South Korea Deal: Is Ghana Short of Architects?

Published on 21st June 2010

Ever wondered why a party that ruled continuously for 19 years (11 under absolute dictatorship) would not talk about the achievements of its own founding father and patron saint – Togbe Avaklaso Rawlings, but shamelessly reach into a different era and forcibly grab and tout the achievements of one of its competitors - the CPP and its founder, Dr. Kwame Nkrumah, as if it is their own?

For over 19 years, the NDC has nothing to show for its stewardship except a trail of clinically “pilot error” economic mismanagements, human rights abuses and political machismo. The Forbes Magazine recently described Ghana as: “Typical example of the world’s worst-managed economies: It’s a country that shouldn’t be poor, but it is. The West African nation’s gross domestic product per capita fell 9% last year - 2009 - to US$621, ranking it 154th out of 184 countries tracked by the International Monetary Fund, below resource-impoverished Haiti. With a US$3 billion trade deficit last year and $4.9 billion in external debt, Ghana is struggling to pay its bills even as it sits on some of the world’s biggest reserves of gold and bauxite, as well as considerable amounts of offshore oil, which is being developed by Anadarko Petroleum and others.”

“Ghana’s problems are mostly homegrown,” said Peter Allum, the IMF’s mission chief to Ghana, in February. Forbes ranks Ghana ninth on the list of the world’s worst economies.

While NDC describe themselves as Nkrumahists and social democrats, they have nothing in common with Dr. Nkrumah in terms of economic and social management of the country. Whilst outwardly Kwame Nkrumah’s political philosophy drew deeply from the well of Pan-Africanism, at the heart of it was economic and political emancipation of the black man. He was the original Mr. Domestication. His nationalistic posture was about self-reliance and self-determination, hence his declaration that the Black Man was fully capable of taking care of himself without looking East or West, but forward.

Kwame Nkrumah had plans with measurable timelines. He built Tema Township and port from scratch. He set up the State Housing Corporation (SHC) to build all the 12 communities of Tema, State House, and Job 600, numerous Estate houses, roads, schools, universities, and hospitals across the country, plus the GIHOC group of companies to basically drive home import substitution industries as well as generate jobs for the masses. All that Nkrumah did was a little bit of fine tuning and a mixture of private and public capital initiatives, whilst allowing political pluralism and Ghana would have been just great.  

Compare that to our present era and you are left wondering whether Kwame Nkrumah was the one man sage who collected all the wisdom in the Ghanaian political milieu to the grave. Nothing typifies the economic mismanagement of the country more than the current rush to pony up $10 billion dollars – $4.5bn in the form of government guaranteed upfront payment to the STX Corporation of South Korea to come and build 200,000 housing units for Ghanaians.

Forget about what NDC spin doctors say about the deal. Here is what a staff reporter of STX Corporation says about the deal in The Korea Times of December 09, 2010: “The Ghanaian government has been set to offer building lots free of charge and will buy 90,000 units in advance as a back-up plan for the project.” He also said Ghana's housing bank called the HFC Bank will guarantee 100 percent housing loans to help individuals who hope to buy the remaining 110,000 units. Analysts and STX officials say the latest deal will help the group strengthen its cash-flow structure despite some skeptical views over the Ghanaian government's pledges.

Officials at the South Korean government and industry watchers say the project has been made in the form of a "package deal," including ways to support Ghana's shipbuilding industry and to develop natural resources there. "As far as I know, the Ghanaian government may give gold and oil as some part of the payment for the project, while STX Group will offer technological support to help the African country boost the competitiveness of shipbuilding-related industries," a government official said, asking not to be identified. "It is still premature to say how the deal will impact on the group's cash-flow. But the deal will help," a credit analyst at a local brokerage said, citing the bleak climate in the global shipbuilding industry.”

I suspect Atta Mills skipped school the very day Economics 101, money, and its multiplier effect were being taught. How did what Kwame Nkrumah did in the 1960s dodge the current crop of politicians and administrators? Is house building such a high tech venture that we need outsiders to come and do for us two and three bedroom housing units at an average price tag of $50,000 each, whilst providing free land and tax free incentives? What about Ghanaian entrepreneurs? If it is good for outsiders, it must be fantastically good for Ghanaian companies too, shouldn’t it?  

If I was in your position, president Mills, I would give the $10 billion dollars to the SHC and other local Real Estate developers to build the housing units whilst I provide the most stringent supervision to ensure they deliver on time, completely, and satisfactorily. Beckoning Koreans is an admission of incapability to manage and supervise and a vote of no confidence in the Ghanaian enterprise. It is also profound misunderstanding of opportunity costs.

If we cannot capacitate state corporations and Ghanaian owned businesses with $10bn dollars today, just when in time will we do it? Atta Mills is unwilling to do the heavy lifting that would prop up and sustain the Ghanaian economy over the long haul. He has cap out for easy and ready-made fixes. Has he asked himself how the South Koreans got where they are? They postponed immediate gratification for a long march towards freedom and economic growth by investing in themselves, not outsiders. Remember, we used to have higher GDP than them at the time of independence.

How is this behaviour different from local importers who import rice, chicken and wax prints from outside whilst local rice farms, poultry and textile industries collapse? This government has no business telling Ghanaians to patronize local produce and industries whilst cutting the life blood off SHC and other indigenous companies who are here and now.

Does Atta Mills fully comprehend the multiplier effect of $10bn dollars? Firstly, the money would stay in circulation ad infinitum in the local economy. Secondly, thousands of jobs, both directly and indirectly, would be created. Local industries would get the much needed economic transfusion to stay competitive and even reach out to the Ecowas sub-region. Thirdly, we would be making a down payment and laying the foundation for a long term sustainable economic growth instead of shipping jobs overseas whilst our own kith and kin cry for jobs.

Under the watch of P/NDC, hundreds of businesses collapsed, GIHOC Group of companies were stripped off and sold for salvage value to their cronies; state institutions like the Peduase Lodge, hotels, schools, Ghana Railways, Ghana Airways, hospitals and Black Star Lines crumpled and buckled and became the abode of rats and snakes, just like the Kumasi Jute and Shoe factories have become the grazing grounds of cows and Fulani herdsmen.

We appeal to parliament to abrogate without any delay the agreement signed between Ghana and the STX Corporation of South Korea. Ghana’s wealth and resources are not NDC’s to abuse and dispose of as they please. The oil money has not started flowing yet and Atta Mills has already mortgaged 10 years of it to outsiders to come and build houses for us whilst we sit on our hands and brains. This is a sinking-hole investment in a foreign company. It is an end-user kind of investment; nothing is recouped and reinvested into the local economy to keep the engine running, besides the vaguely expressed technical advice and help to local shipbuilders.

Ghana must walk away from the reprehensible deal. Counting the costs, they should not be limited to the $10bn 200,000 units, 15% of which would go to soldiers. You have to measure it in terms of opportunity costs, the sucking out of the economic life blood of Ghanaians to go and oil and prop up a South Korean company that is already up to its eyeballs in debts whilst ours become mothballed and stunted in growth. This is gross folly brewed in an African pot.

Go to the Ghanaian towns like Kumasi, Accra, Koforidua, Ho, Takoradi, Obuasi, Tamale, Bolgatanga, Wa, Sunyani and ask who built their houses for them and you would get an earful. It was not foreigners. We have the builders, artisans and craftsmen who can compete with any in the world, given the opportunity; don’t take what is rightly theirs and go and give to Koreans. For $50,000 each and free land, there are a whole lot of values you can get for your money than two and three bedroom houses, not to discount the tremendous boost it would give to our own companies, economy, and people.

By Eric Kwasi Bottah alias Oyokoba

The author can be reached at [email protected]

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