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Opinions of Tuesday, 23 October 2018

Columnist: Patricia Safo

The rules of the game: Not all investors play fair!

This article highlights a serious problem that can be summed up as follows: not all business people and entrepreneurs who come into Africa as investors are prepared to ‘play fair’.

As a result, any country that seeks to attract Direct Foreign Investments (DFI), and this includes Ghana, must ensure that they have effective policies in place as well as Gatekeepers’ that ensure that the rules are obeyed.

In other words, there need to be clear policies, backed by fair and transparent monitoring that ensures that newcomers respect the established law in the host country. This is critical in creating a level playing field, particularly in growth targeted sectors. Ensuring that the rule of law is enforced means that all parties in a sector operate on the same basis and this removes unfair advantage.

The national ecosystem of a country like Ghana is also easily damaged by rogue activity. The country’s natural resources can be left in a vulnerable situation by unregulated business activities. The hard reality is that some foreign operators deliberately ignore the rules and bribe officials to get what they want. When you have a situation that some operators in fast-growing sectors do not respect the rules, basically to maximise short-term profit, they also put at risk the long term viability of sustainable businesses that take account of ethical and environmental issues.

This observation brings us to a key point, which involves the need to strike a balance between:

(i) Government Agencies that aim to promote innovation through DFIs and

(ii) regulation that encourages environmentally sustainable business, which also safeguards people’s health and welfare. This balance is important in helping responsible businesses to continue to operate on an ethical basis. A fair and balanced approach also supports locally established business to compete with new comers who may be supported by investors with a lot of money.

There is a pressing need for professional, impartial agencies to ensure that acceptable systems are put in place to support business activities. At the same time, anything that creates unnecessary costs, bureaucracy or difficult working conditions (for both old and new businesses) needs to be challenged. Bureaucracy in government institutions is always a potential problem, and as the old saying goes, ‘the devil makes work for idle hands’.

Effective management is required in Government Offices to ensure accountability and efficiency. It becomes a matter of serious concern when administrative bottlenecks are allowed to delay the progress of important projects. In some cases, the root cause is nothing more than the ego of some official who has the power to do nothing (except frustrate the people who are trying to achieve change).

The fight against corruption continues to be an uphill struggle in Ghana and many other countries. There is a complacency that pervades the System and no one has the determination to name and shame the guilty parties. The reality is that not all investors play fair and they can exploit weaknesses. What they do well is ‘play’ the corrupt and inefficient system, ignoring rules and bribing officials at all levels. The latest scandals are now becoming a topic of conversation in certain circles, but no action is being taken. A new commitment is desperately needed in countries like Ghana to ensure that effective policies are put in place, with Gate Keepers who make sure that everyone follows regulations and respects the established law in the country.

In Ghana, some of the worst examples of rule breaking can be found in the aquaculture sector. It is timely to look at this, particularly with the National Farmers Day approaching. In view of the problems, it is important for all sectors to look at the current state of affairs in fish-farming. There are a number of issues that have arisen in the last five years, but these have been largely ignored. It has become apparent that if new investors ignore established laws and regulations (and start cutting corners to increase their profitability) this affects established businesses that respect the law. This leaves locally established businesses exposed to unfair competition.

The first company given permits to operate in the Volta Lake completed an extensive application process and was closely monitored. The project started back in 2000. However, activity on the lake is now dominated by foreign owned large commercial farms and monitoring has become less vigorous. It is also evident that the demands of the business require large investments, and this also makes it difficult for local small holder farmers to compete directly with the volumes produced by the larger operators. However, over the last five years, even some of the larger companies have started to feel threatened by new comers coming into the sector. Why should this happen? The problem is that some of the new entrants have little respect for the established laws and the idea of playing fair.

In aquaculture, there is always a risk that unscrupulous people will smuggle fry (very small fish) into the country. However, these are foreign species and are not accredited for use, and could damage the quality of existing stocks. The illegal fish often include genetically engineered hybrids that are fast growing and require less feed (the most expensive element in fish farming). However, this raises concerns about traceability in the food chain, which is of increasing concern to consumers. It also means that customers can be tricked into paying inflated prices for sub-standard fish.
Regular testing of the DNA can be used to enforce regulations and also enable consumers to make clear choices about the food they buy.

It, therefore, follows that there should be proper labelling of food products, particularly meat and fish. In many ways, this type of initiative builds on the good work the Governor of Bank of Ghana has been taking to clean up the Banking System and the wider financial sector. The issues that are causing concern are self-evident and can be linked to explicit ethical standards that should be expected of anyone running a business. If foreign operators are shown to contravene the country’s laws, then legal action can be taken to correct the problems, and work visas can be revoked if people are guilty of malpractice.

The author of the article is a farmer and the CEO of Crystal Lake Fish Limited; she was recently recognised of her achievements as a country winner in the agricultural sector of CEO Global Most Influential Women in Business and Government 2018 by the Pan African Awards

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