ADB Debate - Are we selling the Asenka to pay for the Kontommire?
The disposal of the Government’s stake in Agricultural Development Bank [ADB] is arousing serious patriotic passion with good no-frills arguments emerging form opposing sides of the debate. To some on the opposing side, J H Mensah committed a “policy- fatwa” in his article that sought to explain the policy rationale. But then, some of the world’s great truths were once a “Fatwa”. The sale of ADB tantamount to mother Ghana signing its life away not only to the roguish enemy, the imperialists, but this time, to South Africans who are merely exporting economic apartheid to Ghana. In short, to some minds, the sale of ADB is nothing but, another dubious bargain being struck again by the government of Ghana – the frying-pan is being sold to buy eggs to make omelettes.Contributors to the debate have a duty not to allow nuances to prevail over substance. Also, it is really in the interest of policy makers to realise that in the prevailing intellectual climate and the influx of cyber policy critics, there is more to informing the public on policy issues than radio announcements and press releases; a lot more has to be done to sell or market strategic policies to the public. To be sure, I am not pouring scorn on those concerned citizens of Ghana who devote their time, and attention to make telling and informed contribution on national issues. There is an urgent need for citizens to care, in the light of the assertion that, parliament is merely a rubber stamp that does the bidding of the executive branch.
Policymakers should use every resources (the media) and tools, (use of local languages and metaphors, parliamentary debates etc.) to sell or market prospective strategic policies to the public or they leave a wide gap for the political or ideological propagandists to fill the void with facts according to their preferred sentiments, preferences and beliefs that may be at odds with the national interest – the very position they claim to defend.
The weakness of the state, (the weakness of our leaders) to formulate ground breaking economic and market-led policies explains away the anaemic pace of our development. It is in this context that we should conduct debates on national policy formulation with a fair, balanced and patriotic passion. Contributors to policy debates should be seeking to extend not to preserve the frontiers of Ghana’s development boundaries.
The Nkrumaist and their NDC left leaning allies discern certain enduring veritable values in Nkrumah that eludes the Non-Nkrumaist. Whatever Nkrumah left is regarded as a “Shrine” never to be demolished and rebuilt even if the future economic benefit of rebuilding grossly exceeds the value of retention or maintaining the status quo. Damn it if Osagyefo’s institutions are left to rust; damn it if one (the non-Nkrumaists) tries to expand or enhance its value.
J K Galbriath once said, “Most economic philosophers were right in their own time, Marxists however expects Karl Marx to be right at all times.” … the same can be said of the Nkrumaist – nothing disturbs the ideological soul of the Nkrumaist more than the slightest tinkering with their man’s cemented legacy. Were Nkrumah to be alive today, he would most probably have to concede that the message that was constructed for the struggle for independence cannot be dusted off the shelf and used to tackle our post independence economic woes. To the purblind Nkrumaist ideologues, Nkrumaism has a known, unadulterated and a lasting poultice for all our economic wounds at all times.
In fact Nkrumah’s own economic advisor – Jamaican economist Arthur Lewis, is on record as saying, “in politics, the hallmark of independence is membership into the United Nations, and in economics, independence means you do not need capital from outside” In other words, Arthur Lewis was cautioning post independence African leaders that “political sovereignty” and “economic sovereignty” are not one and the same thing. In the real world, it is lot easier to attain political independence than to attain economic independence and it does not require a lot to attest to the truth of that statement. One of the many simple indicators of how far we are to attaining economic independence is by merely looking at the way we continue to count on donors to count our votes during general elections.
Is the sale of ADB the annihilation of the last bastion of Nkrumaism? I don’t think so. It is no more an aberration than the policy that permitted private radio and television stations to operate alongside GBC – another revered state institution bequeathed by Nkrumah. Was there any hue any cry against a policy that marginalised the GBC?
Properly managed, the sale of ADB will unlock value from a state owned bank that, in relation to its raison d’être, is abominably under-capitalised. Undercapitalisation kills business start-ups and also when a business is in its matured or midlife stage, it can hold back growth unless a steady flow of retained profits is being ploughed back. How feasible it is to bridge the gap between ADB’s reserves and the nation’s agricultural financing needs by retained profits alone? There surely is a working capital deficit; in other words, ADB’s balance sheet is not strong enough to singlehandedly shoulder the burden of agricultural financing from the day it came into being, today and in the foreseeable future.
The monumental issue at stake in the debate is how the government is going to re-invest the realisation proceeds from the sale of ADB, in a way that will enhance the agricultural production base of the economy, than is presently being achieved, if we hold on to ADB in its existing form. The opponents of the sale are religious believers in the “the bird-in-hand theory” of (Public) Investment but will that take us far?
Perhaps, the debate, if expanded, to allow incorporation of richer variables that properly analyze or distil real life realities, with a mind and an eye on practical interests that could accrue to mother Ghana, will eventually lead to defensible, sane and judicious policy of divestiture.
For those of us interested in the debate, we need answers to the following;
The component of ADB’s Operating Profit that is directly attributable to
· Loans to farmers;
· Commercial loans- e.g. trade finance, business banking, corporate finance, etc?
· Money Remittances (bearing in mind ADB’s strategic partnership with Western Union), etc.
For all you know, the bulk of ADB’s profits emanate from sources or segments that has nothing to do with agricultural development financing but we are merely assuming that is the case because it is implicit in its corporate name that financing agriculture is its core business. Don’t we all recall the recent past when banks were making more money investing in Government Treasury Bills? Did ADB give that profit-making venture a miss?
Which sector of the economy will the proceeds form ADB sale be reinvested and what is the targeted rate of return on reinvestment?
If the existing ownership structure, prejudice the independence of Bank of Ghana’s statutory oversight role, couldn’t that be sold or transferred to other SOE’s e.g. Cocobod? This is probably a platform the opponents of the sale should consider building their case around.
To date, we have crafted the debate as if ADB is a stand alone institution that can be completely shielded from some of our national problems requiring coherent policy decision. Policy issues never appear in black and white, at every stage, conceptual, formulation, implementation, review etc., they generally come under different shades of elucidation and that is why advisors advice and ministers decide. Someone – a minister, a president etc. has to make a decision; alert citizenry be it cyber policy critics, the press, journalists etc exist to ensure that decisions are made in the interest of all not the few.
The decision to sell requires orchestration of coherent and holistic national strategic policies that ensures that the part will blend in nicely with the whole. If the state is to receive say, $50 million from the sale, why don’t we pass legislation in parliament – Compulsory Farmlands Leasing Order (CFLO) whereby the state will acquire and register all idle arable lands and assign it to the unemployed youth loitering on the streets of Accra to farm cash crops other than cocoa and assist them to sell on national and international markets? We already have in place the National Youth Employment Program [NYEP] which should blend nicely with (CFLO). I should emphasise that, I am not advocating for confiscation of lands but instead, effective utilisation of farmlands and optimal deployment of unemployed youths. I am merely encouraging a form of statutory endorsement of the old but not discredited system of our Nananom – the “abusa system” whereby landowners and farmers; – in search of modern management buzzwords, were leasing or outsourcing fertile farmlands to the strong, able but landless in need of farmlands to increase productivity. The yields will be split equally between the Government, the Landowner and the youth farming the land. We should use what we have to get what we want.
The government has to share in the spoil and in return provide services such as land and title registration, supply of agricultural tools and equipment, marketing logistics support etc. For those who may question the justification of the government participation in profits of the venture, the answer lies in the fact that our continued reliance on ministerial authority to control and manage oversight regulatory bodies continues to be a fertile ground for political corruption and about the most effective way of managing such quasi non-governmental organisations is to break their dependency on the ministries for funding. Ministerial quirks and wants continue to distort organisational efficiency.
In essence, the nation must look at value in possession using the following categories or yardstick:
The short-term measure of consistent generation of taxation revenues accruing to the state – X% of ADB’s taxable profits;
The strategic flexibility being afforded to the nation as a result of the sale of ADB - - - the conventional measure of the incremental taxation revenues enhancing the taxation base of the economy, other non monetary benefits such as tackling youth unemployment, making farmlands and agricultural credits available to those Ghanaians who are at present being denied credit by the Prime Lender – ADB; or,
Should we risk focusing on value as at now at the expense of what we stand to gain by unlocking values from ADB and prudently reinvest the proceeds in other segments of the economy?
Policy ought to be resourced. The National Youth Employment Program [NYEP] as laudable as it may be is about creation of sustainable employment for the youth and incentivising them to take up farming and fishing within institutional structures and state backing from the proceeds of ADB’s divestiture is a worthwhile policy objective. But this is merely an example out of many; policymakers have a matured insight into the parts of the national economy where cash is needed most.
Development planning is a dynamic not a static equation. We do not have to enter into the heaviness of mathematical calculations but if opponents were to play with the relevant figures and factor in the incremental costs and revenues accruing to the state and compare it with value as at now, the deprival values to be generated from reinvesting the sale proceeds will most probably lend credence to the decision to sell.
In short, if, (that most perplexing two letter word in any analysis) the government can state a cogent, credible and convincing case about the decision to sell ADB by letting the public know that Stanbic is paying a fair value for ADB and how the cash from the sale is to be re-invested then Ghana PLC or Ghana Inc is adding shareholder value and Ghanaians as a whole will be better off. Maybe, just maybe, De Soto’s idea of dead capital in third world countries is not only limited to individuals and the state should re-examine its ownership of assets with a view to formulating policies on “capital resurrection” if ever that was feasible.