This Vodafone - Ghana Telecom Deal Stinks

Having followed the public discussions on the almost concluded sale of Ghana Telecommunications Company (GT) for some time, it has become very clear to me that the sale has many questions than answers.

From the ongoing public discourse to the rather subdued protestations from the major opposition party, the National Democratic Congress (NDC) parliamentarians, there is no denying the fact that the government of Ghana is trying to hide something from the Ghanaian taxpayer.

GT provides both fixed line and mobile telephony together with other auxiliary services, which make it the most potentially viable and profitable ICT company in the country. Its asset base is solid and the human resource is veritably suitable for any progressive government to want to rather restructure the entity, if there is cause, for better performance. Another intrigue to the sale of the third largest cellular phone service provider and the single largest fixed line service provider is that the national fibre optic backbone is also being given to Vodafone.

This is not the first time the government has planned and actually executed a fire sale of a profitable public enterprise. The once profitable Western Telesystems (Westel), which was until recently owned by the state has been sold to Zain Commercial Services for what many industry watchers describe as a song. At the time Westel was sold for a paltry US$250 million, it operated only fixed telephone lines although it had been awarded the license to operate cellular service. Of course, failure of the company to expand its operations and start its cellular service did not warrant a sale. If the problem was management then the appointing authorities should have re-examined the process of selection of managers to that enterprise because one can only expect high performance if competent persons with the requisite knowledge are appointed as against cronies and relations of government officials with doubtful competencies. Would it also not have made economic sense if the government had resorted to the capital markets to raise the needed revenue?

Going back to GT, if the human resource base of the company was in doubt, Zain, new owners of Westel would not have appointed Philip Sowah, former Managing Director of GT’s mobile subsidiary OneTouch, as its country manager. Zain is yet to begin its cellular service, but given the work Philip Sowah did with his team at OneTouch, it is clear that Zain would surely carve a niche for itself in the Ghanaian market with Philip Sowah as its helmsman.

Indeed GT could not see any meaningful transformation under the Malaysian managers who were kicked out by the New Patriotic Party (NPP) government who also later signed a stinking contract with the Norwegian Telecommunications Company (Telenor). Under the Telenor deal which was touted as the best, it was stated by then Minister of Communications, Mr Felix Owusu-Agyepong, that the cost of the business plan (management contract) prepared by Telenor was US$600 thousand. If the Telenor deal was the best why are we now selling off the company after the government made all Ghanaians to believe that the Norwegians were going to give GT a Midas’ Touch?

According to government officials, the problem of GT is lack of operational capital. That according to them has made it very difficult for GT to expand its services and offer the needed value added services to consumers. It is an undeniable truth that proceeds of the sale of GT are going into budgetary support and so if it is so clear that sale is the last option for this national cow, then the people of Ghana should have been getting more than the measly US$900 million.

If Areeba with all its limitations at the time could be sold for US$5 billion (never mind it was Areeba worldwide because Areeba Ghana alone was believed to have contributed US$2 billion to the deal) then GT with all its mobile and fixed line services and the national fibre optic backbone should certainly be priced higher than US$900 million. From my understanding the government of Ghana contracted a loan from ZTE of China to construct the national fibre optic backbone. Therefore the most sensible thing here would have been that the fibre optic backbone be managed by a separate independent entity such as the National Communications Authority (NCA) or better still, the Volta River Authority (VRA), which started it all and not a private sector operator which can use its access later to stifle competition. Of course there is the probability that a service operator which is the sixth entrant to the very competitive mobile telephony market in Ghana can ambush its competitors with its grip on the national fibre optic backbone.

In any case, how come all divestitures of state corporations tend to favour only foreign companies? Or is it true that Ghanaians are indeed not capable of managing any national asset, an outlandish theory propounded by Hackman Owusu Agyeman, an MP and former minister in the NPP administration? It is very strange that we all seem to be deluded by the misguided argument that the much needed national reconstruction of our Motherland can only come about through foreign intervention and the benevolence of foreign companies.

No country has ever developed through the infusion of foreign capital but rather through the collective will of the masses coupled with the genuine intentions of its leaders. For those who believe that this Vodafone deal is the best thing to happen to Ghana, please revise your notes. At least the disgraceful Ghana International Airline albatross should have taught this government a lesson.

Strangely enough, African governments have become so powerful that every decision, whether good or bad, is taken without any recourse to the feelings and the future of the peoples of the continent. So every strategic national asset is sold under the guise of public private participation. The real intention behind all these type of deals however can be found in the empowerment of a few who think that their access to power, which of course is derived from the constitution, empowers them to do anything and get away with it. What politicians have refused to recognise is that they derive their authority from the constitution of the Republic of Ghana and therefore they have to act in the best interest of the people. Any genuine Ghanaian therefore must question this Vodafone – GT deal, because nobody can say that the US$900 million is the best return on investment that Ghanaians can get.

Dwelling on the pathetically epileptic business environment in Ghana today, a certain politician recently described the current Ghana as a Crony Capitalist state and of course, nobody can begrudge him. This is because if the biggest beneficiaries of trade and investment and the general success in business are based on an association or a relationship with the political administration, one cannot help but describe the system as a Crony Capitalist state. Decisions such as the present GT sale also lead people to conclude that sometimes it is rather the behind the scenes benefits that are the critical factors for the sale of national assets. There have been many instances where after a political administration leaves office, findings reveal that some members of the administration benefited from slash funds in the sale of certain strategic national assets.

This writer does not want to be seen to be waxing anti-west or anti-capitalist. But the reality is that it is not all the prescriptions of western interests that are good for the advancement of the course of our people. We need to begin to look inwards. Before Hugo Chavez assumed power in Venezuela, its oil and allied businesses were controlled by companies from the US and other western nations. At that time, majority of the people of Venezuela were paupers. They had limited access to education and healthcare.

Upon his assumption of power, Hugo Chavez naturalized all those assets which were hitherto owned and managed by western companies – which of course, repatriated every profit. Today, all Venezuelans have free medicare from the government and are entitled to free education to the highest possible level.

Finally, only Ghanaians can build a better Ghana by themselves and no amount of foreign capital and foreign intervention is going to take us out of the woods. The story must begin with GT and if the way out is selling it then the US$900 million is simply an insult to the people of Ghana. A few of us Ghanaians can raise this money in no time. All those arguments that Vodafone would invest US$500 million in GT over the next five years are futuristic and in business, futuristic arrangements are very risky and no company would be bound by memoranda of understanding which execution would diminish shareholder value. Our MPs should for the first time reject this sale when the proposal is sent to Parliament for ratification, otherwise posterity would indict them as well as all those who actually prepared and executed the sale!

By Kwabena Mprah Jnr

Views expressed by the author(s) do not necessarily reflect those of GhanaHomePage.