Public Agenda (Accra)
Eric Boafo
4 August 2008
column
Cincinnati — I have, graciously, decided to cede my column, today, to the piece below, written by a good friend of mine, which is an insightful contribution to the on-going debate on the sale of Ghana Telecom. Views expressed by the writer are not necessarily those I share. The last part of last week's column will appear next week!
Please read on;
The recent hullabaloo surrounding the sale of Ghana Telecom (GT) is a microcosm of the deep psychological state of Ghana. We are a group of people, who, rightfully so, show so much pride in our country, sometimes, so much to the detriment of the collective good of the nation.
Is Ghana Telecom an asset just as the so-called Ghana International Airways is? My point is, sell Ghana Telecom-sell all the non-critical state owned companies because it is right to do so at this time and dispensation when telecommunication is the most lucrative industry in the developing world. In fact, the richest man on earth, today, Carlos Slim, owes his wealth to his telecommunication investments all across Latin America. So it is not surprising for Vodafone and other telecom giants, whose markets in Europe and North America have peaked, to show interest in GT.
My main premise is that government has a role in business, but only as a facilitator and not a player. It is required of government to do business to the extent that it is unprofitable for the private sector to do so. Once the private sector comes in, the role of government should be limited to governance of the industry.
For instance, before Mobitel, SPACEFON, and the rest set up shops in Ghana, GT was the only available telecommunication medium in Ghana and, therefore, government could not have sold it since that would have left us at the mercy of a monopoly. The $900 million question is: Why is it in the interest of Ghana to sell GT today? The simple answer to the above question is we have nothing to lose but $900 million and more competition in the telecommunication industry to gain. We don't have to look far to appreciate how competition in the telecom industry has benefited Ghanaians.
By the early 2000s, one needed at least GH¢100, plus some connection at GT in order to get a One Touch chip; more so, one needed, at least, GH¢30 plus, some luck for a SPACEFON chip. However, as of 2007, all one needed was about GH¢1.00 with nothing else in order to get a chip of his or her choice. The difference between the early 2000s and 2007 is the level of competition in Ghana's telecom industry. So, selling GT would only increase the competition in the industry, because the only way Vodafone-or whoever the buyer is-can succeed in Ghana is to provide good services at cheaper prices to consumers.
At the end of the day, all what consumers care about is how good and cheap the service is and not who is providing it. I know that for sure because over the past two decades whenever the Black Stars won games, we never paused in our celebrations to ask of the nationality of the coach. We just enjoyed the win.
I find it quite puzzling and difficult understanding why opponents of this sale and all any other sale-or privation-of state-owned corporations say nothing about the level of inefficiency and total waste at these under-performing companies until government decides to sell them. Suddenly-when government raises the issue of privatization or sale-these white elephants become high-rated national assets-precious eggs that need protection.
Why should we continue to pump money into them when we know for sure that we are not getting our monies' worth? Our past and most recent history proves that our government, be it CPP, PNDC, NDC or NPP, is not good at managing corporations. Ghana Airways, for instance, was a mess under the NDC and it isn't doing any better in the hands of the NPP. What became of the Presidential Special Initiatives (PSI) that President Kufuor started? Isn't it ironical that we complain about the large size of our government, and yet expect it to oversee the day-to-day operations of big corporations? Should our government be that petty?
This equation is simple enough: sell GT for its fair value, and invest the money in the people of Ghana. Ghanaians don't lose out on this because we will still have telecommunication services either from GT or from one of its four competitors. At the end of the year, for assuming no risk at all, government comes into play only to take the people's share of profits as taxes, just as it does with MTN, Tigo, Kasapa, and the rest. Those who cry over foreign investors repatriating profits forget that investment comes before profit, and though they can repatriate their profits, their investments in our people and infrastructure will continue to live on.
Though the British left with all their gains after independence, they could not take along, Korle-Bu, the Takoradi Harbor, the Southern Rail Network and the human resources that managed them. So far, as the business climate in Ghana remains lucrative, investors-be they indigenous or foreign-will continue to reinvest their profits in the economy. The most important thing is for us to patch up the lax in our government, which allow untaxed profits to leave the country.
Though the debate surrounding the sale of GT is a healthy one, and one that reflects the level of openness in our democracy, it saddens me that opponents of the sale are distracting us from the real issues surrounding the sale of GT. At this level of our development the debate shouldn't be about whether to sell GT or not, but, rather, whether the process is open and competitive enough for us to attract more potential investors-be they local or foreign. Also, does the contract have provisions to ensure that Vodafone does not monopolize the National Fibre Backbone included in the sale?
In short, is everything being done to ensure that GT is sold at its fair market value? How are we ensuring that the NPP doesn't give out these 'assets' on a silver platter just as the NDC did during the massive divestiture of state corporations in the 90s? Do we have to wait till another episode of Fast Track High Court to find out? The more time and energy we expend on these pertinent questions, the better value we will get from this sale and all the other sales to come.
Those who oppose the sale of GT just for the sake of having a national telecommunication carrier lack an appreciation of the global world we live in today. In the 21st Century money and, for that matter, investment has/have no specific shape or form, and, therefore, has no boundary. With just the click of a button an investor in Tokyo can send money to my grandmother's village in the form of investment for micro finance. Closing our doors to the global world in the name of keeping national assets limits our access to the global investment pie.
Some people carry a false belief that Africa and, for that matter, Ghana has all it takes to be self-sufficient. They misconstrue availability of natural resources for wealth. What they refuse to acknowledge is gold is not mined until it's discovered, and even after discovery it is not mined as jewellery; oil is not discovered until it's explored, and even after that it's not drilled as petrol; Cocoa is not harvested until it's planted, and even after that it's not harvested as chocolate. The point being, it takes investment to turn natural resources into something of value, and investment is what Ghana is lacking at the moment.
One way to attract investment is exactly what we are doing by selling off GT to investors. The United States is what it is today because Britain financed its development centuries ago; Asia is the giant it is today because America bank-rolled its economy in the 90s. So what makes us think that Africa can rise up all by herself in this more interdependent global village? The thrust of the argument, however, is that our politicians should not sell our birthright to these investors in the name of privatization. At least, that is what we've seen over the years. Careful planning, thought, and deliberations need to go into making this decision. In fact, at the end of the day, the country must be the chief beneficiary.
I never appreciated the value of foreign investment until I visited the Bahamas a couple of weeks ago. I must admit I have never seen black people so proud of their country until my visit. However, almost all the investments in the biggest industry in the Bahamas, tourism, are foreign-owned. In some cases, whole islands are sold out to investors to put up tourist attractions. One of such islands, Paradise Island, sold out to a South African billionaire employs 9,000 of the 310,000 people of the Bahamas.
None of the biggest mansions I was shown was owned by a Bahamian, yet they took pride in the fact that those rich and famous spent their money on their land, and for that matter on them; they took pride in the fact that their Dollar has been at par - value-wise - with the US dollar for decades; they took pride in the fact that developing countries like Ghana could only envy their $15,000 GNI (Gross National Income) and their 71 years life expectancy. At no point in time did I hear anyone complain about the lack of Bahamian government ownership of tourist investments, because they were living testimonies of the value of foreign investments.
It's about time we realized that for Ghana to progress any further than it has so far, government would have to narrow its focus on the most pertinent issues facing the country at the moment: human resource development (not state-based employment), private sector empowerment (not merely state-run corporations), provision of good healthcare, potable water supply, adequate energy supply, etc. It's about time government weaned itself off the day-to-day operations of petty businesses and focus on the larger picture of governance. Government's role is to ensure competition in all industries so consumers would get value for their money. Government's role is to protect the interest of its citizens by enforcing labor laws and environmental regulations.
The long and short of it is that GT is not being sold because no Ghanaian mind can manage it as some claim, but, rather, government lacks the needed investment to keep it going. The truth is, no matter who buys GT, Ghanaians will comprise over 99% of its workforce-in fact, that is one of the issues that should be central to the current debate. Ghanaians need to form the majority-if not all-of the workforce. How can GT compete effectively in the telecom industry when its competitors don't have to fight for government's budgetary allocation like GT does?
GT is what it is today because it has been starved of the needed investment much to the detriment of its very own survival. Though it may sound paradoxical, the only way to save GT and all the ailing state owned corporations is to let them go. Pride is of no value when our people live in poverty and yet are buried in untapped riches. Allowing our national pride to overcome reason will simply keep the status quo-one, which puts pride ahead of needed investment.
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