You are here: HomeWallOpinionsArticles2009 09 26Article 169155

Opinions of Saturday, 26 September 2009

Columnist: Egu, Francis Kwaku

Business and politics in Ghana

The business environment in Ghana reveals a worrying trend which requires urgent attention to boost investor confidence in corporate Ghana. The issue is a greater percentage of key projects and businesses deals are controlled by the state. Consequently investors as well as local businessmen strive to win the favour of the political party in power to get lucrative contracts and business deals. In the end as the ruling party is out of power, the business deals and contracts awarded come to an abrupt end. Usually the in-coming government tend to review or cancel most contracts and business deals of the preceding government.

Business deals

It’s a known fact that the government is the key client in business deals in the retail as well as manufacturing sector. The government is a valued customer for the auto companies in the country. It buys more cars from these companies than individuals or private companies combined. The government buys cars for serving ministers and other appointees. It buys fleets of cars for the presidential motorcades and state protocol cars. The NPP government bought fleets of luxury cars during Ghana at 50 celebrations. The government approves car loans for 200 sitting MPs to buy cars every four years. When the government approved £50.000 car loans for MPs this year there were reports car dealers flocked parliament house looking for business deals.

Again the government is a key client to most construction and engineering companies. Service providers like the banks, insurance companies, telephone/mobile phone providers, hotels all regard the state as their valued client. The state usually book hotel rooms for conferences and foreign dignitaries on regular basis. All the state cars require insurance policies etc. The state borrows from the banks. In fact state organisations and affiliate bodies control business deals in the energy, road & highway, education, health, aviation, oil etc sector.

The reality is most businesses recognise the significant role the state plays in the expansion of their business and are not taking chances. They also know such lucrative deals play key role in their profit margin. As a result most contracts and business deals are often tainted with political under dealings. The sinister thing is companies or individuals on the other side of the political divide are denied such opportunities.

Regrettably these practices do not create favourable environment for the development of indigenous businesses. Given that a party in power have life spans of at most 8yrs in power. A change in government will definitely spell doom to most of these party affiliated or favoured companies. In the past we have thriving party affiliated companies like EA Masai Group of Companies and CASHPRO that were hard hit after the NDC lost the election in 2000. Apart from that most construction companies, advertising agencies, consulting firms etc that were given thirst-quenching contracts during the days of the NDC folded up when the NPP won the election.

This phenomenon is once again surfacing with the NPP out of control. Just within eighth months of losing the election some NPP affiliated companies are folding up with lightning speed. Databank Financial Services is reported to be experiencing some hitches after acquiring the toxic assets of Statesman newspaper. This paper was allegedly receiving state support. This has been withdrawn by the current government just as NPP withdrew state support for the Palaver/Democrat newspapers some years back.

Caterers providing meals for the School Feeding Programmes are feeling the pinch as their contracts are under scrutiny. On the whole most businesses that came with the NPP regime are going into oblivion as their contracts are being axed. The Ghana@50 Committee and some others are examining some NPP business deals and contracts.

There was an influx of Nigerian business moguls in the country during the NPP regime. Currently businesses of some of these moguls are systematically going into extinction. TV stations, advertising companies and other businesses owned by these moguls are struggling to remain buoyant because contracts are not forth coming.

Disincentive to investment

The irony is our political leaders go globe trotting in the name of wooing investors. JA Kuffour went globetrotting during his 8 years in power looking for investors. Now that the NPP is out of power most of these investors are struggling to survive. Similarly JJ Rawlings also globe trotted and brought in some investors. Most of these investors suffered awfully under NPP regime as well.

When the NPP took over in 2001 they reviewed most of the contracts awarded by NDC. An example is the review of the defunct Ghana Telecom contract with the Malaysians. Presently there are rumours NDC is considering reviewing the sale of the same Ghana Telecom to Vodafone. They are also looking at reviewing the sale of the defunct Ghana Airways which is now Ghanaian International Airlines.

What these politicians don’t realised is cynical sales of state enterprises and subsequent calls for review of such sales results in lack of investor confidence in the system. In order to continue reaping the benefits of direct foreign investments its necessary we put in place safety mechanisms to shield investors. A change in regime should not mean an automatic re-evaluation of contracts and business deals of the preceding regime. We should find a way of circumventing this routine of the demise of businesses with the fall of the party in power. Perhaps we should get neutral bodies to handle state contracts, business deals and sale of state enterprises.

Conclusion

Business and politics in Ghana is too entwined and there is the need to delink both. Award of business deals and contracts must be on merits and ability to deliver and not on political affiliation. Business moguls and ventures who affiliate themselves to political parties must also realised it comes with a price. The demise of that party could spell an instant doom to their investments. Businessmen who want to remain in politics must be aware the life span of their businesses could be just 4 years or at most 8 years.

Francis Kwaku Egu, UK Kwakuhull@yahoo.com