With Apostle Kwadwo Safo, Abose Okai & Kumasi Magazine and Banking Chiefs
Folks, An article in Business Week India edition of March 31, 2008 is reported to have caused some revolutionary angry reactions at the Castle in Accra and among NPP executives. Tata Motor company of India announced the new $2,500 car to be built in India and sold around the world. The car is called the Nano, for its high technology and small size. According to the Business Week report, “It's cute, compact, and contemporary. It's a complete four-door car with a 623-cc gas engine, gets 50 miles to the gallon, and seats up to five. It meets domestic emissions norms and will soon comply with European standards. It's 8% smaller in outer length than its closest rival, Suzuki's Maruti 800, but has 21% more volume inside. And at $2,500 before taxes (value-added taxes increase the price by about $300), it is the most inexpensive car in the world. Starting this fall, the Nano will roll off the assembly lines at a Tata Motors (TTM) plant in Singur, Bengal, and navigate India's potholed roads”
Why can’t this car be built in Ghana and instead in India? - the President was reported to have shouted in anger.
“My people need jobs! And we are importing everything, including Small cars like Nano, when in fact we used to have an Assembly Plant in Ghana that was closed down during the PNDC days!”
We had a little discussion on April 1 day on our Ghana Leadership Union forum, which I modify for general reading:
THE ROLE OF GOVERNMENT
There is a conservative school of thought that suggests that governments should wash their hands off private enterprise. Let the markets decide, they shout! Let competition reign! The role of Government is being ignored by educated people. Government is the main employer in Ghana. It appears going into government has become a pursuit to riches for many, including even pursuit of the Presidency. Some Economists are the most guilty of this intellectual neglect. They argue that we should ignore African leadership, focus rather in building democratic institutions and open our markets. Of course we know where that theory went.
Some are also of the school of thought that Africans have been imbibing Western conservative theories that may not apply to them today, but did in the 1700, 1800s or earlier.
Sometimes one has to walk a little before running, even though it is not impossible to be waken from sleep at 3 am by Hillary Clinton and commanded to hit the 100 Meter dash with Carl Lewis.
There are certain institutions we all may agree we need to build and strengthen. We can agree with the theoretical free-enterprise conservatives sometimes. A good example are the Banks. They need to operate independently. However they are still regulated by government!
HOW DO YOU CREATE JOBS and GET OUT OF POVERTY?
There is a joke going on in many third world nations that one can obtain a grant for say $547 million, give it a fancy name such as MCA, and get our of poverty! African leaders and their top technocrats have been spending most of their time preparing documents called Poverty Reduction Strategy in the last decade, a copy of which can be seen at the UNDP website. They are heavy documents. The Ghana GPRSII document is more than 200 pages. A complete thesis on poverty reduction! Can one reduce poverty (aka Ohia) through donations and writing such documents?
Some of us have seen how American so-called independence works, especially in the so-called free enterprise capitalism. Government always has a role to play, in requiring State Banks to be licensed and follow certain minimum reserve requirements for lending, etc, etc. With no regulation, everybody would want to give short term loans that bring the maximum returns, as they do in Ghana now for the importers. With no regulations, organizations lead to chaos. The American mortgage financing market are experiencing chaos in the current markets due to years of unregulated or failed regulations. The chaos and the greed of a few are not affecting almost the whole American economy.
If you allow that much freedom, with no limit on Bank’s portfolio reserves, no limit on what percentage they should set aside for various categories of short and long term loans, where does manufacturing loans come from? Where does residential 15, 20, 30 year Real Estate loans come in? Where does Commercial 5 year, 7 year, 10 year Real estate loans come in? In Ghana we see massive commercial real properties sitting idle for years, half completed, due to shortage in owner-financing. We see inventors and very highly skilled artisans who cannot expand and create employment. Does our leadership see itself having a role?.
The Question is: How would an effective President handle this proliferation of imported goods into Ghana and loss of Jobs over the decades? Let me share mine what I would do at the April 1 meeting at my $60 mil mansion.
IFYOU WERE PRESIDENT (for the Day).
If I were President, before I buy any Tatas, new Nanos, more Kias, Yugos, or BMWs, I would use my powers in that light to bring the businessmen, the Bankers and the Diplomats in for a little dinner chat. With my deep voice, I will let it echo out: “Gentlemen, have some more wine. However, If you want to sell us more Mercedes, Toyota, Tata, Nanos, beyond a certain volume level, why not set up an assembly plant right here!”
Before they have much to object, I’d go on: In America let’s examine the effect of the threat the US Congress (Newt Gingrich) and the Clinton administration posed to the Japanese (and partly German /European) in the late 1980s and early 1990 era and its effect on the American market and Japanese auto manufacturers today: A win-win!
1. The Japanese set up plants in America, places like San Diego, Fremont (a mile from my American house), Nashville, etc, and created hundreds of thousands of jobs here in America.
2. German companies followed suit with plants in North Carolina and other places.
3. America eliminated a huge Budget Deficit with Japan.
4. Cars Americans had come to love (Honda, Toyota, etc) were not removed from market or huge import taxes imposed, but are available still at competitive prices.
5. The Japanese gained by first copying Mercedes and BMW and calling them Acura, Lexus and Infinity, learning from the Western technology and now gained market share in the global luxury car market.
6. The prices of Mercedes and BMW went down considerably in the USA. Almost every house around my American home has one – the dreams of youthful Americans were not killed by counterproductive governmental laws of heavy duties and taxes threatened by Congress.
7. Americans learnt from the Japanese in making small cars more efficient (GM- Toyota), and Chrysler for example learnt from the merger with Mercedes by designing and building Vans whose doors can bang like Mercedes (and not like what we call in Ghana tontorowa – empty shells) and that even I appreciated and bought one.
It is the effect of leadership in making our societies work that we in Africa need!
Example, if I were President, all I do is ask my staff to call Apostle Kwadwo Safo to a dinner meeting with me this April 1 and invite the Chief Mechanical engineers at KNUST, a couple of local leaders from Kumasi Magazine and Abose Okai and Kokompe, the Chief Financial gurus and Bankers I know at Databank and other Investment Banks in Ghana. In an informal manner I will share ideas like we do on GLU forum and check out their minds. There will be no blackboards there, just plenty of pork chops, pig feet and chicken wings (and of course some Veggies). However, at the end of the day, they will know that a combination of education and experiences and negotiation skills may not even require new laws by Parliament. We can put out heads together and develop our nation and compete with the big boys.
At the end of the dinner,
1. Kumasi Magazine and Abose Okai and Kokompe Chiefs and Apostle Kwadwo Safo would have been educated, without knowing they were in a classroom (as my uncle calls his front porch) about how our culture of keeping information to ourselves does not help our future children and themselves.
2. The small Business community would be getting education on how to expand their business to expand markets and make more money, help create jobs, help the country to develop and help government with more tax revenue and maybe renovate the other Presidential mansions so we need no more loans.
3. The Bankers would have realized they were not initiating enough loans for the uneducated and/or skilled workers, and they should; they also need to make Banking modern and use the same communication technology used in America and most of the West.
4. The Small Business men would have been educated that they need to use the service of the MBAs from Tech, Legon, Harvard, Oxford, etc, locally at home to help them prepare Business Plans and how to submit them to the Banks for loans (few white shirt jobs created);
5. The Databank and white-shirt Investment boys are happy because they see Business corporations forming in a few years needing to raise capital on the stock market.
6. University youth (not at the meeting) can envision that in 2 years time their degrees in Business, Technology, etc, are coming of use.
7. Some hustlers and Abrefo in Germany and Canada, tired of the snow and rough weather, may see themselves returning home since they can find lucrative jobs or invest their small savings and survive.
8. The government, in seeing more businesses, now can raise more revenue and is talking of exploring Solar Energy panels and Wind and Thermal energy.
9. Some Consultants and high IQ boys and girls now see opportunities they can return home to Ghana also.
Everybody goes home smiling and soon we see some changes, Bankers granting more loans, more offices and warehouses available for rent by small business start-ups, .
jobs created, government collecting more taxes as revenues and hence providing more services, expanding the roads to ease traffic, small business costs down, profits up, cars cheaper in Ghana, new manufacturing taking place, housing construction affected, etc, etc.
Ooooppps!! Were we talking leadership in Ghana or what? Was this April 1st?
Time to wake up!