My Beauty Best Teacher

Is the Government in Accra about to shoot itself and cross-border integration in the foot? Thompson Ayodele and Olusegun Sotola of IPPA write:

The Ghana Investment Protection Council, GIPC, recently revived a regulation that requires foreign-owned businesses based in Ghana to raise at least $300,000 before they are allowed to operate. These measures are imposed to shield indigenous business owners from foreign competitors. This is hinged on the belief that there is a need to curtail the influx of neighbouring countries‘ nationals from crowding out local business interests and creating job loss for Ghanaians.
Although the argument that the policy is designed to witch-hunt the nationals of any country has been debunked by the Ghanaian authorities, industry watchers and experts are not convinced. What is evident in view of the investment pattern is that the regulation is directly aimed at local entrepreneurs from West African countries who want to invest in Ghana and not against Chinese or Indian entrepreneurs whose chunk of foreign investments‘ loans are guaranteed by their governments. Thus, raising the specified amount won‘t be a problem for the Chinese and the Indians. By and large the policy will have more direct bearing on small and medium, scale businesses owned by nationals of West African countries as they do not enjoy the protection offered by their Chinese and Indian counterparts.

Mired in grinding poverty and social destitution, Africa cries for help. A cacophonous galaxy of rock stars, anti-poverty activists, and heads of state are calling on the G-8 countries to cancel Africa’s $350 billion crippling foreign debt and double aid to the continent. British Prime Minister Tony Blair will make aid to Africa the centerpiece in Britain's presidency of the G-8 meeting in Gleneagles, Scotland in July. Live 8 is planned for July 2. After meeting with President Bush on June 10, modalities are being worked out to cancel at least $34 billion in debt of 27 of the world’s poorest nations, mostly African. Will this African Marshall Aid Plan work?

Africa’s plight follows a ten-year attention deficit cycle. Every decade or so, mega-plans are drawn up and rock concerts held to whip up international rescue mission for Africa. Acrimonious wrangling over financing modalities ensues. Years slip by, then a decade later, another grand Africa initiative is unveiled. Back in 1985, there was Live Aid and a “Special Session on Africa” held by the United Nations to boost aid to Africa. Then in March 1996, the U.N. launched a $25 billion Special Initiative for Africa. In September 2005, the plight of Africa will again take center-stage at a U.N. conference with clockwork precision. Expect another major initiative for Africa in 2015.

Helping Africa of course is noble but has now become a theater of the absurd – the blind leading the clueless. A recent IMF study estimated that Africans in the diaspora remit $32 billion annually back to Africa, with the main destinations being Ghana, Nigeria, and Kenya. About $7 billion is sent to southern Africa (Ghana News Agency, Accra, May 31, 2005). The amount Africans abroad remit back exceeds the $25 billion Tony Blair seeks to raise.

Nigerian President Olusegun Obasanjo says corrupt African leaders have stolen at least $140 billion (£95 billion) from their people since independence. The World Bank estimates that 40 per cent of wealth created in Africa is invested outside the continent. Even the African Union, in a stunning report last August, claimed that Africa loses an estimated $148 billion annually to corruption – or 25 percent of the continent's Gross Domestic Product (GDP). Rather than plug the huge hemorrhage, African leaders prefer to badger the West for more money. And the West, blinded by its own racial over-sensitivity and guilt over the iniquities of the slave trade and colonialism, obliges. This is the real tragedy of Africa.

Between 1960 and 1997, the West pumped more than $450 billion in foreign aid – the equivalent of four Marshall Aid Plans – into Africa with nothing to show for it. Contrary to popular misconception, foreign aid is not free but a soft loan. Outright debt relief and massive inflow of aid without any conditionalities, safeguards or monitoring mechanisms is absurd. It is akin to writing off the credit card debt of a drunken sailor and allowing him to keep the same credit cards. No African government has been called upon to give a full public accounting of who took what loan and for what purpose since many of Africa’s foreign loans taken in the past were misused and squandered. No government official has been held accountable; instead, irresponsible past borrowing behavior is being rewarded.

More distressing, much of the new aid money will flow directly into an African government budget – a huge black maze of vanishing tax receipts, extra-budgetary expenditure items, perks and off-budget “presidential privy accounts,” redolent with graft, patronage and waste. Over the past few decades, African budgets have careened out of control. State bureaucracies have swollen, packed with political supporters. Back in 1996, 20 percent of Ghana's public sector workforce was declared redundant by the Secretary of Finance and Guinea’s 50,000 civil servants were consuming 51 percent of the nation's wealth. In Kenya, civil service salaries take up half the budget; in Uganda, it is 40 percent. Zimbabwe has 54 ministers; Uganda with a population of 35 million has 70, while Ghana, with a population of 22 million, has 88 ministers and deputy ministers. With bloated bureaucracies, soaring expenditures and narrow tax bases, budget deficits have soared.

They are covered with World Bank loans and foreign aid (Ghana’s budget is 50 percent aid-financed and Uganda’s is 60 percent). If the aid is insufficient, the rest of the budget shortfall is financed by printing money. Even when is aid available for “budgetary support”, there is no guarantee that it will be used productively to generate a return to repay the soft loan. It could well be “consumed” when it pays for the salaries of civil servants. Writing off Uganda’s debt does not eliminate the aid dependency. In fact, when the World Bank canceled $650 million of Uganda’s debt in 1999, the first item President Yoweri Museveni purchased was a new presidential jet!


British Prime Minister thinks he can cajole or browbeat African leaders into curbing corruption and ensuring that resources released by debt relief are put to some good use – such as increased spending on education and health care. But the push for good governance and reform must come from within – from African civil society groups, organizations and the people. However, in country after country, chastened by diabolical restrictions, these groups have no freedom or political space to operate.

Carlos Cardoso, an investigative journalist, was murdered in November 2000 for uncovering a bank scandal in which about $14 million was looted from Mozambique's largest bank, BCM, on the eve of its privatization. The official in charge of banking supervision, Antonio Siba Siba, was also murdered while investigating the banking scandals. Such was also the fate of Norbert Zongo, a popular journalist in Burkina Faso, who was gunned down on Dec 13, 1998, while investigating official corruption. In September 2001, President Isaias Afwerki closed down all the independent media and arrested its staff, quashing calls for democratic reforms. In all, the government shut down eight private newspapers and arrested its journalists, picking them up in their newsrooms and homes and from the streets. They were held in a central jail until April, 2002, when they threatened to begin a hunger strike to protest their detention. They were then transferred to an undisclosed location.

In neighboring Ethiopia, President Meles Zenawi, a member of Tony Blair’s Africa Commission, just held fraudulent elections. Anticipating public outrage, he banned street demonstrations for one month and assumed full control of the country’s security forces. When the opposition rallied to protest the results dribbling in, the police opened fire, killing 26; opposition leaders have been placed under house arrest. Witness the election machinations in Egypt.

The paucity of good leadership has left a garish stain on the continent. Worse, the caliber of leadership has distressingly deteriorated over the decades to execrable depths. The likes of Charles Taylor of Liberia and Sani Abacha of Nigeria even make Mobutu Sese Seko of formerly Zaire look like a saint. In an unusual editorial, The Independent newspaper in Ghana wrote: "Most of the leaders in Africa are power-loving politicians, who in uniform or out of uniform, represent no good for the welfare of our people. These are harsh words to use on men and women who may mean well but lack the necessary vision and direction to uplift the status of their people (The Independent, Ghana, July 20, 2000; p.2).

The crisis in leadership remains a major obstacle to poverty reduction and has many manifestations. It is characterized, among others, by the following dispositions and failings: The "Big Man" syndrome, subordination of national interests to personal aggrandizement, super-inflated egos, misplaced priorities, poor judgment, reluctance to take responsibility for personal failures, and total lack of vision and understanding of even such basic and elementary concepts as "democracy," "fairness," "rule of law," "accountability," and "freedom" -- among other deficiencies. In some instances, the leadership is given to vituperative utterances, outright buffoonery, stubborn refusal to learn from past mistakes, and complete absence of cognitive pragmatism.

Believing that their countries belong to them and only them only, they cling to power at all costs. Their promises are worth less than Al Cappone’s. They stipulate constitutional term limits and then break them: Angola, Chad, Gabon, Guinea, and Uganda. African leaders themselves drew up a New Economic Partnership for Africa’s Development (NEPAD) in 2001, in which they inserted a Peer Review Mechanism (PRM), by which they were to evaluate the performance of fellow African leaders in terms of democratic governance. What happened? To be fair, they acted in reversing the “military coup” in Togo in February but went on vacation when elections were stolen in Zimbabwe and Togo.

Ask them to cut bloated state bureaucracies or government spending and they will set up a “Ministry of Less Government Spending.” Then there is the “Ministry of Good Governance” (Tanzania). They set up “Anti-Corruption Commissions” with no teeth and then sack the Commissioner if he gets too close to the fat cats (Kenya) or issue a Government White Paper to exonerate corrupt ministers (Ghana in 1996). To be sure, multi-party elections have been held in recent years in many African countries but the electoral process was so contumaciously manipulated to return incumbents to power. Four such “coconut elections” have so far been held this year: Zimbabwe, Togo, Congo (Brazzaville), and Ethiopia.

Ask them to place more reliance on the private sector and they will create a Ministry of Private Enterprise (Ghana). Ask them to privatize inefficient state-owned enterprises and they will sell them off at fire-sale prices to their cronies (Uganda). Or ask them to move a foot and they will demand foreign aid in order to do so. In 2003, some 30,000 ghost names were discovered on the payroll of the Ministry of Education, costing the government $1.2 million a month in salaries heisted by living workers. When Ghana demanded foreign aid to purge the payroll of these ghost names, Japan coughed up $5 million.

The reform process has stalled through vexatious chicanery, willful deception, and vaunted acrobatics. Only 16 out of the 54 African countries are democratic, fewer than 8 are “economic success stories,” only 8 have a free and independent media.

No amount of debt relief and increased aid will help Africa until Africa cleans up its own house. But the leadership is not interested in reform. Thus, without new leadership and genuine reform, debt relief and increased aid would compound Africa’s problems and more African countries will implode. The continent is stuck in a veritable conundrum. What can Western donors do?

Smart aid would do one of two things. One, bypass the vampire state and target the people, who produce Africa’s real wealth. An African economy consists of three sectors: the traditional, informal, and the modern sector. The people who produce Africa’s real wealth – cash crops, diamonds, gold and other minerals – live in the traditional and informal sectors. Meaningful development and poverty reduction cannot occur by ignoring these two sectors. But in the 1960s and 1970s, much Western development aid was channeled into the modern sector or the urban area, the abode of the parasitic elite minority. Industrialization was the rage and the two other sectors – especially agriculture – were neglected. Huge foreign loans were contracted to set up a dizzying array of state enterprises, which became towering edifices of gross inefficiency, waste and graft. Economic crises emerged in the 1980s and billions in foreign aid money were spent in an attempt to reform the dysfunctional modern sector. Between 1981 and 1994, for example, the World Bank spent more than $25 billion in Structural Adjustment loans to reform Africa’s dilapidated statist economic system. Only 6 out of the 29 “adjusting” African countries were adjudged to be “economic success stories” in 1994. Even then, the success list was phantasmagoric. Ghana, declared a “success story” in 1994, is now on HIPC life-support system.

At some point, even the most recklessly optimistic donor must come to terms with the law of diminishing returns: That pouring in more money to reform the modern sector is futile. Greater returns can be achieved elsewhere – by focusing on the traditional and informal sectors.

Second, smart aid would empower the African people (African civil society groups) to monitor how the aid money is being spent and to instigate reform from within. Empowerment requires arming the African people with information, the freedom and the institutional means to unchain themselves from the vicious grip of poverty and oppression.

Africa already has its own Charter of Human and Peoples’ Rights (the 1981 Banjul Charter), which recognizes the right to liberty and to the security of his person (Article 6); to receive information, to express and disseminate his opinions (Article 9); to free association (Article 10); to assemble freely with others (Article 11); and to participate freely in the government of his country, either directly or through freely chosen representatives in accordance with the provisions of the law (Article 13). Though the Charter enjoins African states to recognize these rights, few do so. When President Thabo Mbeki called on June 3, President Bush should have handed him a signed copy of this Charter to be delivered to President Robert Mugabe of ‘Zimbabwe.

The institutional tools Africans need are an independent central bank (to assure monetary stability and stanch capital flight), an independent judiciary (for the rule of law), a free and independent media (to ensure free flow of information), an independent Electoral Commission, an efficient and professional civil service, and a neutral and professional armed and security forces.

Recent events in Ukraine (November), Ghana (December), Zimbabwe (March), Lebanon (April), and Togo (April) unerringly underscore the critical importance of these institutions. Without them, President Bush’s plan to spread democracy may stall. Democracies are not built in a vacuum but in a “political space” in which the people can air their opinion, petition their government without being fired on by security forces and can choose who should rule them in elections that are rigged by electoral commissions packed with government goons.

On May 13, thousands of Egyptian judges, frustrated by government control over the judiciary, agitated for full independence from the executive in their oversight of the electoral process. “The institutions are presenting Mr. Mubarak with an unexpected challenge from within, one that will be difficult to dismiss. The fact is, major changes in this country are going to come out of those institutions, not from the streets," said Abdel Monem Said, director of the Ahram Center for Strategic Studies in Cairo.

In the past 24 years, Egypt has received more than $55 billion in U.S. aid in direct government-to-government transfers. Smart aid would assist civil society in instigating institutional reform. Since this approach carries some risks, the same objective can be achieved by funneling aid through diaspora Africans and their organizations, as was the case with Soviet dissidents during the Cold War.

Africa’s long term growth prospects do not lie in rock concerts and increased dependency on Western aid but on the ability of the African people or civil society groups to instigate reform from within. Assistance to such groups – both at home and abroad – constitutes much smarter aid to Africa than all the LIVE AID concerts Bob Geldof can organize.
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The writer, a native of Ghana, is a Distinguished Economist at American University and President of the Free Africa Foundation. His new book is Africa Unchained (Palgrave/MacMillan). This article is culled from his May 10 testimony before the Standing Committee on Foreign Relations of the Senate of Canada.

Benin Mwangi at the Cheetah Index, comments on rice imports in Ghana.

There is not really an inherent problem with Ghana or any other African nation importing rice from other countries. However, if enough of it is imported, then it puts downward price pressure on Ghana's local agricultural producers who are the engine of the country's economy. One reason for this is because the long grain rice coming into Ghana from abroad is typically sold below what it would cost to produce the same quantities and qualities of rice in Ghana. In the US this is possible because of government subsidies to farmers, which cause large surpluses and in Asia it is presumed to be because of the low cost of labor and the largely intact road infrastructure.

John Schram in The Walrus:

Image via Wikipedia
Today the maturing democracy in Ghana is the envy of much of the continent. Freedom House, an American think tank, rates it as one of only nine African countries that are truly “free”: twenty-three others, including some with post-colonial histories rather like Ghana’s, such as Nigeria, Tanzania, and Kenya, are only “partly free.” The remaining sixteen are not free at all. Atta Mills, Akufo-Addo, and Afari-Gyan could show them a thing or two about how to run a democracy.

More here

MobileActive reports on Codeo the Coalition of Domestic Election Observers:

Each of the 4,000 trained observers-mostly members of the 34-organization strong CODEO coalition--are deployed all over Ghana are using their phones to report on incidences at the polls and how well the polls are conducted, using a coded checklist. As we have reported before, systematic SMS reporting by trained local citizen observers about how well an election is conducted can prevent rumors, and is an independent and reliable indicator about the quality of the election process...[continue reading]

Update:BoingBoing reports on GhanaElections via Twitter

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• Voting Heavy in Ghana

Anthony Faiola at the Washington Post reports on the dwindling role of the IMF.This was highlighted recently when Ghana refused the IMF's advice for a smaller infrastructure bond sale than the country itself required:

"It takes a while for your parent to realize that you are mature enough to make your own decisions, but they eventually do because they have no choice," said Sam Mensah, one of Ghana's senior negotiators with the IMF. "Ghana has outgrown the fund's money just as many countries have. . . . And I think the big question for the fund now is how is it going to stay relevant. To do that, it needs to operate very differently than it has in the past."

Deutsche Bank Research reports:

On September 27 this year the eyes of the international capital markets were drawn to Ghana: on that day Ghana became the first sub-Saharan country after the Republic of South Africa to issue a dollar-denominated, ten-year government bond and in so doing experienced huge demand. This important test of the international appetite for African bonds thus proved extremely positive and cleared the way for future bond issues by other promising candidates like Gabon, Kenya and Zambia...The local-currency bond market is only just starting to emerge. Nurturing its growth is, however, very high on the list of government priorities, which is also shown by the increasing liberalisation of access for foreign investors. Since December of last year foreign investors have been able to invest in capital market instruments with a maturity of at least three years. An alternative option is investing in bonds issued by the African Development Bank which are denominated in Ghanaian cedis.

Emmanuel Ashong-Katai of Ghana's SEC writes:

...the unlisted securities market holds much promise for the private sector and the growth of the national economy. Its effective and efficient development will unleash the creative potential of the Ghanaian private sector by turning ideas and inventions into marketable products both locally and internationally. It will also induce efficiencies in the entire financial system - It will force commercial banks to improve their services and reduce their lending rates to the SME sector as the unlisted market provides them with an alternative and reliable source of long- term capital.

More here(PDF)
Read related article 'New securities market to rescue SMEs'
via PEF Ghana

Excerpt from President Barack Obama's address to the Ghanaian Parliament:

Time and again, Ghanaians have chosen Constitutional rule over autocracy, and shown a democratic spirit that allows the energy of your people to break through. We see that in leaders who accept defeat graciously, and victors who resist calls to wield power against the opposition. We see that spirit in courageous journalists like Anas Aremeyaw Anas, who risked his life to report the truth. We see it in police like Patience Quaye, who helped prosecute the first human trafficker in Ghana. We see it in the young people who are speaking up against patronage, and participating in the political process.

Read complete speech here.
Obama preaches tough love.
Related coverage here.
A snub for Nigeria
Photo courtesy of Huffington Post

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• allAfrica.com interviews Obama on Ghana visit (one.org)
• Excitement on streets of Ghana for Obama (cnn.com)
• Barack Obama tells Africa to stop blaming colonialism for problems (telegraph.co.uk)

Ghana's Danquah institute calls for examination of e-voting Mac-Jordan writes in Global Voices:

...the Danquah Institute (DI), a policy think tank, research and analysis centre, is urging a national platform for stakeholders to lead the discussion on the possibility of facilitating the adoption of biometric voter registration, and subsequently the e-voting system in Ghana.

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• Ushahidi Ghana Meet up (ushahidi.com)

In Myweku:

A couple of years ago one of the finest thinkers, Koranteng Ofosu-Amaah, in the African blogosphere provided us with a detailed exposé on “Ghana Must Go”. Koranteng’s article was inspired by Marc Jacobs 2007 collection for Louise Vuitton. Louise Vuitton’s use of the ubiquitous “Ghana Must Go” material for his rather expensive designer bags triggered a few soul searching comments mostly revolving around the supposed “theft” of an African pattern design by others.

More here

Finance Asia reports:

The overall African economy is expected to grow at 6.2% in 2007, compared with 5.5% in 2006. Countries such as Ghana, Botswana, Uganda, Zambia, Mozambique, Namibia and Nigeria are showing gross domestic product growth rates that are three- to four-times faster than those of the developed economies in the Euro zone. The Ghana Stock Exchange is one of the world’s best performing stock markets, while Botswana boasts one of the highest per capita government savings rates in the world

From the CIPE Blog:

In Ghana, rural entrepreneurs are gaining presence as a political constituency...With a greater political voice for rural entrepreneurs, the people in poverty can lead the charge to eradicate poverty.The Private Enterprise Foundation (PEF)has several programs designed to bring rural entrepreneurs into the political process.

• With proper resources and training, farmer-based associations can become an effective voice for rural entrepreneurs.
• Engaging the private sector in the legislative advisory process provides a vital opportunity for dialogue on reform issues with policymakers.
• Private sector associations are important for improving Ghana’s business climate and making the broader business community a part of democratic decision-making.

...[continue reading]

Kofi Akosah-Sarpong indicts journalists for their complicitness in perpetuating the memes of superstition, a phenomenon all too common across Africa. "...All intellectual laziness aside, what worries me, and I have a lot of worries as a Ghanaian/African development journalist, is a lack of a questioning, critical response to such supernatual interpretation of events that affects practically all that matters in Ghana/Africa...While most Ghanaians accept journalistic inquiry into various wrong doings or oversights or the implications of petroluem prices on the average Ghanaian, journalists have failed in asking about the implications of the rain of prophetic and other spiritual activities in Ghana's development process... By throwing journalistic inquiry on prophetic, juju-marabou mediums, religion and other spiritual activities that are inhibiting the Ghanaian development process, Ghanaian journalists will help open up the dark recesses of the paranoids and conspiracy theorists who feed on Ghanaians deep-seated beliefs in the superstitions such as witchcraft and prophetic revelations that block people from finding rational, reasonable solutions to their problems..."
Via GhanaWeb

Sappor, Godsway Yaw, writes about the failure of African Leadership "...It is not so much the wicked effects of colonialism or neo-colonialism or a regime of artificial borders that keep Ghana and Africa in general, poor. It is true that colonialism did not bestow much to Africa but the African leadership could not retain, let alone increase, the little that it inherited. In fact, corrupt leaders destroyed it. The inherited infrastructure-(roads, brides, schools, universities, hospitals, telephones, and even the civil service machinery) - are now in shambles... Common sense dictates looking both ways before crossing a street, or risk being hit by a truck. For decades, African leaders looked only one way, at "external factors": colonial legacies, the lingering effects of the slave trade, an unjust international economic system, and predatory practices of multi-national corporations, among others, to explain the miserable economic performance of the continent. A lot of studies have already been done about the external factors and it is no secret to say that these factors are beyond the control or manipulation of most African countries on an individual basis. It is therefore a MUST to make an unerring examination of all causative factors, both external and internal, in order to arrive at a lasting solution. “A big obstacle to economic growth in Africa is the tendency to put all blame, failures and shortcomings on outside forces. Progress might have been achieved if we had always tried first to remove the mote in our eyes”... Although it is true that colonialism and Western imperialism did not leave Ghana, for this matter Africa in general, in good shape, the condition has been made immeasurably worse by internal factors such as misguided leadership, systemic corruption, capital flight, economic mismanagement, senseless civil wars, political tyranny, flagrant violations of human rights and military vandalism, among others...",GhanaWeb.

In Ameyaw Debrah, Kofi Akpabli  on 'Ghana's Rum'- Akpeteshie:

He looks at the role of the protectionist British colonialist's who protected their own distillers

courtesy of Joy Online

In the days of yore when Britannia ruled the shore of the Gold Coast they found Apio abominable. The open secret was that Akpeteshie was too competitive for their imported beverages. They knew that leaving the drink all alone would be a marketing disaster for their Jack Daniels and Old Toms. They therefore banned it. Oh yes, they did. So, when in March 1957 Ghana, our beloved country gained independence, Akpeteshie also became free forever.

To its potential for branding a la Russian vodka:

Akpeteshie also has a very serious value proposition- that of faithfully serving Ghanaian traditional culture. From birth through marriage to death, the drink is required for a number of customary rites. It is used to pour libation and at the traditional level, it is part of the fine imposed at arbitrations. If one thinks of what Schnapps (in all it’s glory) is used for today, one should know that Akpeteshie ‘has been there and done that.’

More here
The Scots have their whiskey, the Spanish flaunt their Sherry,Africans should be doing the same.