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Opinions of Wednesday, 30 June 2010

Columnist: Boadi-Danquah, Eugene

Ghana Is Treading A Deadly Path With Its Housing Contracts

May 26th almost saw a landmark financial deal approved by Ghana’s parliament to enable a South Korean company undertake what could be arguably the largest social housing project in Ghana and the West African sub-region.
If the global financial and housing crisis taught countries no lessons at all, it opened people’s eyes to the fact that short term luxuries can never be divorce from long term sacrifices. To countries like China, this was a wake up call that has led to what some pundits have termed excessive protectionism, but common sense would term that as prudent management. Most western countries rather took the opportunity to throw one or two lifelines to stimulate growth, which would literally translate as “made life carry on as normal”, the consequence of it has been the need to meet such with medium term austere measures to save the stimulants from ending up sedating their economies through its overdose.
Either way you look at it, Governments are working around the clock to spend mainly in strategic areas that produce direct growth of their economy and ensuring that money, which is the lifeblood of their economies, stay in circulation as long as possible. Local industries are given the necessary assistance to ensure that they continue to provide jobs for indigenes; the flow of credit has been enhanced in all ways possible, so that small businesses can continue to expand to stimulate the necessary growth.
3rd world countries like Ghana, whose budgets historically come with huge deficits, require donor support on a yearly basis and religiously seek IMF’s assistance, the supposed most dreaded option in any developing country, have also made their attempts. Though these have not been channelled towards direct growth, some cuts have been made in strategic areas to cause the country to come closer to imagining living within its means.
One may wonder, why in the face of all these, Ghana’s parliament is considering awarding a contract, valued at $10 billion to South Korea, to undertake social housing projects in the country. The first reason that comes to mind is that Ghanaians, naturally perceive most things foreign as superior. Many young people today, grew up knowing that the synonym of “superior quality” is “foreign”. From fruits, farm produce to livestock breeds, you are forgiven to confuse the inferior ones with the word “local”. It doesn’t come as a surprise to most Ghanaians who are stuck within the status quo, that in a quest for such a massive social housing project, their government has had to turn their backs to local developers.
What one may not realise now is that the idea that wholly undertaken Ghanaian projects end up being inferior is a misconception. It is not true, to the least degree. The government which has behaved like a “rat” and deserted the “sinking ship” in this instance is also the cause of the underperformance of Ghanaian contractors. While it is a general “rule of thumb” that the indemnity of public construction projects lies with the contractor, at least for a given design life, the same is not for Ghanaian executed contracts. A year ago, Ghana’s Minister of Roads and Highways, Joe Gidisu was addressing a delegation of transport experts in Bogota, Colombia; where he reiterated the fact that contracts awarded under the previous administration were executed in a shoddy manner, causing his government to make compromises on their road delivery timetable and budgets to avert the situation. This statement only makes sense in Ghanaian settings, but in the world of responsible construction practise, the statement is sub-standard. It is indeed that simple to make Ghanaian contractors perform to the desired standards; by letting them indemnify any project they undertake to the project value plus delays and other costs. This can be provided through private insurance companies, who will then shoulder the burden of efficiency in our public contracts execution. With proper legislation and enforcement, government can always make the necessary claims that would drive up insurance premiums and get contractors to work more efficiently to avoid such huge premiums.
Some also have attributed this deal to the Ghanaian misconstrued idea of development. Surprising as it may seem, some Ghanaians including some leaders and elderly, measure development by the numbers of high-rise buildings, golf-courses, fountains, shopping malls, multi-story car parks etc and not the question whether one child in a distant village who grew up sharing the same stream with livestock now has a taste of quality drinking water, or if the child who schools under tree can also realise his little dream of seeing brick and mortar. It is therefore not too surprising that the path Ghana is treading in attempting to solve its social housing needs is similar to the option taken by Abu Dhabi and Dubai and not the people we should be looking up to on our developmental ladder like South Africa or Botswana. These countries we use to justify our decision have oil reserves that could last them a century and anticipated tourism revenues that could carry them to the end of the world, with very limited skilled workforce. Ghana’s has blinded expectations of its oil revenues, and has not realised that the contract’s sum is equivalent to the anticipated revenue of 10years.
To most that choose to, this is also one of the typical sub-Saharan African decisions making, where short term desires are prioritised over the overall long term development of society. Ghana is still recovering from a dented image that arose from the confessions of a UK based construction company, with the notoriety of greasing the palms of a few African leaders and end up taking huge chunks of money out of their economy; reminiscent of the old slavery days. If that reason is anything to go by, then Ghana has not proven itself beyond such, and rather presented grave vulnerability to such, based on the meagre amounts that UK’s Mabey and Johnson paid to secure multi-million dollar contracts in Ghana.

The thought of the housing deficit of Ghana being 1million a year needs to be revisited, because a lot of academics have mistakenly taken Accra to be the blueprint of Ghana. Outside the greater Accra Region, houses go up for rental for up to years before some even attract a single viewing. A serious look at how we plan our country is needed to also avoid overly congesting Accra, leading to pruning planning options rather than long term sustainable options.

From which angle you look at this, you can hardly see any prudence in a 3rd world country, with unemployment level’s greater than America during the great depression to punch such a huge hole in its finances by awarding a multi-billion dollar contract to an ailing South Korean company which will use up to 70% Koreans for its execution, when with just a slight change of priorities and the necessary strong institutions (not men), could stimulate its own building industry and make its own contractors work more efficiently.

Eugene Boadi-Danquah (Engineer/Businessman)