Politicians quick to take advantage of Ghana’s oil windfall

Oil barrel coffin, Ghana (photo courtesy Flickr user What KT Did)

 

In The Ringtone and the Drum, my recently published book on West Africa, I described how diamonds have proved a curse rather than a blessing to Sierra Leone:

Once the resource curse falls on a country, like a deadly virus it spreads rapidly, crippling its host’s every organ, paralysing its every function. First to suffer are farming and manufacturing. The profits from diamonds (or oil or gold) far outweigh those achievable through agriculture or industry, and it makes economic sense to allow mineral extraction to become the dominant productive activity. Often it becomes the sole productive activity. Diamonds give a country’s leaders more wealth than they ever dreamed of, so they no longer need to worry about other parts of the economy. Minerals become the only way to make a living; everything else is left to rot. As other, more labour-intensive sectors collapse, the majority of the population has no work (the decline of Sierra Leonean agriculture was swift: twenty years after discovering its precious stones, the country had gone from exporting rice to importing it). A chasm opens up, between the rich few with access to mineral wealth, and the poor masses who are shut out.

The masses have no outlet for their frustrations, no way of redressing the balance. While they are growing rich on diamond exports the leaders of a resource-cursed country do not need to agonise over what their subjects think of them. Governments in countries lacking in valuable minerals depend on taxes to keep them in business; without them, ministers would not be paid and the machinery of government could not function. For taxes to be paid, the state must count on at least some degree of support from its citizens, and is to some degree answerable to them – if it ignores their needs entirely, citizens will use non-payment of tax as a bargaining chip. But in diamond-rich economies, governments need nothing from their people; profits from the gems are more than sufficient to keep the leaders in luxury, and their subjects, lacking any leverage over them, have no way of agitating peacefully for a fair share of the pie.

Sierra Leone’s near-neighbour Ghana, the world’s newest oil producer and one of its fastest growing economies, has so far avoided damage to non-oil sectors, but last week brought a worrying sign that politicians are keen to get their hands on oil revenues. By itself, and even though inflation in the country is running at just 9%, members of parliament awarding themselves a 140% pay rise may not be cause for tremendous alarm – Ghanaian MPs’ monthly salary of $3,800 is still much lower than that of their Kenyan counterparts, for example, who trouser a cool $10,000 a month.

But it is difficult to understand why such a pay rise should be backdated to 2009. Such a ruse means that in January next year, lawmakers will receive a windfall of $109,025 (the $2,225 pay rise multiplied by 49 months). Ordinary Ghanaians who are struggling to make ends meet are unlikely to be aware of the full extent of the politicians’ good fortune, but if they did have time to do the calculation they would receive a nasty shock: it would take a Ghanaian on the minimum wage 121 years to earn what MPs have just gifted themselves.

On the web: the UK Strategic Defence and Security Review, Russia-China-US relations, and India’s international outlook…

– Writing in The World Today, General Tim Cross and Brigadier Nigel Hall examine the prospects of the UK’s Strategic Defence and Security Review, suggesting that any reforms it ushers in “must give operational reality to the new concept of comprehensive security”. In an interview with The Daily Telegraph, meanwhile, Defence Secretary Liam Fox suggests that “[w]e don’t have the money as a country to protect ourselves against every potential future threat”, with fiscal constraints necessitating Armed Forces tailored to those threats that are “realistic”.

– Yevgeny Bazhanov explores the “triangle” of geopolitical relations between Washington, Beijing, and Moscow, while over at Global Europe Shada Islam suggests that the EU must redoubled efforts to improve engagement with Asia.

– In the first of a new column on international affairs, Shashi Tharoor, former Indian Minister of State for External Affairs, explores the importance of internationalism in foreign policy and why it “has always been a vital part of [the Indian] national DNA”. The economist Jagdish Bhagwati, meanwhile, assesses US-Indian tensions at the heart of the Doha Round and the prospects of reinvigorating the trade talks.

– Elsewhere, in The Walrus John Schram has an in-depth account of Ghana’s post-colonial transition and how its democratic experience provides an example to other African countries.

– Finally, Keith Simpson, William Hague’s Parliamentary Private Secretary, presents his annual offering of summer reading in foreign affairs. Iain Dale has the full list here.

A classic viral moment

[youtube:http://uk.youtube.com/watch?v=kica8hmSdAM&feature=related]

This video interview shows Derick Ashong, an Obama supporter, getting approached by a (presumably pro-Clinton) interviewer outside Obama and Clinton’s third debate in February last year.  Here’s how the New York Times described what happened next:

“So why are you for Obama?” he asked. It was clear from his approach that he expected a dimwitted answer, an expectation that he was about to talk to another acolyte smitten by Senator Obama’s rock star persona.

But, as it turned out, Mr. Ashong, who was raised in Ghana and elsewhere, was glad to be asked. For almost six minutes — about a century in broadcast television years — Mr. Ashong, who has an immigrant’s love of democracy and the furrowed brow of a Brookings fellow, held forth on universal health care, single-payer approaches and public-private partnerships.

“A lot of these H.M.O.’s are publicly traded companies anyway, but I don’t think we want to create a market for health care per se, like we don’t want to create a futures market in health care,” he said. And so on.

Cute stuff. Highly informative. But not the kind of political discourse that generally captures a wider audience.

But here’s the weird part. On Feb. 2, the interview of Mr. Ashong was posted on a YouTube channel called “The Latest Controversy,” where supporters of both Senator Hillary Rodham Clinton and Senator Obama are asked very aggressively to justify their choice of candidates. The video blew up, drawing more than 850,000 views. And after that huge response to his policy analysis, Mr. Ashong decided to double down and explain the emotional component of his support for Obama in a follow-up video that was posted Feb. 11 and received 300,000 views.

Taken together, that means a guy who was looking to (anonymously) show a little love for a candidate was able to look into the camera for more than 13 minutes combined and draw in more than a million clicks with an impassioned but reasoned pitch.

Ashong will be in the UK next month, and speaking at a meeting of the All-Party Parliamentary Group on Conflict Issues.  Details: 6.30pm on 26 February in the Grand Committee Room in Parliament. More from the NYT piece after the jump. Continue reading

Deadlock in Ghana

One of Africa’s few shining lights, Ghana, is on tenterhooks as it awaits the result of an incredibly closely-fought general election. Publication of the results has been delayed, as the remote outpost of Tain in the west has yet to vote in the second round because of problems with voting materials. The national result is so tight that Tain, with just 23,000 voters, could be decisive. The poll there will open on Friday.

Ghana is important not just because it is one of very few West African countries that is not mired in corruption, civil strife and abject poverty (although there is plenty of the latter and not a little of the former if you look hard enough). It is also one of only a handful of countries on the entire continent that has regular peaceful democratic elections (it has had five since 1992). After the debacles in Kenya and Zimbabwe in the last two years, and after the recent coups in Guinea and Mauritania, it is crucial that Ghana’s poll passes off peacefully.

So far, there has been relatively little unrest, but as Chris Blattman reports, tensions are rising by the day:

My friend Naunihal sends me this dispatch, cobbled together hastily this afternoon (he urges me to tell you):

The situation is starting to look like Bush v. Gore. The election commissioner just said that the opposition leads by 23,000 votes and that there is one constituency where there was no election for security reasons which has over 50,000 votes that will vote just after new years.

But it gets messier. The incumbent party (NPP) points out that 2 big constituencies in Kumasi (its key area of support) were not included in the officially counted votes (probably because they are contested) and that it won one of those by over 51,000 votes.

In addition, they point out that in 11 constituencies in the opposition’s key area of the Volta region, NPP poling agents were thrown out and did not sign the election returns. I’ve seen the violence done to one of the party election observers – he was beaten and stoned and may lose his eye.

Right now fear is running high in Accra. Makola Market, the main market, is closed because of fear of violence. I’m getting reports right now from people aligned with the NPP, so I’m only hearing about NDC “Machomen” riding around in empty streets.

The constituency that has yet to vote for the President, voted against the incumbent party at the Parliamentary level, thus kicking out the incumbent MP. So it looks good for the opposition in that area, but everything is really too close to call.

And rumors are spreading that the election commissioner is under pressure from the incumbent government to throw things their way.

None of this is good in terms of street level tensions and legitimacy for whichever candidate gets declared.

Update: Fortunately, the election concluded peacefully, as Nana Akufo-Addo of the New Patriotic Party graciously conceded defeat to John Atta Mills’ National Democratic Congress. A rare example of a peaceful democratic transition, then, from one African party to another, and further evidence that Ghana really is a beacon of hope for the region. Let’s hope leaders in other parts of the continent take note.

FDI shoots up in West Africa

Defying the global financial crisis, Guinea-Bissau, Gambia and Guinea have recorded sharp rises in foreign direct investment in recent months. Trouble is, according to the United Nations Office on Drugs and Crime, most of the increase is drug money. “Foreign direct investments in these (three) countries, unexplained so far by their economic performance, have exploded. Remittances have grown. Even the currencies of the region are being revalued,” says the beleaguered head of the organisation, Antonio Maria Costa. “This is a form of money laundering, it comes in as foreign direct investment, it goes into rural real estate, purchase of land, hotels, tourism,” he told West African leaders in Cape Verde, who are meeting to discuss the problem.

As well as the above three countries and Sierra Leone, which I wrote about in July, a researcher who works for Kofi Annan claims that Ghana has become another hub for the drug deluge, which he believes will affect the country’s current election campaign. Here’s a helpful map of West Africa’s Cocaine Coast – expect Liberia and Cote d’Ivoire, which like Sierra Leone and Guinea-Bissau are struggling to rebuild after devastating wars and which are surrounded by drug havens, to be next.

Global deal – the developing country ask

Imagine you’re advising China or India – or perhaps a poorer developing country such as Ghana – on their preparations for the climate change negotiations in Copenhagen. What sort of deal should these countries be prepared to accept? What would seem fair?

Nick Stern sidles up to these questions in his paper – Key Elements of a Global Deal on Climate Change. His starting point is that global emissions need to drop to around 20 gigatonnes of carbon dioxide equivalents (and then further to around 10GT CO2e in the decades that follow) – that’s around 2 tonnes of CO2e in 2050 for each of the world’s 9 billion people or so.

Stern believes that there is no choice but for countries to converge on this per capita average:

This target for per capita emissions by mid-century is so low that there is little scope for any major country to depart significantly above or below it. If one or two large countries were to manage only to reduce emissions to, say, 3T or 4T per capita, then it would be difficult to see which other major grouping of countries would be able to get emissions close to zero: and the global target would be unlikely to be reached.

So…let’s imagine the Americans have accepted this logic (suspend belief for a moment) and have a proposal for reducing their emissions from over 20T today to Stern’s 2T by 2050. They enter the negotiating room expecting other countries to do the same.

How would you advise China, India or Ghana to respond? They start from a very different point – around 5T per Chinese citizen, 2T for an Indian, and maybe around 1/2 tonne for a Ghanaian.

Now, as Stern admits, for them, simple convergence would be a pretty rough deal.

All major groups getting to 2T/capita is a pragmatic approach and not a strongly equitable one. It takes little account of the greater per capita contributions of the developed countries to the historical and future contributions to the stock of GHG emissions.

My instinct would be to urge the Chinese, Indians and Ghanaian to forgo what might be a fun, but ultimately unproductive, squabble about historical emissions. Be magnanimous about the past, I’d suggest. Instead focus on what really matters – who’s going to be allowed to emit what over the next forty years.

Because however far Chinese, Indian or Ghanaian emissions are allowed to increase before they start to drop towards 2T – its absolutely certain that their total emissions between now and 2050 (on a per capita basis) will be significantly lower than America’s.

In other words, there’s no trajectory that can be drawn that gives these countries a fair share of the next generation emissions ‘cake’.

So what deal would you advise them to strike?

Nothing new under the sun

Among the most popular policy responses to recent rises in food prices are export bans. Cambodia has banned rice exports, for example. Kazakhstan, Pakistan and Iran have refused to export wheat to hungry neighbours like Afghanistan. And Burkina Faso, one of the West African countries that has been hardest hit by the price rises, has banned cereal exports to neighbouring Ghana.

Such measures have been widely criticised, but they are not new. I recently came across FJ Pedler’s ‘Economic Geography of West Africa’, published by Longmans in 1955. Among many other interesting topics, he writes about the maize shortages of 1947. He notes the wildly fluctuating price of guinea-corn in the Zaria region of Nigeria, which rose from £8 per ton in 1946 to £38 per ton a year later. “These price movements,” he says, “are an indication that too little food is produced to meet the needs of the people throughout the year.” Traders take advantage of this, buying up food at harvest time to sell it later when prices rise (a bit like today’s commodities traders, who have been stocking up on food): “They are often blamed for high prices and scarcity [plus ça change…], but their action is the result of shortage, not the cause of it.”

As in today’s crisis, Mr Pedler reports that governments “often get frightened by the high prices and shortages…and prohibit the movement of food from one place to another.” Like Burkina Faso today, West African governments in the 1950s banned the export of guinea-corn from one state to another – in this case, from Katsina Province into Zaria Province. It didn’t help then either, and Pedler explains why the approach is flawed:

It is difficult to defend these bans on economic grounds. If they are effective, they prevent food from moving to the place where people will pay most for it. This must drive prices even higher in the needy area: while in the producing area an artificially low price is maintained, so that there is less economic incentive for farmers to increase their production.

Little has been learnt, it seems, in the intervening half-century. However, as Mr Pedler observed back then, the bans are easily evaded; “their principal effect is to add to the cost of transport by making it necessary for traders to avoid control posts or bribe the guards.” Good news for the corrupt, then, but bad news for the hungry.