghana’s Parliament in February, 2018, it will come with the usual litany of unapproved payments, contracts backdated to cover work shoddily done, late and overpriced, good and services that were never received and ‘ever green’ bills – the same item paid for year after year, with interest.

The difference this time in our annual song of self imposed impotent lamentation is that this AG, Mr. Daniel Domelovo will be exercising, probably for the first time, the constitutionally mandated powers of his Office to Disallow and stop payments. At the Ministry of Youth and Sports alone, payment has been reportedly stopped on some Ghc87.4 million, equivalent to $20 million.

The AG also has powers to Surcharge, essentially naming the public servants who allowed the improper spend to slide by their blinkered eyes, the private companies involved, demand refunds and/or recommend prosecution.  2018 has started off with a trot in naming, shaming and I would like to see rapid prosecution in recouping the little drops that make our public coffers.  

Will the private companies (owners and directors) who are found to have conspired and pilfered public funds in 2016 also be blacklisted, proscribed from providing goods and services paid for by public funds for punitive terms?  They should be.  Lest they turn up in disguise on the next year’s MMDA report and continue to bleed, little by little, drop by drop.  

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Shut the front door

We have heard it all before, Ghana is positioning itself to be the ‘gateway for West Africa.’  Now we seek to leverage our political stability, economic reforms and policies to be the Best Place to do Business in Africa.  All very good.  If first, we can market our challenges – infrastructure, market access, the sheer cost of inputs including access to credit, technology, a work force with upgraded skills sets and the lack of truly viable value chains –  as opportunities to drive investment, both local and foreign.

The Ghana Union of Traders Association (GUTA) is a powerful lobby with friends in high places and they are at a crossroads, with lights, sirens, bells, whistles and a couple of talking drums thrown in the mix.  They will have to read the small print.  The direct import of President Akufo-Addo’s One District One Factory (1D1F), Planting for Food and Jobs is industrialisation of the economy and the sub text is import substitution.  Without strategic planning, this will hit GUTA and the thousands they employ directly and indirectly, hard.

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Imports of goods into Ghana – from toothpicks through cosmetics and cars to roofing tiles – increased from $3.2 billion in the third quarter of 2017, up from just above $3 billion in the previous quarter. We spent $400 million last year, importing rice, now a staple in most Ghanaian homes.

Translated, it means members of GUTA are spending a fortune in borrowing to buy foreign exchange to bring you and I the luxuries we now take for granted.  Essentially GUTA, you and I, are spending money boosting other economies (China, United States, Belgium, United Kingdom and France lead), putting pressure on our local currency to deliver goods and services that we buy locally for exorbitant prices due to currency fluctuations and import taxes.  An unedifying spectacle of a dog chasing its own flea bitten tail in public.

According to a report by the United National Conference on Trade and Investment, Foreign Direct Investment (FDI) into sub Saharan Africa continued to fall in 2016 by 3% to $59 billion. Inflows into West Africa were positive, up by 12% to $11.4 billion, heading mostly to Nigeria with Ghana putting in a respectable $3.5 billion on the back of oil and gas and cocoa exports.

In the sub region, we are competing with the big boy (Nigeria) for the smaller and more strategic placement of FDI.

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A competitive edge

Nigeria has a population of 186 million, the strategic investment promotion focus of the Buhari government is on Agriculture, Education, Healthcare, Oil and Gas.  To our immediate left, President Alhassane Ouattara of Cote d’Ivoire’s (population 24 million) investment drive is to attract much needed capital into the Construction, Mining and Pharmaceutical industries.  Ghana (population 27 million) is competing with these countries to attract Foreign Direct Investment (FDI) into Agriculture, Tourism, Infrastructure, Mining, Oil and Gas.

Little Drops

The Ghana Investment Promotion Center (GIPC) is holding a series of stakeholder meetings to determine how and if to reform our investment law to attract more of sustainable and equitable strategic investment.   On its books are thousands of prepped and ready to go enterprises in the pillar industries that this government has resolved to focus on.   One company is looking for as little as $120,000 to improve technology and its capacity in processing agricultural products.

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GUTA is a key constituent in the conversations that must take place on how to actually position Ghana, Beyond Aid and Ghana Beyond Imports.  They have a key point –  prevent foreigners with the advantage of technology and capital in accessing the retail market where they dominate.  I agree, we are already doing that and it is not working, except for a few large Ghanaian importers, in the short term.

 

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When the demonstrations are over, the small print and some history.  In 1972, Nigeria pulled a ‘what the fudge’ by introducing its Indigenization Decree.  Virtually overnight, a policy of import substitution and protection was in play.  In theory, it should have stimulated growth of local industries, created new employment for Nigerians, stabilised the country’s external reserves, guaranteed its balance of payments, driven up manufacturing of quality goods and services, enough to satisfy its large internal market as well as position its domestic companies to export.  It worked, to some degree with some industries.

 

Aliko Dangote is today Africa’s richest man, it is his cement that Ghanaians buy to build their shops filled with imported goods, their car wash bays where imported cars are detailed, the houses filled with foreign decor.  If 1D1F and the drive to industrialise is seen through, surely we should be producing quality goods and services to secure our local markets and be nimble and competitive enough to export to Nigeria, Djibouti, China, France, the UK.  Members of GUTA with their deep forex pockets could take first mover advantage and be in the front of this domestic turnaround.

 

The question for me is not that reforms to our investment law should not be broached at all.  Knowing what we now do and with a close eye to trends in the global economy, exactly what is GIPC proposing to reform, where, why, how, when and to what effect?  A cost benefit analysis that GUTA and the rest of us can discuss and align on.  Ghana Beyond Aid and Imports of toothpicks.  Little drops required now.

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