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Opinions of Monday, 2 July 2012

Columnist: Tsikata, Prosper Yao

RE - Ghana: Support To Public Private Partnership Projects

I plead your indulgence for space to respond to the above-captioned letter and news item published by the Insight Newspaper, June 23, 2012, on Ghanaweb
(http://www.ghanaweb.com/GhanaHomePage/NewsArchive/artikel.php?ID=242780). We
(I mean every Ghanaian) are informed about the National Democratic Congress (NDC) government’s decision to private not only the Kotoka International Airport (KIA), but three other airports, and the two main harbors ¬– Tema Harbor and Takoradi Harbor - under what the NDC government termed Public Private Partnership (PPP).

I have since been wondering if it is the fancifulness of the term Public Private Partnership that has intrigued my NDC officials so much so that they can now couch the selling of these critical public assets under this loaded terminology to bamboozle the people of Ghana. While the letter does not go further to indicate which group of people form or will form this vital private partners, who will offload their dollar bills to support these projects, we are clear on who the public is. In simple terms, the public remains all members of our society. Therefore, the Kotoka International Airport, the Tema Harbor, the Takoradi Harbor, and all the other assets in question, being public assets exist for the use of the general public and are funded through the peoples tax and revenues generated from the use of these facilities.

The private partners to husband the public are what would largely be in contention as government attempts to execute these projects. The proposed tripartite initiative or the PPP simply describes a government service or private business venture which is funded and operated through a partnership of government and one or more private sector companies. In this case, Ghana Government might engage a private partner who will run and manage the affairs of the KIA and all other facilities concerned and also assume substantial financial, technical, and operational risk in running and managing the facilities in question. I have no doubts that the KIA is already a self-sustaining service whereby users of the facility bear the cost of running the facility through airport tax and other forms levy paid for the use of the facility.

If it is, however, the case that the user fee of the facility which is borne by travellers falls short of the cost of running and managing the facility, then there is a case to be made for operational and financial efficiency and viability in the running of the KIA and the other facilities, and for that matter the need to consider some form of partnerships with the hope of revitalizing the operations of KIA and the others. While opting for private finance initiative (PFI) and participation may not be a bad thing, it must be noted that private capital is expensive and investors and their shareholders expect higher returns for their capital.

There are no doubts that our airports need to be rehabilitated, expanded, and upgraded, as the memo indicated. I believe that any Ghanaian who has travelled through the Bole International Airport in Ethiopia, O.R. Tambo International Airport in South Africa, Cairo International Airport in Ethiopia and many other destinations such as Heathrow in London and JFK in New York will agree with me that we do not have the luxury of time on our hands to wait any longer for the expansion of our airports and fitting them with modern facilities befitting 21st century airport.

I postulate that airports, like front desk bureaus of companies, are the visage of any country. They metaphorically depict the health of any nation just as the front desk bureaus of companies portray their health. When I travel through Cairo and I am harassed by officials at the airport, I know what to expect in the city of Cairo and beyond; when I travel through Heathrow and I am confronted by guarded immigration officers, it is done with some dignity and it is procedurally explained to me, and that also informs me about what to expect in that country. All these indicators inform me about what to expect in each country I have been to. Similarly, when I disembark at the KIA and I am swamped by greedy and hungry Customs Officials who are ready to stoop very low for even a single dollar bill, I recognize that the checks that are supposed to be there are lacking and there anything goes.

Rehabilitation, expansion, and upgrading are all essential words. I am of the view that they all come with facilities that will see a proper uplift of the KIA and the others around the country to standards we all can be proud of. A modern airport facility must be fitted with security gadgets that can police even the custom and immigration officers who abuse their offices by harassing travellers and asking money from them.

But the issue of how government intends to fund these projects is what is again in question. The sale of Ghana Telecom, the sales of Ghana Airways and its properties around the world, the sales of the Black Star Line, the sales of AGC, privatization of water and many other state properties in recent memory, premised on “the expansion and efficiency mantra” have not brought the intended expansion, upgrading, and efficiency to these companies. The consequences have rather been the milking of the Ghanaian economy and the repatriation of huge profits to the place of origin of the investors and their companies. Who will fault an investor for repatriating his profit through approved and unapproved means? We are all aware that some of these investment agreements come with diktats that place ceilings on what percentage of profit an investor can repatriate to their places of origin, but hardly are these prohibitions adhered to.

In a recent debate on a guarded forum I am a part of, a contributor alleged that MTN had repatriated over US$40 million back home in three months. Only heaven knows how much Vodafone transfers from the Ghanaian economy each month after taking charge of GT with the most extensive network coverage in Ghana. The point is we have sold gold and that hasn’t brought the needed efficiency and respite, we have sold GT, but the quality of service they promised has never been achieved, we have sold almost everything Ghanaian and we are still bent on selling under the guise of a new acronym PPP, P3, or P3.

What difference will it make, in this case just like the others, if the private investor is a Chinese, American, British, or just any non-Ghanaian who will repatriate his profit back home? The name PPP may be adopted but that does not change the equation or make the process any different. After all most Ghanaian assets that have been offloaded to foreign companies have some form of state participation in them. For example, when AGC was gobbled by AngloGold in the late ‘90s, the Ghana Government maintained what was termed the golden shares, by which the government had a veto in trust for the Ghanaian public (Curious readers can find out more about the golden shares by following the link here:
http://www.accessmylibrary.com/coms2/summary_0286-22375441_ITM ). It may be argued that AngloGold expanded the operation of the inherited companies and injected some efficiency in its operations, but to the benefit of whom?
The point is that if the so-called private partners, who we are yet to identify, again, turn out to be the “old known private players” in our economy, then what the NDC government want to sell to Ghanaians as Public Private Partnership (PPP) is a Trojan Horse under a bizarre designation. It will still be labeled privatization, with the appendage Foreign Direct Investment (FDI), and no different from what we have known. But if the private partners turn out to be local or Ghanaian investors who will be allowed to buy stocks or shares to partner the Ghana government financially in running and managing the airports, then we can say that we are making headway on this front. I, however, have no doubts that the mindset hasn’t changed with the change of government. The very things they accused their predecessors of are the things we see each day.
If the NDC government will learn any lessons from the past, I advise them to fall on the recent call by Sir Sam Jonah on African governments to support local investors over FDIs. This is essential because of the role Jonah played over the years as PNDC/NDC darling boy and later NPP strategic adviser trotting the globe looking for FDIs only to realize too late that FDIS flow where the profits are promising. Or perhaps, FDIs flow into countries where the locals themselves have confidence in their own economy and are ready to put their money there. At the recent World Economic Forum on Africa, held in Tanzania, Jonah was advocating domestic-driven investment mobilization over FDIs. Perhaps he has realized the dangers of a complete control of ones economy by foreigners, but a little too late (you can please follow the link to Jonah’s assertions
http://business.myjoyonline.com/pages/news/201005/45783.php).
On a lighter note, all of us, including the President of the Republic of Ghana Professor John Evans Atta Mills, should note that the Kotoka International Airport can only be truly ours when we own the keys to its financial lifeline. It is with ownership that the president would even be free to run hundred meters in suit under the sweltering sun and get away with it. A private investor whose motive is only money may not allow the president to break loose on a sprint to prove his fitness in suit in a sweltering sun.
Every Ghanaian both home and abroad must keep their eye on this debate. If needs be, people must be ready to occupy/invade the KIA just as others have done on Wall Street and elsewhere to stop the NDC government from selling the KIA under the guise of PPP. I also believe others can also do justice to this subject by looking at the security implications of our airports in foreign hands.

Prosper Yao Tsikata
Email: pytsikata@yahoo.com