The $10 Billion Stx Housing Contract: Government Must Tread Carefully On This Very Big Deal!

It is because I have written extensively on real estate issues in Ghana that

I feel a sense of duty and obligation to write on this subject. In a

previous article titled, “The job-creating machine called the real estate

industry in Ghana” (

http://www.ghanaweb.com/GhanaHomePage/NewsArchive/artikel.php?ID=179843 ),

I have established beyond doubt the multiplier economic effect real estate

development creates in any country. There is no question that the

industrialized nations of the world today were built on the back of

extensive real estate development. It was the construction industry that

built America in its formative years and turned it into a very powerful

nation over the years. It is in this same spirit that I welcome any attempt

by any government in Ghana, NPP, NDC, CPP, PNP or whatever party, to solve

the one million housing deficit we have in our country today.

To me, the attempt by the current government to build 200,000 houses in

Ghana is welcome news indeed. Can we imagine for one moment the number of

jobs this could create in Ghana, let alone the impact on so many other

industries in our country? A $10 billion investment overall in an economy

like ours is a big deal indeed, and could stimulate our economy extensively

for years to come. On face value, this looks very, very promising indeed.

However, it is when you look at the fine print in this whole proposal that

you start feeling very queasy and uneasy about the whole deal. It is the

freebies and the giveaways our government is offering to procure this

transaction that make it very worrisome indeed. Here is the list of

government giveaways:

1. A Ghana government sovereign guarantee to enable the Koreans go to

the world capital markets to raise funds for the project. What this simply

means is that the Koreans currently don’t have $10 billion of their own

money to invest in our country. Our government has to give them the

guarantee to go raise that loan which we could be stuck with if they could

not pay back to their investors. Why couldn’t our government offer such

similar facility to a consortium of Ghanaian real estate developers who have

established a track record of building fine houses in our country? Ghana was

very successful in raising $750 million on the world capital markets

previously. Why couldn’t we make similar efforts on the housing front? Why

not?

2. Our government is offering free land to the Koreans from government

land banks. Is our government equally willing to be that generous to local

real estate developers? How come for all these years no government in Ghana

has done so for our local real estate developers who have toiled for years

without much government support? Where is the doctrine of equal opportunity

for all? Or are we still stuck in the colonial mentality that anything

foreign is always better than our own?

3. The Ghana government will provide free infrastructure such as roads,

electricity, water, power lines, telephone lines, etc., etc., to the houses

built by the Koreans. Folks, AT NO COST TO STX! Has anyone at any of our

ministries done a cost analysis of all this to find out how much extra cost

this will be to our government? Have we? Will our government readily offer

this freebie to a consortium of Ghanaian real estate developers too?

4. Unconditional import duty and income tax exemptions for STX and

their expatriate contractors and staff – are we willing to do this for our

fellow Ghana real estate developers and their employees too?

5. Unconditional VAT exemptions on materials STX and their expatriate

contractors and staff will buy locally in Ghana. How come we have not done

so yet for local estate developers to stimulate our own economy?

6. A full 100% profit repatriation for STX and its employees on all

their projects in Ghana. What a sweet deal Ghanaian real estate developers

will die for!

7. Under the “Financing Documents” section of this deal the Ghana

government will pay such expenses as travel, legal and accounting fees

incurred by the Koreans in the execution of the entire project for their

length of stay in Ghana.

8. An off-taker agreement that guarantees the Koreans that every house

they build will be purchased by the Ghana government. Quite an iron-clad

guarantee Ghanaian real estate developers will die for in these turbulent

economic times!

Let me state categorically here that I am not interested in the politics of

this STX housing deal. Far from it! I am a real estate professional and my

interest is in how beneficial this real estate project is for our country,

Ghana. I would caution that we approach this whole deal carefully, do a

thorough cost-benefit analysis by independent professional experts and not

rush this thing through parliament only to regret later. Let’s not get

bamboozled by a Korean government who are quietly gunning for our oil

prospects, arm-twisting us, and using our housing deficit as a front to

achieve their goals. Politicians are notorious for seeing sensitive economic

issues only through the political prism and blinding themselves to the stark

realities their decisions could inflict on the economies of their own

countries. They may achieve bragging rights for the next election but it is

the people of Ghana who get stuck with the bill in the long run. We’ve seen

this movie before. Ask the United States of America why their country is

hemorrhaging today and they will tell you plainly. If STX builds 200,000

houses for Ghana, our country will still be 800,000 houses short. Is the

government of Ghana willing to give local developers equal treatment and the

same freebies listed above for the remaining 800,000 houses? Is the

government willing to? Will they do it? Can you imagine how much that would

stimulate the Ghanaian economy if they did? Eight-hundred thousand houses?

I have visited the offices and projects of a lot of real estate developers

in Ghana and I feel proud to be in such august company and write proudly

about it. Why our own governments won’t promote our own people in the real

estate industry bothers me greatly. Can’t we learn from the recent refusal

of visas by the US government to some of our ministers in the Cosmos oil

deal involving the US conglomerate, ExxonMobil? The US will do everything to

promote American companies first before anybody else, but in Ghana it is the

reverse! Most of the Ghanaian developers have all told me: “FINANCING is our

biggest problem!” Seriously, by this STX deal, the government of Ghana is

simply creating the blueprint for Ghanaian real estate developers to DEMAND

EQUAL OPPORTUNITY from future governments. Let’s not rush into this. Let’s

tread carefully on this deal. I hope the powers that be are listening!

Peter Atsu Tsikata

Real Estate Consultant

Millennium Properties Ghana Ltd

Direct: +233-54-541-0350

Tel: +233-30-282-4140

Cell: +233-26-655-7066

Fax: +233-30-282-4132

Efax: 775-257-1811(USA)

Email: peter@millenniumtoday.com

Web site: www.millenniumtoday.com