Accra Daily Mail Interviews President Kufuor

President Kufuor returned home on Sunday after attending the Franco-African Summit in Paris. On the way home, he stopped over in London where he addressed Ghanaians living in the UK. ADM Managing Editor, A. Harruna Attah was at hand to put a few questions on domestic issues to him.

LABOUR ASKING FOR SALARY/WAGE INCREASES, HOW FAR CAN YOU GO?
Over 70 per cent of our revenue goes into PAYE. So when people talk of 100 per cent increase, if you double the 70 per cent, then you are talking of an overshoot of 40 per cent. Where do we raise the 40 per cent? It's not practical. In fact, when government talks of increases in salaries of workers, government in a way is only addressing the public sector worker, not across board. Government should not promise things that might dislocate the private sector because the conditions of employment are different between the private sector and the government.

Measurable productivity should be the yardstick for pay increases. On the government side it tends to be very difficult to quantify productivity. The civil servants may be writing fine reports and all that, but reports for say some social services cannot be measured. So when we come to talking of pay increases we are constrained to look at what is in the kitty that government can use to top up.

IS IT TRUE THAT THE FUEL PRICE WILL GO UP TO ?23,000?
No, ?20,000 is sealed. The ?20,000 was fixed on two principles. The first principle was that there must be cost recovery. Because there was no cost recovery on petroleum, the debt was increasing. Within our tenure of two years we found debt increased by 500 billion cedis. That shocked us, so we said there was no way we could continue that way. In any case Ghana Commercial Bank was collapsing under the weight. Because that bank was the state's, we could force the management to establish LCs and add to the already huge debts. So we said no way. From calculations we found that if we were going to do full cost recovery and at the same time tackle the debt within the very limited period, then the price should shoot to ?23,500 a gallon.

EVEN THEN AREN'T WE STILL LOSING, BECAUSE IN THE UK 4 STAR PETROL IS ABOUT 75 PENCE PER LITRE, WHICH WORKS UP TO ABOUT ?36,000 PER GALLON. SO THAT MEANS WE ARE STILL PAYING VERY LITTLE.

In the UK the revenue base is big and the economy is so diversified. Petroleum definitely adds to revenue but they have other things going in. The private sector is fully developed and tax on private sector generates a lot.

In Ghana, as I said in the State of the Nation Address, we need to build revenue. Some members of the press said, "you didn't tell us how to increase revenue". I'm telling you, diversify your economic base, grow those things identified in the presidential initiatives - cassava, oil palm, salt; it is all calculated to add to the revenue base. And I said, the experts had assured us that if those things matured within a space of five years or so, we might double the GDP. That's where if we maintained our rate of population growth, we might find that the individual is getting more than the $400 per capita. So I indicated all that. We do not have this broad economic base to support the increases, and already our incomes are so low that if you look at what the British are doing and say you will do the same in Ghana, then you might kill off the people all together. We couldn't afford to do that, so we looked at the possibilities and decided that ?20,000 should be the most realistic thing. It would add some burden to the people, but it wouldn't break the back of the camel.

WILL THAT TAKE US TO THE END OF YOUR FIRST TERM, THE ?20,000?

If we are doing full cost recovery, because it is not just the increase, we are also restructuring the entire petroleum sector. For instance, government wants to cut back in terms of importing crude. It is almost exclusive to government; now we want to encourage the private companies to also use their money to import. That will alleviate the burden on government to find the resources to import. Because of that, government is setting up this regulatory authority which will also see to the limits of ex-pump prices so these private companies using their money to bring in the crude will not go maximising their prices at the expense of the poor consumer.

Government is thinking of also divesting itself of some of the equity because the refinery is exclusively government's and there has been a lot of inefficiency in the management of that asset. We believe by bringing in private sector participation we may be more efficient in the management of that, and that again will help raise revenue. In fact the sale of equity might yield some revenue which again will be used to pay off some of the debt. So it's a whole complex thing we are trying to do, but in the mean time, on balance we find that the ?20,000 will enable us to do the cost recovery, leave some small margin that will be diverted to service the debt, both principal and interest, and also enable us generate capital for road development. These are the calculations that went into this.

Some people are saying because petroleum price went up 94 per cent, wages should also go up 94 per cent. But it is never like that anywhere. Whatever is left in the revenue pot that government can use to top up the wage so that the suffering wage earner would feel a bit cushioned even as we try to strengthen the economic base to develop we would leave with the earner. And we find that currently government cannot do higher than ?9,000. Strictly, the calculation advised ?8,500, which got Ghana at par with the one dollar a day, which we never got since independence. This time government has pushed us to that point and we are even exceeding that by a margin. We thought people would appreciate what we are trying to do, but if the working people say if petrol went up by this much, then wage should go up by the same percentage, then we should all put the ruler out to measure our output.

DON'T YOU THINK IT'S THE MEDIA THAT IS MISLEADING THE PEOPLE? AND I'D LIKE YOUR COMMENTS ABOUT OUR PERFORMANCE IN THE PAST TWO YEARS.

Let us use the analogy of the dove who with the help of some doctor found his voice and all of a sudden he began hearing his own voice and he liked the sound of it and went on singing all over the place. This is what perhaps we are going through. I want to believe this is just a passing phase, and that the media will become more responsible and know that managing the nation demands more than just knowing how to talk.

PEOPLE SAY PERHAPS YOU HAVE "SPOILT" US, THE GHANAIAN MEDIA; THAT YOU'VE GIVEN US TOO MUCH FREEDOM.

Perhaps the people may be right. Because when a bird is caged for so long and you free it all of a sudden, you just watch how the bird moves out of the cage. For a moment, it behaves, with all due respect, a bit like crazy. It will flutter all over the place before eventually it will perch somewhere and begin to behave normally. So, not to worry, we perhaps "spoilt" you, but it was all for a good cause.

I SAW A LADY FROM LA COTE D'IVOIRE YESTERDAY WHO SAID OF ALL THE AFRICAN LEADERS WHO CAME PASSING, YOU WERE THE ONLY ONE THAT STOPPED AND GREETED HER. SHE CALLED HER MOTHER IN COTE D'IVOIRE TO SAY THE PRESIDENT OF GHANA GREETED ME. HOW DO YOU MANAGE IT?

I wish I could tell you. I think I am just being myself. And with me, every human being counts. That's a very foreign land - land of the whites, and all of a sudden I saw this very black girl looking very Ghanaian standing in the foyer. So I said, "Are you Ghanaian?" She said, "Ivorian". And I said, "but you look so Ghanaian". She said, "I'm also part Ghanaian". So I said, "How are you?" and moved on.

President Kufuor returned home on Sunday after attending the Franco-African Summit in Paris. On the way home, he stopped over in London where he addressed Ghanaians living in the UK. ADM Managing Editor, A. Harruna Attah was at hand to put a few questions on domestic issues to him.

LABOUR ASKING FOR SALARY/WAGE INCREASES, HOW FAR CAN YOU GO?
Over 70 per cent of our revenue goes into PAYE. So when people talk of 100 per cent increase, if you double the 70 per cent, then you are talking of an overshoot of 40 per cent. Where do we raise the 40 per cent? It's not practical. In fact, when government talks of increases in salaries of workers, government in a way is only addressing the public sector worker, not across board. Government should not promise things that might dislocate the private sector because the conditions of employment are different between the private sector and the government.

Measurable productivity should be the yardstick for pay increases. On the government side it tends to be very difficult to quantify productivity. The civil servants may be writing fine reports and all that, but reports for say some social services cannot be measured. So when we come to talking of pay increases we are constrained to look at what is in the kitty that government can use to top up.

IS IT TRUE THAT THE FUEL PRICE WILL GO UP TO ?23,000?
No, ?20,000 is sealed. The ?20,000 was fixed on two principles. The first principle was that there must be cost recovery. Because there was no cost recovery on petroleum, the debt was increasing. Within our tenure of two years we found debt increased by 500 billion cedis. That shocked us, so we said there was no way we could continue that way. In any case Ghana Commercial Bank was collapsing under the weight. Because that bank was the state's, we could force the management to establish LCs and add to the already huge debts. So we said no way. From calculations we found that if we were going to do full cost recovery and at the same time tackle the debt within the very limited period, then the price should shoot to ?23,500 a gallon.

EVEN THEN AREN'T WE STILL LOSING, BECAUSE IN THE UK 4 STAR PETROL IS ABOUT 75 PENCE PER LITRE, WHICH WORKS UP TO ABOUT ?36,000 PER GALLON. SO THAT MEANS WE ARE STILL PAYING VERY LITTLE.

In the UK the revenue base is big and the economy is so diversified. Petroleum definitely adds to revenue but they have other things going in. The private sector is fully developed and tax on private sector generates a lot.

In Ghana, as I said in the State of the Nation Address, we need to build revenue. Some members of the press said, "you didn't tell us how to increase revenue". I'm telling you, diversify your economic base, grow those things identified in the presidential initiatives - cassava, oil palm, salt; it is all calculated to add to the revenue base. And I said, the experts had assured us that if those things matured within a space of five years or so, we might double the GDP. That's where if we maintained our rate of population growth, we might find that the individual is getting more than the $400 per capita. So I indicated all that. We do not have this broad economic base to support the increases, and already our incomes are so low that if you look at what the British are doing and say you will do the same in Ghana, then you might kill off the people all together. We couldn't afford to do that, so we looked at the possibilities and decided that ?20,000 should be the most realistic thing. It would add some burden to the people, but it wouldn't break the back of the camel.

WILL THAT TAKE US TO THE END OF YOUR FIRST TERM, THE ?20,000?

If we are doing full cost recovery, because it is not just the increase, we are also restructuring the entire petroleum sector. For instance, government wants to cut back in terms of importing crude. It is almost exclusive to government; now we want to encourage the private companies to also use their money to import. That will alleviate the burden on government to find the resources to import. Because of that, government is setting up this regulatory authority which will also see to the limits of ex-pump prices so these private companies using their money to bring in the crude will not go maximising their prices at the expense of the poor consumer.

Government is thinking of also divesting itself of some of the equity because the refinery is exclusively government's and there has been a lot of inefficiency in the management of that asset. We believe by bringing in private sector participation we may be more efficient in the management of that, and that again will help raise revenue. In fact the sale of equity might yield some revenue which again will be used to pay off some of the debt. So it's a whole complex thing we are trying to do, but in the mean time, on balance we find that the ?20,000 will enable us to do the cost recovery, leave some small margin that will be diverted to service the debt, both principal and interest, and also enable us generate capital for road development. These are the calculations that went into this.

Some people are saying because petroleum price went up 94 per cent, wages should also go up 94 per cent. But it is never like that anywhere. Whatever is left in the revenue pot that government can use to top up the wage so that the suffering wage earner would feel a bit cushioned even as we try to strengthen the economic base to develop we would leave with the earner. And we find that currently government cannot do higher than ?9,000. Strictly, the calculation advised ?8,500, which got Ghana at par with the one dollar a day, which we never got since independence. This time government has pushed us to that point and we are even exceeding that by a margin. We thought people would appreciate what we are trying to do, but if the working people say if petrol went up by this much, then wage should go up by the same percentage, then we should all put the ruler out to measure our output.

DON'T YOU THINK IT'S THE MEDIA THAT IS MISLEADING THE PEOPLE? AND I'D LIKE YOUR COMMENTS ABOUT OUR PERFORMANCE IN THE PAST TWO YEARS.

Let us use the analogy of the dove who with the help of some doctor found his voice and all of a sudden he began hearing his own voice and he liked the sound of it and went on singing all over the place. This is what perhaps we are going through. I want to believe this is just a passing phase, and that the media will become more responsible and know that managing the nation demands more than just knowing how to talk.

PEOPLE SAY PERHAPS YOU HAVE "SPOILT" US, THE GHANAIAN MEDIA; THAT YOU'VE GIVEN US TOO MUCH FREEDOM.

Perhaps the people may be right. Because when a bird is caged for so long and you free it all of a sudden, you just watch how the bird moves out of the cage. For a moment, it behaves, with all due respect, a bit like crazy. It will flutter all over the place before eventually it will perch somewhere and begin to behave normally. So, not to worry, we perhaps "spoilt" you, but it was all for a good cause.

I SAW A LADY FROM LA COTE D'IVOIRE YESTERDAY WHO SAID OF ALL THE AFRICAN LEADERS WHO CAME PASSING, YOU WERE THE ONLY ONE THAT STOPPED AND GREETED HER. SHE CALLED HER MOTHER IN COTE D'IVOIRE TO SAY THE PRESIDENT OF GHANA GREETED ME. HOW DO YOU MANAGE IT?

I wish I could tell you. I think I am just being myself. And with me, every human being counts. That's a very foreign land - land of the whites, and all of a sudden I saw this very black girl looking very Ghanaian standing in the foyer. So I said, "Are you Ghanaian?" She said, "Ivorian". And I said, "but you look so Ghanaian". She said, "I'm also part Ghanaian". So I said, "How are you?" and moved on. SHE WAS EXTREMELY EXCITED. THANK YOU SIR.