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Opinions of Thursday, 4 October 2007

Columnist: Graham, Ekow Appiah

Does International Debt Placement Translate into Progress?


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What Progress?

It is always mind boggling when ordinary and, sometimes natural, events are presented to a populace as something out of the ordinary never before achieved or heard of by political “wanna-bes”. Ghanaians today could, perhaps, forgive this unbelievably inept NPP political leadership when one of their “bright minds”, Jake Obetsebi Lamptey, nonsensically and unashamedly proclaimed that a solar eclipse witnessed across the skies of Ghana was because the NPP was in power. This cataclysm of thought could be forgiven because Ghanaians and other stakeholders in our motherland are confronted with bold faced lies with far more serious implications.

Witness a Minister telling Ghanaians that the national government is not paying for the communication gadgets and its associated costs of the NPP’s National Party Chairman whilst documents bearing the minister signature said exactly the opposite.

Today, bold faced lies are the order of the day and these lies do not draw any rebuke or furore from within the NPP political leadership, opinion leaders, church leaders, and not surprisingly most main stream media outlets. Certainly, some of those who lie loudest get to be presidential aspirants for the NPP. This is, indeed, a testament to the times Ghanaians live in.

Ghanaians are living a political extension to Jesus Christ’s proclamation “I and my Father are one”. The political leadership in Ghana is in bed with main stream media personalities and some “prominent” church leaders who are appointed to board positions and invited by key political personalities to grace occasions. It does not really matter if they are not up to the task assigned. It is, therefore, no wonder that Kwaku Baako could crow on national airwaves that he was given an opportunity to be on the board of Ghana telecom and rejected the opportunity. Would any of us want to be “guided” by this Kwaku Baako in any constructive business venture? Maybe, just maybe, he has proprietary business expertise that most qualified Ghanaians lack so I leave it at that, for now. Why are we not gobsmacked when Haruna Atta yells in the open to extol the virtues of the political era we live in when he praises this NPP government for dipping their hand in the national kitty to finance the travel costs and other expenses for journalists representing today’s “main stream” press in Ghana who accompany the President of Ghana on his, many-a-time, useless sojourns abroad. Possibly, he (Haruna Atta) did not even realise the implication of what he said. That would not be totally surprising. We had Kweku Baako bragging to the world that he has listened in on the Ex-President Rawlings’ phone conversation until it dawned on him later on that he had admitted to a criminal activity.

Yes, in fact and actual fact, the political leadership of Ghana and the “main stream” press are “one”. Indeed, we should look no further for more evidence of this “oneness” than the otherwise remarkable Chronicle newspaper putting a request in print that the businesses associated with the Political leadership of today’s Ghana MUST advertise in their newspapers because they helped them to come to power. They must love themselves so much so that they are in bed together and they don’t care who is watching them in their escapade!!!

We must, however, not allow these strange “bedfellows” to dictate how we think or should think and how we measure human and national progress. That would mean we lose our most prized asset as human beings and beautiful Ghanaians, our reasoning faculties. Hence, when they say that borrowing in the international debt market at a relatively high cost is progress, let them also say what that progress is. We should do that to allow them more space to over expose their corruptible and not-so-analytical minds.

Countries raise finance to pay for government expenditure through different contractual alternatives and it is no big deal when a country borrows from the international debt market. We know from the published literature that Western banks and other institutional investors have been interested in the high yield debt in emerging markets since the 1980s because of its relatively high yields. So when Ghana issues a high yield debt and it is over subscribed, it should be nothing new. Governments in developing countries are not corporations and, therefore, cannot declare bankruptcy. Therefore, these banks are happy to take on high yielding assets from emerging markets into their portfolio, a portfolio for which its overall risk has been hedged anyway. How then can we really say that placing a sovereign debt in an international debt market by Ghana is progress? We also know that the heavy international debt burden was one of the contributory factors of the East Asian Crisis. We know that international debt was one of the contributory factors of the Argentina economic crisis.

So we know there is, historically, a high demand for high yield developing country debt and some of this debt has contributed to economic crises in some developing countries. How do we allocate this so-called progress being banded about as a result of the high yield sovereign debt placed by Ghana? Is it the placement of the debt in the international debt market? Is it the over-subscription of the debt? Is it the listing of the debt on an organised exchange? Just where is the progress and how could we measure it?

Perhaps the discourse should centre on the lead managers in this debt placement. When they fixed the rate on this fixed income security and it was over-subscribed, that should sound alarm bells to those observing the issue, in my opinion. This is because many questions automatically arise. For instance, why are investors rushing to buy this asset when there are other similarly risky assets in the market? We need to learn more about how and why the yield was fixed at 8.75%. It is very important that we are not left bamboozled by low level analytical and superficial political talk.

Whilst the other meaningful discourse is underway, we should also make sure steps are put in place to prevent the funds raised ending up as settlement fees for the acquisition of private hotels and other private property. Countries complain about “conditionalities” attached to loans and grants extended by the Bretton Wood Institutions. What countries don’t talk about is why those conditions are imposed. For the unspoken reason, we need to keep our eyes open here on how these funds are expended.

The President of the Republic, Mr. Kuffour, literally hauled Mr. Tony Blair, the then Prime Minister of Britain, out into inland Ghana to see mud houses when Mr. Blair visited Ghana in Kuffour’s first term in office. That was an interesting move and we all saw Mr. Kuffour at his “begging” best. Good for you, Mr President!!! However, Mr. Kuffor, you have done very well for yourself and your family and bought your hotel (or should I credit your “qualified accountant” son?) whilst you have been in power. Perhaps you could show the world current pictures of the publicised area you visited together with Mr. Blair to depict the progress that have been chalked under your “political leadership”. It would be some progress if one, just one, of the mud houses has been replaced by a more solid structure within the time frame that you have been in power.

Progress…some progress indeed!!!



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