18 August 2014

Ghana: Democracy Is Producing Prosperity - President Mahama

Photo: White House / Amanda Lucidon
President John and Mrs. Lordina Dramani Mahama welcomed to the White House by President Barack and Mrs. Michelle Obama

interview

Washington, DC — John Dramani Mahama, one of the leaders taking part in the U.S.-Africa Summit earlier this month, became president of Ghana in July 2012 following the sudden death of John Atta Mills. His victory in the elections in December that year was contested by the opposition but upheld by the Supreme Court. While in Washington he told AllAfrica's Reed Kramer and Bunmi Oloruntoba that Ghana can manage its oil properly, curb corruption and strengthen its robust democracy. Excerpts from the interview:

Was it worthwhile to participate in the Summit?

It was very much worth the trip. We discussed a lot of things with President Obama, and I think we are all coming away quite satisfied with the discussions [and] the opportunity to get to know each other better and to understand each other. The good thing is this has not been just a talk shop between political leaders. There was also the business forum that engaged political and business leaders to understand investment opportunities in Africa. There was also the youth leaders' summit, which I hear was very successful.

There were concrete outcomes?

Yes. There were $33 billion in additional commitments to Africa, $14 billion of that targeted to come from the private sector. That is significant. For Ghana, we signed a new Millennium Challenge Compact [that will result in] an almost $500 million injection into our energy sector. By the time we complete that Compact, I believe Ghana would probably have the most efficient power sector in west Africa, producing power not only to satisfy our increasing demand but also being able to export it to our power-deficient neighbors.

Much of that $498 million investment will be directed towards transmission and distribution?

Yes, transmission and distribution - but also electricity generation. Under the 'Power Africa' Initiative, we expect to see more American private sector investment in generation, and we signed an MOU with GE for 1000 new megawatts of power. That additional 1000 megawatts is significant considering that our total installed capacity today is 2800 megawatts. That includes the hydro at Akosombo, Kpong and Bui.

With the growing demand for electricity, why is your government allowing flaring of gas by the oil companies? Why is that gas not being used to generate power?

We haven't flared much. We gave permission to flare as a safety precaution because there was no capacity to re-inject the gas and because there was a delay in the gas project coming on stream. For the safety of the FPSOs (Floating Production Storage and Offloading vessels), they need to be able to flare. So far no significant flaring has taken place as far as I know.

The Millennium Challenge Compact calls for reforming laws and regulations to transform the power sector. Can that be sold politically in Ghana?

Yes, it can. We have actually been implementing reform already. Change is necessary. You need to persuade people, and sometimes you need to drag them kicking along! But certainly, to make the energy sector more efficient, we are willing to take the steps that reform the energy sector and make us a significant power player.

Does that principally involve privatization?

We call it 'Private Sector Participation', and we have done it before. I used to be Minister of Communication, so I remember when all the PTTs [postal, telegraph and telephone services] were government-owned. When we decided to deregulate and allow the private sector, there were all kinds of concerns about security. But telecoms exploded across Africa when the private sector came in. We are going to do the same with power. I am a convert to private sector participation.

Why is Ghana experiencing high inflation and such a large government deficit?

Despite the negative narrative that has gone out, Ghana's economy is still one of the top performers in the sub-region in terms of GDP growth. Last year we grew at 7.4%, and this year we estimate that growth will be significantly strong, and so I think that the economy still has very good prospects. Despite the fact that we do have challenges in the short-term with twin deficits and increased interest rates and inflation, we are taking the kind of measures that are necessary to be able to turn that around. I think it's a bit too much to expect that in two years we would have significantly made a dent on bringing the deficit down. We are looking at being able to bring the deficit to manageable levels - about 6% - by the year 2017.

What kind of assistance are you seeking from the International Monetary Fund?

We are working with the IMF more closely to give confidence to our partners that we are working seriously on this deficit. We are also cooperating with the IMF and the World Bank to undertake the deep reforms that are necessary to make the economy more robust going forward.

I want to see a strong developmental component to whatever program that we work out with the Fund and the [World] Bank. We want to focus on infrastructure, jobs and restructuring the economy to create industries that allow us to reduce our huge import bills. We want to see investment in rice production so that we don't have to spend $400 million on rice imports every year; in sugar production so that we don't have to spend $200 million importing sugar every year; in poultry production so that we don't have to spend $190 million importing poultry ever year; in fish production so that we don't have to spend hundreds of millions of dollars on fish imports.

There is a lot that we need to do to change the structure of our economy, and it's my belief that the discussions we are having with the IMF and the World Bank are going to focus on how we achieve the solid economy that will transition Ghana from lower-middle-income status to middle-income status in the next several years.

Critics point to corruption as a major contributor to the country's economic problems, and they say it's getting worse. What is your assessment and what are you doing about it?

Corruption is something we all have to contend with. My government is committed to the fight against corruption. Indeed, in Africa, you face a conundrum. When you expose corruption and deal with it, it increases the perception of corruption, so people have a feeling that there is more corruption. We have seen governments that have refused to investigate corruption because they say it will bring them down.

I believe that we need to deal with corruption on two tracks. One, expose it and sanction it, but two, also put in place the systems and reforms that make it more difficult for people to be corrupt. It's more sensational to expose and punish corruption than to do the difficult work that is required to put in place the systems that make it difficult for people to be corrupt. We have done a lot of work in that regard.

We just passed a National Anti-Corruption Action Plan, and we are going to raise the resources to implement it. I think that that will make quite a big difference. We are implementing the Ghana Integrated Financial Management Information System (GIFMIS), which is an electronic platform that makes our public financial management more transparent and more difficult to be corrupt. So a lot of reforms are taking place to bring more accountability. We have a commitment to fight corruption, and we are going to continue to do so.

Has becoming an oil producer changed Ghana?

Not much. I think there's been quite an exaggeration about what oil was going to do for Ghana. Gold and cocoa are still leading exports. Oil revenues amount to between $600 and $700 million a year. Going forward, that will change. We are going to have additional revenues from gas. In 2016 when the TEN field [Tweneboa-Enyenra-Ntomme] comes on stream there will be additional revenues. We are finalizing an agreement with ENI on the Sankofa field. New discoveries have been made and more exploration is taking place. So oil revenue is going to grow significantly, and potentially Ghana could become a significant player in the oil and gas industry in Africa. But for now our revenues are still quite modest.

Speaking as a Nigerian, I want to ask what Ghana is doing to avoid the mistakes other countries have made with their oil.

We have learned a lot from Nigeria, and what we have learned is what not to do! I have said this many times: Nigeria discovered oil in the late 50s and early 60s, when they had nobody to learn from. Everything Nigeria has learned, it has learned the hard way from its own mistakes. Some things they have done right and some things they have not done right. Fortunately for Ghana, they have generously shared that with us in advance of our oil production coming on stream, and we continue to learn from the Nigerian experience.

Turning to regional matters, what are your thoughts about integration in west Africa, which has moved more slowly on this than east Africa?

Yeah, that's true. When I was elected Ecowas [Economic Community of West African States] Chair by my peers, I outlined my priorities. Number one was pushing integration forward; two was peace and security; and third was sub-regional infrastructure. We have been talking [about integration] for too long, and the political will to push the last mile has not been there. I am trying to get my colleagues to realize that is a win-win situation for all of us. If we allow people, goods and services to move freely across our boundaries, the comparative advantage to all our economies would be much better than the compartmentalization that we currently have.

I keep telling my brother President Jonathan that Nigeria has to take on more responsibility in terms of integration. One of the things I would like Nigeria to address are the prohibited imports. You can't export textiles into the Nigerian market even when they are made in Ghana. Nigeria has a big market - 140 million people - but Nigeria could potentially have a market of 350 million people.

Nigeria has nothing to fear from Ghana in terms of competition. Nigeria has a comparative advantage in terms of market size; in terms of ability to produce; in terms of resources. The richest economy in Africa - not in west Africa - it is the richest economy in Africa. What rich economies do is try to open up other markets, so I expect that Nigeria will take on more responsibility in pushing integration. If Nigeria adopts the will to do it, I am sure it will happen. So I will keep pushing to do that.

Along with President Issoufou [of Niger], you are heading an Ecowas task force on creating a common currency. What's the timeline?

We are working towards being able to arrive at the common currency in 2020. It's quite a tall order but we will give it our best shot. The roadmap has been accepted, so we are going to try and follow the roadmap. We have reduced the criteria that need to be met in order to make it easier to get convergence, and it's been accepted by the heads of state.

Now we need our central banks and others to lead us towards achieving this. It will be a good thing to be able to trade in the same currency across the sub-region. The French-speaking countries are doing it already, and it has installed a certain discipline in their economies, because they are supposed to meet certain targets and keep their indicators within a certain range. For those of us who are not under those kinds of strictures, occasionally we lose micro-economic stability. Inflation goes through the roof. That kind of discipline will be better for our economies going forward. Besides, if you can denominate all goods in a common currency, it makes it easier for us to trade amongst ourselves.

How much progress has been made with customs reform?

When we met in Dakar, we agreed on a Common External Tariff, which is the first step to harmonize across the sub-region. We also negotiated a sub-regional EPA [Economic Partnership Agreements] agreement with the European Union and during the summit we have signed a Trade and Investment Framework Agreement with America.

And your second priority for Ecowas - peace and security?

Security is on top of the agenda any time we hold a meeting. Our Mediation and Security Council comes up with recommendations that are presented to the heads of state at each meeting. One of the things we are working on is an early warning system called Ecowarn to detect conflict and prevent it before it escalates. This was one of the issues we discussed during the summit, and President Obama made a commitment to help us with this regional early-warning system, which would feed into a continental early warning system. Aside from that, in the discussion here the Unites States agreed to help us with the African Standby Force, starting with six nations - and Ghana was named as one of them.

One of the major things we are working on is how to collaborate and share information amongst each other. With the threats that we are facing we need joint intelligence on what is happening with regards to illicit drugs, with regards to movement of small arms, with regards to drug smuggling, with regards to terrorism. If we are able to set up a structure that allows us to share information across national boundaries, I think it will make us better able to confront the security threats we are facing.

In addition, I think that we must cooperate between sub-regions, because some of these security issues straddle sub-regions. For instance Boko Haram is both in west Africa and in central Africa. It's threatening Cameroon now, and so at the last Ecowas meeting we invited Cameroon and Chad to join us. We also had Algeria and Mauritania invited to join us because of the Malian crisis. Ultimately we recognize that it's an interconnected continent. It's an interconnected world.

Currently, in the crises we are seeing in northern Mali and Nigeria and even as far as central Africa, we can trace arms from Libya that are penetrating these areas and giving people the lethal force to be able to do some of the things that they are doing. That's why we appreciate the work that Libya's neighbors are doing - Tunisia, Egypt and all of them - to try and bring stability to Libya. I believe if stability is brought back to Libya, it will snuff out that supply line of illicit arms.

Describe how Ecowas is responding to the Ebola outbreak in several member countries.

Unfortunately, this outbreak has taken place in three countries that were formerly in conflict and have been rebuilding, and so their public health systems are still weak. They are not robust enough to cope with a major challenge like this. Our member countries contributed the initial resources that arrived through the West African Health Organization to acquire protective gear and all that. International assistance has been coming in, but I believe that resources should have been committed much earlier to assist with the crisis before it escalated to what it is now.

However, it's not too late. We can get Ebola under control. We need more protective clothing. We need additional laboratory test kits. Mobile laboratories are needed to test quickly and isolate people. We need quarantine stations where we can keep people in comfort and administer medication to them. We need vehicles for health workers. There is a lot that resources can do. We need to surveil and track patients and put those affected in isolation, not only in the three effected countries but throughout the sub-region.

Ghana has had successive closely contested elections and peaceful handovers of power. What is your assessment of state of democracy in Ghana today?

I think Ghana's democracy is solid. It has stood the test. I believe the [2012] election dispute that was adjudicated has made us emerge stronger. The fact that those who lost were prepared to go to the courts is a good sign. In some countries if there is a dispute, people start fighting each other. So we have a robust democracy. We held six elections peacefully. The NDC [National Democratic Congress] was in power for the first eight years. We lost the election in 2000 and went into opposition. We served as the loyal minority for eight years. Then we went for elections and we won, and we came back into office.

Our people are enjoying the dividends of democracy, and there is a commitment of all the political stake-holders to democratic and constitutional governments. People know that every four years, if they don't want the government, they can change it

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