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Ghana the race to the flagstaff house

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– Ghana’s Economic Prospects

As the countdown to Election Day continues, momentum and anxiety are gradually building up to a crescendo. The Vaultz Magazine has chosen to focus its third quarter edition on Ghana’s upcoming elections.

In a bid to contribute our quota to the intellectual discourse and analysis, TVM has highlighted the critical sectors of the economy and their corresponding challenges that the next government must proffer pragmatic and cost-effective solutions to holistically address them. A few recommendations have also been offered.

ECONOMY

 

The country’s economy has been stuttering from the effects of volatilities in commodities and in capital inflows. With expected revenues from oil falling by as much as 45% from a high of $110 per barrel in 2014, to $75 in the latter of 2015, and further falls to below $50, representing three (3) year lows, the projections of oil based revenue have diminished.

It is quite obvious that Ghana was relying too much on proposed revenue without looking much into diversification of the economy, almost falling prey to the Dutch disease in the process.

Another major niggling negating factor has been a fall in the international price of cocoa, one of Ghana’s highest foreign exchange earners. Sharp drops in combined growths from 13.5% in 2013 to half of that in 2014, and the shrinking of growth further to 4.9%, is a clear indicator of poor year on year growth in GDP, in spite of increased government debt from both local and international capital markets.

The freeze in capital meant very little in terms of local savings and therefore local investments. Most government activity was in the way of heavy borrowing, with some borrowing rounds being undertaken just to pay off previous debts.

The country faces a high risk of debt sustainability as the overall debt vulnerabilities have increased and the country’s debt service to revenue ratio has approached high risk levels.

The underlying cause of this high debt levels has been loose fiscal policy, deteriorating financing terms and external pressures. What makes a bad situation worse than the 70% debt to GDP ratio is the dogged insistence and dependence on bonds as a means to fuel the spending of the government. It appears that there is still no restraint in this regard.

If anything, the adamant refusal to cut off a lot of waste in national spending and the raw devil-maycare attitude will not bode well in the very near future. The efforts to restore macroeconomic stability and debt sustainability are ongoing.

Structural reforms in public finance is required, so that gains achieved in fiscal consolidation will be maintained over the medium term and fiscal discipline becomes more entrenched in successive periods.

The diversification of some of the national payroll sector activity and the devolution of activity like healthcare and education to the regional and district level, coupled with some local level management will actually do much to benefit the government if it’s rather invested into creating a sustainable system and the right structures for the implementation of such a model.

A radical shift in the philosophy of government expenditure will be the only savior to the country’s fiscal malfeasances. The government can only make progress if it decides to slash spending on many unproductive areas and reduces its present size. There cannot be any way the centralized administrative process will work with its multiplicity of loopholes which are even more difficult to find because of the size of government operations.

ENERGY

The relevance of the energy sector as a catalyst for economic development cannot be overemphasized. Energy provision or more specifically adequate energy production in relation to demand has become a recurrent influencer in Ghana’s drive towards sustained economic growth.

In a desperate bid to stave off the acute electricity shortage that had bedeviled the country for more than two (2) years, the duty bearers resorted to emergency power plants, which are a more expensive alternative. More worrying, were the opaque dealings that surrounded the procurement of these power barges.

Aside the power barges arriving later than anticipated, the contractual and financial terms that were negotiated in the procurement of these power barges, have largely been strongly criticized by civil society as failing value for money considerations. The Power subsector is fraught with enormous financing challenges.

Aside the problem of securing project financing, procurement of fuel has also become difficult due to the financial problems of the state power generator, Volta River Authority, which also supplies fuel to the independent power producers.

It has been estimated that the utilities will require about US$1.18 billion to purchase fuel in 2016. This will increase to about US$1.5 billion in 2017 if indigenous and imported gas supply does not improve.

The mounting debts of State utilities have the potential to collapse the entire Power subsector. Government is unfortunately the largest debtor to these utilities, making the retrieval of these funds more difficult.

The utilities also owe the West African Pipe company (WAPCo) and Nigeria Gas Company (N-Gas) over $160 million, culminating in the disconnection of gas supply into the country.

These developments portend the comeback of power rationing, and its debilitating effects on individuals and industries. The technical and operational inefficiencies in the power subsector have been associated with frequent power outages, power fluctuations, low staff morale, poor procurement practices and poor customer service.

To improve on these challenges, the government has resorted to the Millennium Challenge Corporation via the second compact, for the partial privatization of the Electricity Company of Ghana and a Management Contract for the Northern Electricity Distribution Company.

This initiative has faced strong opposition from the subsector’s Labour union. Despite the elimination of subsidies, several levies and taxes have been slapped onto electricity tariffs. These levies included the Energy debt recovery levy meant to facilitate debt recovery of the downstream petroleum sector foreign exchange underrecoveries and also facilitate power generation and infrastructure support.

While these new levies could be attributed to foreign exchange fluctuations, it is also pertinent to examine what the government wishes to do with the fuel related levies that make for over 50% of the ex-pump prices.

Though economic tariffs are necessary for the attraction of private investments, the need to protect the poor cannot be overlooked if energy is to become an input for poverty reduction. There is no consensus on the optimal level of tariffs. Utilities opine that tariffs are lower and not cost-based, consumers see tariffs to be too high.

The TEN fields has come on-stream and is expected to drive economic growth in Ghana through the marketing of our crude oil and boosting gas supply to generate power for industrial and domestic use. The Sankofa-Gye Nyame field is also expected to deliver first oil in August 2017 and first gas in February 2018 to augment thermal power generation that will ensure sustainable electricity production.

These two fields will increase production of crude oil above 200,000 barrels a day, with corresponding increment in government petroleum revenues. Nearly a decade after discovering oil in commercial quantities, Ghana’s passed the Exploration and Petroleum Bill, 2016 into law.

The new law repeals the Petroleum (Exploration and Production) Act, 1986, PNDCL 84, to streamline operations in the oil and gas sector, adds on to the Jubilee oilfield which began commercial production of oil in 2010.

There is the need for an efficient regulatory regime that balances the need for investors’ reasonable returns on investments with the protection of consumers through the provision of quality services, uninterrupted and affordable power must be seriously considered.

Increased petroleum revenues will only benefit Ghanaians, if they are managed efficiently. It is imperative that the investments are targeted at strategic economic areas rather than the thin distribution that has been witnessed during the past five (5) years.

Also, the pro-poor sectors should receive significant portions of petroleum revenues, as they serve as a cornerstone for poverty alleviation. Crucially, the elimination of financial indiscipline would go a long way to protect the integrity of petroleum revenues.

These can be achieved despite the absence of a long term development plan. It is essential that the Power subsector is stabilized by increasing electricity generation capacity and expanding the transmission and distribution network.

A coherent programme to address the perennial financial challenges in a sustainable manner is also needed. A restructuring of the state utilities is required to ensure that they are technically and operationally efficient. It is also hoped that a more open and less restrictive regime on solar technology be aggressively pursued. This means exemptions of duties and taxes on solar batteries and panels and all accessories, as against the policy that exists at the moment that are far from coherent.

It is expected that the existing restrictions that insist on solar providers having to register before practicing their trade does not bode well for ease of entry into business, which means that favored companies could easily corrupt what is a crucial space.

An open approach will ensure that cheaper and newer technologies in alternative energy would be explored and the marketability and suitability of these will become the right competitive advantages to build up such a nascent but crucial sector that could potentially fill the gaps in national grid energy shortfalls.

INDUSTRIALISATION

The recent power crisis coupled with illconceived economic policies and activities have influenced the crippling of many manufacturing firms in the country. The manufacturing industry’s contribution to Gross Domestic Product (GDP) has been continuously declining over the years.

Aside energy issues, multiplicity of taxes, excessive port charges, high cost of credit, technical challenges and unavailability of market have all contrived to the bleak nature of the industry. This has led to renewed calls by several business associations for a coherent development of the country’s industrial sector.

Recently, industries involved in the production of cement, rice, poultry among others have raised huge concerns at the impact of foreign companies who are exploiting the Ghanaian market as a result of ECOWAS or world trade liberalization policies.

The establishment of an Exim bank by government to provide funding to exporting businesses is a commendable intervention. However, such initiatives must be backed by clear cut policy guidelines toward meeting the objective of improving economic growth.

The country’s industrial policy launched in 2011, with its implementation over a five year period was expected to create an enabling environment for businesses particularly industry and manufacturing to be robust.

Despite the policy document, stating the setting up of one billion Ghana cedi fund to accelerate the industrialization agenda, there’s not been much activity six years after. Industrialization is a core function of development and must be the priority of any government.

It may appear that the battle is not yet over in attaining an industry driven economy as Ghana hinges its fortunes on volatile sectors such as Oil and Gas.

There is the need for a deliberate and concerted effort on the part of government to support the manufacturing sector to grow. This will also require the contribution of other stakeholders. It is crucial that our local industries exploit the bilateral and multilateral agreements that are available to the country.

The Economic Partnership Agreement (EPA) which opens up access to the European market offers a huge market for Ghanaian non-traditional exports, provided they meet the required standards. Ghanaian industrialists can also harness the opportunities offered by other protocols such as ECOWAS Trade Liberalization scheme.

AGRICULTURE

Ghana’s agriculture sector is seriously under-resourced, despite employing the largest labour force. The sector, which is predominantly rain-fed, makes significant monetary contributions to the local economy but analysts believe it can do more if the necessary funding support is given to the sector players which is lacking at the moment.

This significant gains made in the agriculture sector of developed economies are mainly attributed to the effective policies in place which makes funding accessible to farmers and all stakeholders involved in the agriculture value chain. Unfortunately, the same cannot be said about Ghana, with agriculture sector lagging behind the Services and Manufacturing sectors.

The Ghana Statistical Service estimates that the agriculture sector will grow at an average of 3.3 percent between 2016 and 2018, this is clear evidence of declining sector as Services and Industry sectors knock agriculture from it long held position as being a significant contributor to Ghana’s GDP. Support from successive governments to the sector has been abysmal.

The total expenditure by government in the agriculture sector for 2016 was cut by GHS 40 million despite the sector’s decline growth of 0.04 per cent. With a growth target of 3.6 per cent much needs to be done to achieve this and analysts believe slashing the budget for agriculture is not the right move to make. In terms of support for the provision of needed inputs, there was no fertilizer subsidy in 2014.

In the subsequent year, only 90,000 metric tonnes of fertilizer out of the needed 180,000 metric tonnes was distributed to farmers. Most of Ghana’s agriculture activities are subsistence with little or no funding support from government or the private sector.

Land acquisition, poor irrigation activities, access to fertilizers and farm implements, access to markets and storage facilities and post-harvest loses are the problems effective funding can solve in Ghana’s agriculture sector.

Cocoa trees are already growing very old, and more are below peak production levels, yet new cocoa seedlings are not meeting the right level of demand to replace older trees. It has been reported that some farmers are selling off their cocoa farms to illegal miners, thereby reducing the country’s cocoa yield for this year. Very little has been done to energize and assist smallscale farmers and boost food sufficiency in Ghana.

Over GHS 25 million was wasted in the form of agricultural assistance to farmers via shady government initiatives. The sector needs a more businesslike approach towards its policy formulation, in order to keep its agriculture afloat and not gain marginal increases in growth annually, considering the prominent role it plays in the national narrative.

This will require programs that are centered on motivation for increased mechanization, more scientific methods and a growth and export driven philosophy. Also, a cross-sectoral facilitation between the ministry of Trade and Industry and the Ministry of Agriculture, will help to see agriculture more as a fuel for local small-scale industrialization and not just poverty alleviation.

Private sector players could then be incentivized for investments in the sector in areas with good growth prospects. This can fuel the micro-level industrialization as well as energize that part of the raw material feed as part of that ecosystem for food sufficiency, export activity and agro-based industrial growth.

INFRASTRUCTURAL DEVELOPMENT

As an emerging middle-income country and an important player in West African trade, Ghana is graced with a remarkable opportunity to realize continued economic growth, ensure fair access to its growing wealth, and diversify and develop its economic enterprises.

In order to seize this opportunity to ensure genuine prosperity for the next generation, Ghana must rapidly build and maintain its economic infrastructure.

The underdevelopment of domestic transportation, utilities and information technology infrastructure has limited the growth of domestic processing and manufacturing and made the provision of services across distance needlessly difficult. Strong infrastructure is key to prosperity.

Infrastructural development has been a major election expectation since the birth of the nation. As one of the most obvious legacies of a government or regime, they have been at the core of most manifestoes. Most governments in Ghana are hailed the most for their addition to the stock on infrastructure.

It has been estimated that Ghana needs to spend at least US$1.5 Billion annually over the next decade in order to address its infrastructure deficit. To close the infrastructure gap, the government has resorted to a Public Private Partnership (PPP) approach. A PPP has several advantages in the provision of infrastructure and services.

Principally, it enables the government to provide better infrastructure through the use of private sector financial, human and technical resources, thereby freeing government resources for other equally important uses.

Generally, electrification has expanded rapidly, and the expansion of water supply especially in Greater Accra and Ashanti regions. Provision of rural water in other deprived areas has been very encouraging. What needs to be taken into consideration is what plans are being outlined for a sustained growth in the water sector, while maintaining the gains already made.

This will mean also doubling down on wastage that comes from poor maintenance activity and illegal connections, which rid the water provision companies of significant amounts of revenue.

Critical in this sector will be the creation and expansion of routes that link agriculturally productive areas of the hinterlands to urban and peri-urban markets, which would then open up such areas for more aggressive agrobased activity.

Processing and low level manufacturing could also be assisted in the hinterlands by better road networks, which open up such areas for more commercial activity. Overall, there should be a more decentralized approach to infrastructure development.

The investments and the activities involved have very far reaching implications for the localities involved that requires that these investments are suited more towards providing better ecosystems for productivity to support local economic activities.

SOCIAL POLICY Income levels of most economically active Ghanaians are low. A major characteristic of past Ghanaian governments has been one of promising, and in some cases, delivering myriad social interventions aimed at poverty alleviation, among other pressing issues that affect the ordinary Ghanaian.

Of the major promises that Ghanaians have listened to over the years, issues related to stipends for the poor, like the Livelihood Empowerment Against Poverty (LEAP) program, school-feeding project, stability and sustainability of health insurance and other related mother and child issues still remain paramount.

Most Ghanaians have gained directly or indirectly from most of these schemes, and will expect subsequent governments to improve on these offerings, especially in the areas of education and health, which constitute expenditures that most disposable incomes at the family level are spent on.

In light of huge budget expenditure on Education and the subsequent hemorrhaging of the national kitty just to keep social interventions alive, it will be very interesting to see how support of activities like school feeding and other higher stake interventions are handled.

The addition of two more state universities, the University of Health and Allied Studies, as well as the University of Natural Resources is commendable. Efforts to convert 11 polytechnics into technical universities are underway, with the view to increasing focus on advanced technical education.

Unfortunately, these intentions, however desirable on paper, are not going to have impact even in the short or medium term because of a great lack of capacity to run these schools. There is very little strategic focus on developing a vibrant curriculum.

Teachers themselves are very ill-equipped to teach students, most of them being the worst performers in school and choosing teaching as the last option. Until there is some urgency in the quality of actual content of education delivered to children and students, Ghana’s abysmal ratings at the juvenile level in areas like Mathematics and Science, where they were the bottom in 76 countries across the world by the Organization for Economic Co-operation and Development (OECD) in 2015 is quite telling of the dire situation.

Most of the graduates of that 2015 generation will be unleashed on a tottering nation with very little in terms of employable skills, quantitative and qualitative aptitudes and skill sets. This will not only present itself as a huge burden on the economy, but to businesses that will have to spend considerable amounts of resources to retrain them to make them even manageable.

This is also a time when vocational and technical education is far easier and has a higher potential to create more small business opportunities due to increased access to technology and cheaper and better ways to scale from technical vocations.

Funding for studies in these areas will mean the best pool of capable young people who can earn incomes right out of school, and a market for the rapidly burgeoning service industry in Ghana, which would also depend on a lot of this skilled workforce. Most of the challenges outlined above are not new, successive governments have made myriad attempts to solve them.

It is imperative that these innumerable and seemingly intractable challenges are holistically addressed. It is essential in our bid to become a higher middle income economy.

It is our hope that the elections will be held in a fair and peaceful manner, and the final results will be credible and accepted by all stakeholders. We are a beacon of democracy in the sub-region, and we must continue to blaze that lofty trail.

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One thing that the oil money should have offered the nation is cheaper money for investment in agriculture – Dr. Abu Sakara Foster, Executive Chairman of Sakfos Holding

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The Role of Agriculture in Economic Development

TVM: What is your general assessment of the current state of the Ghanaian economy?

ASF: Our economy in its current state is one in which the essential transformation of its nature has still not happened. It is still an economy based primarily on production and export of raw materials and not one predominantly described as a value added economy. The service sector has grown but not by servicing Ghana’s industrial sector; it is rather servicing imports. So the nature of the economy really has not changed much. However, in terms of the performance of the economy, what you are seeing essentially is a stabilization of the currency, the building of our reserves, which basically has contributed to the stabilization of the currency and steadying of the national inflation. All this not withstanding, bank interest rates (generally above 20%) are still too high for many primary producers and manufacturing industry to maintain and expand operations competitively in the domestic market. Also liquidity is very, very tight!

On the latter point,  recent enforcement of rules in the financial regulatory sector has meant an even tighter squeeze on the liquidity of funds. This action is however indeed good in one way because it will help bring interest rates down to a more realistic level as entrepreneurs progressively turn towards incentives to do more sensible business and turn away from more risky businesses. But in the short term these measures have dried up access to funds from banks, as they themselves have struggled to find money quickly to meet their obligations with the central bank.

So in terms of macro economy, there is a good turn around in terms of the fact that you have a stronger foundation for improved performance mostly from improved fiscal management. But when I say foundation, I’m relating to the performance of the economy, not the structural nature of the economy per se. By and large, it is a more predictable economic environment; but in terms of evolution from one kind of “creature” to another kind of “creature”, we are still where we are, an economy based on production and export of raw agricultural produce,  raw minerals, raw timber, raw fish, raw unconventional products and crude oil even when we have a refinery. This is where then major challenge of our generation lies.

TVM: Ghana’s economy has been predominantly agric-led for decades. For about two decades ago, there was a boom in the service sector and its continuous growth has seen agriculture over taken. What in your view might have accounted for this?

ASF: Of course the growth in the service sector naturally means that somewhere in the total GDP pie, some other portion of that pie must give.  The reduction in agricultural sectors’ GDP contribution relative to the increasing size of service and manufacturing industry and the mineral mining industry does not necessarily mean that agriculture is doing badly. After all in the final analysis, we want to have the agriculture sector reduced as a portion of it’s contribution to GDP if the manufacturing sector grows in return. We want to have the manufacturing sector grow because it is based on growth of domestic productivity growth and will most likely increase jobs and incomes more significantly. However the service sector can do grow without much domestic productivity increase in fact it may hurt domestic productivity growth and stall our competitiveness in our own domestic markets. That is not any guarantee that increased service sector growth in economies such as ours will increase the good paying jobs for any sustained period. Ultimately the wealth has to be created from somewhere and that in our situation is mainly from transforming the primary to secondary processed products.

In my view the service sector can grow but by only as much as the manufacturing sector is growing and it is servicing the domestic manufacturing sector. But if the service sector growth  is only servicing imports and the manufacturing sector is not growing very much, while agriculture sector is declining, then that is a problem!! Because it means that we are actually going backwards in terms of progressive capacity to have a home grown economy that is more robust and less susceptible to external pressures.

The increase in income from the oil sector has also brought about a new dynamic in terms of proportions of GDP contribution by various sectors, including agriculture. The impact of oil income on national GDP is not perhaps as big as one will imagine, but it has certainly influenced growth of the service sector because we had no previous history of a service sector for the oil industry.

All this recent growth means little if there is no evolution of the economy.  Metaphorically speaking if you are an eight-year-old child and that looks the like the size of a teenager, it doesn’t mean you’re grown yet, it just means you have only expanded in size. The evolution has not yet occurred. So we need to look more closely at how agriculture is contributing to transforming the economy basically from a raw material producing economy to a more value added agriculture. We must also closely observe the changes in all the technological innovations that comes along with investment in agro processing. It is happening, but too slowly. It needs to happen at a faster rate to effect that sorely needed evolution.

 

TVM: As a country, we’ve kept believing that agriculture is the back bone of our economic development. But then, unfortunately, the hypothesis has been disproved by the continuous decline of the agricultural sector’s contribution to GDP. Should we still continue to bank our hopes on agriculture as the basis for economic development?

ASF: The hypothesis has not been disproved at all; and we’ve not been believing. If we really believed, it would have happened. And that is the exact problem with agriculture. We say that agriculture is the backbone of the economy, but then when it comes to the allocation of the pie of the budget to it, sometimes it gets less than three (3) percent, or even a tiny little amount. You don’t need to go to Harvard Business School to figure out that in trading, the thing that is bringing you the most money is the thing that you have to spend your money on, in order to turn over more of it, to make even more money.

 

TVM: What in your view do you think are the main challenges confronting the sector from achieving its maximum impact.

ASF: There are three areas. The first is in the area of national policy which creates the medium within which everything happens including agriculture. The second area is the limits of knowledge base within the sector. Finally there is the service industry associated with the agricultural sector that provides it with inputs and marketing of its outputs. If we take these three areas, all of them have different kinds of challenges.

The main challenge in the policy area is a dysfunctional democracy that is not closely allied with the real things that matter in the economy. We can’t blame politicians alone. They have to get elected. So they respond in short term ways that the populace will appreciate but ultimately are ways that are detrimental to real growth of the agricultural sector. For decades people have called for a reduction of rice importation by any and all means possible. However the same people will scream to the high heavens if rice prices went up a pesewa because tariffs on imported rice were increased. Ghana has also seen the rise of “middle class political activism” that demands more accountable government and better balance of trade to reflect growth in made in Ghana products of which processed agriculture products should have the lion share. However policy makers have encouraged and boasted about the mushrooming of shopping malls filled with mainly imported goods that are consumed by the same “activist” middle class. It appears the need to win elections has dulled the capacity of governments to act more firmly in favor of the national interest to stimulate growth in the domestic agricultural sector.

The second issue associated with national policy is conviction by the leadership. There needs to be a very firm conviction among leaders that agriculture can indeed work sufficiently to give us the take-off we need the next phase of our national economy.  This will make us commit to it for long enough to make it work. Leadership needs to convince themselves and the populace that we can and will make it work!! Every country that has successfully transformed their economy from an agricultural base at the end of their colonial period did so with a very strong commitment and sometimes with only a single single crop. The Malaysians that we admire so much did it with only palm oil. And yet we have palm oil, yam, gold and so many other things. Mauritius transformed an agricultural economy based on only sugarcane to a modern value added economy.  

Fortunately or unfortunately, because we’re blessed with so many good things, we have so many choices. We have consequently dissipated our efforts trying to exploit all of them at once as and when it dawns on us. It is like a drummer with too many drums in front of him and trying to drum all the drums at once. There has to be a coherent medium to long term plan and a focus beyond four year terms of office. In addition to a national focus and we need to learn to live according to our pocket, a good manager should always tries to live within their means. The country and its citizens are carrying too much debt. We need to renegotiate terms even as we  work our way out of debt. Our national debt is not insurmountable given our resource base and it is in our debtor’s interest to give us more conducive terms to work off our debt.

Talking about the knowledge base, we have to have a system where we start looking at the variety of crops that fit our farming systems rather than the mono crops we relied on during the colonial economy that is still with us in great measure. The truth of the matter is that we know a lot more than we are actually applying because our researchers have come up with different varieties that fit many more farming systems, crop patterns and types of farmers. This sometimes leads farmers to make the wrong choices by opting for technologies that they cannot sustain. It’s like choosing a BMW car over a Volkswagen car but you can’t drive faster than 60 km/h because you lack the skills and experience. In spite of that you still want to join in groups talking about the pros and cons of a Ferrari versus a Ducati.  Farmers need to be educated to choose the right technologies for their level of capacity and at the same time take advantage to upgrade their investments to match their capacity through extension and farmer to farmer learning. Farmers that opt for high end technologies beyond their capacity can be likened to ordinary drivers that choose to run a Ferrari car but do not have enough fuel, a good road to race on and also lack the skill to control a fast car in the first place. Just because collapse of farms are not as dramatic as car crashes does not mean that they have less of an important effect on the national economy.

Our operators themselves (the famers and value chain actors) need to assess their capacity and know-how relative to the investments that they can make. I don’t think our farmers are ignorant, they know a lot and they’re quite experienced. If a farmer is not using a particular technology, it is not always because he hasn’t heard about it, sometimes it is because he/she has figured out that it doesn’t make any more money. This is because our marketing system does not always give them sufficient incentives. Also, the transaction cost are so high that sometimes they leave significant portions of the products in the bush.  We need to resolve that through development of farm track roads and greater use of appropriate rural transport to reduce the costs of the first aggregations and homesteads and subsequently at village markets.

 

TVM: In this age of technology, how crucial is agriculture to our economic development

ASF: Agriculture is still very crucial because it must form the platform that serves as a foundation for take-off of our industrial and manufacturing sectors. Agriculture is also where we have the greatest comparative advantage.  However three things need to happen to establish this foundation in sufficient measure. First, we have to intervene to turn our comparative advantage in agriculture to a competitive advantage. We cannot go and start competing with producers of space technologies and all of that very high end stuff. We don’t have even have comparative advantage for that yet.

In Ghana, especially the northern part, we have in abundance arable land, surface and ground water and a varied climate suitable for many crops and livestock.  With good climate it is a question of choosing the right combination of crops, applying the right technology both in terms of the physical equipment and inputs, and also the management know-how. Then we can be competitive in the market place. If Usain Bolt was sat in his lazy chair all the time, he could have never been a world champion in spite of his great potential. He has to go out and train to realize the potential is already there. Our policy makers profess our great potential all too often but what are we doing to realize even a little of that great potential?

This is basically where we have to make more effort and a very deliberate effort at that!  Beyond effort in agriculture, other parts of the economy have to be tuned to support the agriculture sector as the main point of thrust for the economy. When we do that for a consistent period, we get to a stage where we lift the whole economy and then other sectors can then start growing to then exceed agriculture in their contribution to the economy.

TVM: Do we need to reinvent the wheel as other developing countries are doing by focusing on agricultural development as a basis for economic development?

ASF: I don’t think we need to reinvent the wheel. The matter is we haven’t pushed the wheelbarrow far enough to the stage where economies can take off. So we need to push the wheels more and faster to get to the stage where it agriculture becomes a foundation for other sectors to take off organically in synchrony and yielding the greatest synergies. The other Countries like Malaysia and Mauritius did not forget about agriculture and then come back to it. Instead they rode on the back of Agriculture. They developed agriculture first and then it formed the foundation for their investment in other sectors. Also we have to remember that one of the key things that we use for development is human resources. So we need to empower and retool the people for productive engagements. That is another important reason agriculture must come first, it helps build the technological innovation skills needed for the other industries. We have to build agriculture as a foundation first.

 

TVM: But then, the government has rolled out several policies to revamp the agricultural sector with the flagship of Planting for Food and Jobs. What is your take on this and do you see this programme succeeding in the long term?

ASF: I think it is going in the right direction. Of course, there are teething problems with it and there are major challenges. It’s success is contingent on the determination to ensure that the fundamental things that have normally failed previous programmes don’t fail this one. So we must all resolve not to let it fail. If there is a threat that there will be no funding for it, policy makers should to sit round the cabinet table and raise the money for it by taking cuts from elsewhere, it is as simple as that. Why? Because agriculture is what is driving the economy and it must take precedence over consumptive expenditure that does not bring immediate income.  That is the kind of leadership direction that we need for initiatives such as PFJ to succeed. The fundamental thing that it is addressing is the availability of seeds and fertilizers at farmers’ doorsteps, using our own local seed producers and fertilizer distributors. Of course some seed is still are being imported, but we hope that will change in time in favor of locally produced seed. It doesn’t just change overnight, nor will it happen without persistent effort and investment in local seed producers and seed systems. We don’t yet have the domestic capacity to meet our full seed requirement. We have to build seed production capacity alongside growth of effective demand to ensure that the seed business is financially viable. For a viable seed system the seed produced must be sold. If it is not bought, producers will reduce seed production and some seed growers may get out of the seed business altogether.

We must strengthen the seed distribution for farmers to be able to buy seeds at their door steps. This means that seed dealerships between seed producers and farmers must be tackled effectively as a national priority and maintained as a national asset. The incremental gains that will accrue as a consequence of the dealership system will exceed its value for access to seed and inputs alone. It can also serve as a point of interface for output markets and evolution of the remaining agro-industry. We need to make these seemingly simple things happen for our agricultural system to work sufficiently well to support interventions and programmes like PJF sectors to succeed. I believe we can do this and already the early signs of success are showing. PFJ will succeed if we don’t blow it by taking things and people for granted.

 

TVM: In Ghana, the old folks practice subsistence farming. Being the executive director of the Rural and Agricultural Development Associates, how can the rural folks be empowered to turn the woes of this sector into fortune.

ASF: I think first of all when you describe our agriculture; it is a composite of different types of farmers. You have the small scale farmers who are subsistent farmers. You have the emerging medium scale farmers that are people who have determined that agriculture is where they are going to make a living and extra money from. Then there are the commercial scale farmers who have decided that they are going to put their lives to it for big time returns to investment. So our agriculture has a spectrum of farmers like an accordion. It is not a one single thing or type of farmer.

Now, it is true that small scale farmers in the past have formed a large majority of where we get our food from and are also the majority in numbers. Together small scale farmers make more money than the medium and large scale farmers. This trend will not however stay as it is in future. If agriculture evolves as we expect it to, then as numbers of the medium and large scales farmers grow, small holder farmers’ numbers will decrease. Small-holder farmers won’t be eliminated all together. Instead the remaining small-holder farmers will become more efficient. Even if they are still on small-holder allotments, they will become more productive and efficient. What we expect to see is that the medium scale grows significantly and maybe the large scale will also grow in a highly specialized market driven manner. Irrespective of the variations and specializations of different types of farmers there exists a relationship between them. That relationship and interdependence will grow stronger through linkages to market networks so let us not divide them artificially.

TVM: You spoke about you knowing older people that started farming and they falling out, so how do we now get the youth to be interested in this? How can the state make agriculture appealing to the youth?

ASF: Agriculture has to be appealing to everybody. If it is not appealing to the old people, it will not be appealing to the youth. And the greater appeal about agriculture is not as a hobby. It is as a business. No one has ever asked how we can make shop keeping appealing to the youth. If you have the capital, you go there and you make your money just like any other business.

Agriculture is however not an easy business like sitting and selling in a shop. Agriculture involves a certain level of difficulty because of its specialized knowledge and physical involvement, especially when one does not have the right equipment and tools. So one of the ways we can make farming more attractive to people starting is to have service centers for tools, equipment and specialized know-how. This applies not just for the youth but also for other farmers and value chain actors because it reduces transaction costs for ownership of equipment and use of services. It also makes service providers more accessible to farmers and value chain actors in rural areas.

TVM: A few years ago you cautioned the nation to focus on the soil not the oil. Can you explain why you did say that?

ASF: When the oil started flowing we were all dreaming and salivating about how this oil was going to change the whole economy. I’m glad you’ve raised that question. We’ve seen the oil sector come and stay. So what has changed?  Not so much and that is why I said at that time, focus on soil not oil. It was on the basis that if we were to see a big transformation then what ever income was coming from that oil, should go into the soil! At least the interest from the saved oil income should go into the soil to address all these challenges we’ve enumerated above to give us that quantum leap we expected from a completed foundation in agriculture.

“One thing that the oil money should have offered the nation is cheaper money for investment agriculture.”

It should be used to make sure that we have the range and volume of seeds and equipment needed to make productivity higher on a big scale. We should not be relying on donor funds that may have their own priorities, areas of focus and limit on the scale of investment.  With sufficiently expanded scale of intervention in agriculture, would come many fold increased incomes from agriculture. Concurrent scale of investments of the cheaper money in improved agro processing would have also pulled up price incentives to sustain the production because higher profits from the added value goods can be shared as price incentives to sustain flow of raw materials to factories. Currently, operators have mills that are not getting enough rice because cost of financing operations greatly limits their capacity to share slender profits. The price structure of commodities across the entire value chain must be scrutinized to ensure a strong incentives for operators either as producers, farm service providers and aggregators. There are many jobs in agriculture apart from production.

The second thing I meant by that was, when you focus on the oil, how many people will be employed into that sector? How many towns can be touched by that sector? If you are not in Takoradi, you won’t know that there’s oil in Ghana. You don’t feel anything. But if we invest those monies in the soil and there’s soil everywhere in Ghana, the impact on people’s lives will be far more pervasive and we would have all felt it by now.

At the time, I said categorically that the best way of managing that money was to pretend we did not have it. In other words, all of it, not one drop should have been brought into the normal economy. All of it should have been kept out of the economy in an investment fund. And we only use the interest from that fund to reduce our rate and cost of borrowing. We could also fund specific turn key projects that are arranged in a hierarchical order of priority setting and they feed into each other. It would have helped us know just how much we take each year taking as chunk of money. In return for that money we must see at the investment period its end product and its value for money on the ground. For example if it is a railway we want to build to reduce transportation costs, we take the chunk of money and build the railway. We would not borrowed the money from anywhere and the railway is in place.

 

The Personality profile segment

TVM: When I started the interview, I did say a lot about who you are and your personality. When you go onto the internet you can read a lot about yourself but then it is always best to hear it from the horses own mouth. So who is Dr. Abu Sakara?

ASF: Well, I’m a family man.  I have been married for 36 going on to 37yrs with the same woman and I have four grown up children. The eldest is 35 years, the next is 32, then 29 and the last is 28yrs old. They are now adults, three ladies and one gentleman. We basically are a very close nucleus family and I’m also close with my extended family too. I come from a family of 22 children and 5 wives. We are the first generation of truly monogamous people but marriage in our culture is still predominantly polygamous.

I had initially had a village upbringing. I was born in Damongo but lived in Kpembi near Salaga for the first 6 to 7 years of my life. I grew up in my great grandfather’s house (the Sinbung royal household of Kpembiwura  Lanyor I). I learnt so much form the village life and my character benefited immensely from their culture of sharing and caring. Above all it left me with a strong identity and high self esteem.

My first crossover happened when I went to live with my father S.S. Sakara, the then Distrct Commisioner for West Gonja in Damango. Living with him in his European style bungalow with European accoutrements and affectations was very restrictive. I liked my freedom in the village  and felt like a prisoner in the bungalow life. But of course it had its benefits for learning academically and struggled to learn how to sleep in the afternoon, siesta!.

Then I went and visited my other cousins in Western Gonja who taught me the differences in culture between Western and Eastern Gonja, so I learned to become a cultural hybrid with capacity to cross over in accent and names of things. Capacity for cultural crossing over has been a major theme in my life. I have  lived between cultures both East and Western Gonja, African and European culture and Eastern and Westen Africa.

I  left for the UK when I was 12 years old. I went to school and grew there so I had to learn to live in that environment. When I became older I started travelling to other parts of the world like Latin America. My experiences have shaped who I am, because life is a sum of all our experiences.

 

TVM: You are one the few celebrated personalities in your field of endeavor. Was this what you always wanted to do?

ASF: When I was younger, I was very active. I was always dong one thing or another.  I initially struggled academically because I wasn’t paying enough attention but one day I was sat down by my foster parent and I learnt  and fell in love with the art of reading and that changed my world.

When I was in England I started doing a lot of sport and I got very much involved in judo. I rose very quickly through the belts and I won the England school boys at 15 years old. Later on I served the national judo team for the u16 and u18 at the same time. And when I was a bit older I was in the u18 and u21 men’s team at the same time. So that took a lot of my attention and at that time I thought my career was going to be in professional sport.

Unfortunately for me I tore a cartilage when we were at the Junior European championships in Bad hamburg, Germany in 1977 and I was required to take some time off and it came just at the right time because I was between 6th form and the university. As a matter of fact, I tried to overcome that and my attempt to get back quickly splitted the stitches so it took a longer time to recover. Thw long lay-off helped me make up my mind to actually go to the university because at the time, though I had a university placement at Reading, I hadn’t quite made up my mind to go yet.

I got into agriculture not because I made a deliberate decision in terms of career choice. It was simply because I had the sciences under control and that was the course that gave me an intercalated year abroad. So I was looking forward to this year abroad because when I saw the brochure, it was somewhere in the Philippines.   I thought if I do this course, I’ll get to go abroad for one year. So I chose the soil science course, only after the second year to find out that I had to win an award scholarship first.

I initially lost hope of going abroad because I didn’t think I had a fat chance of getting that Scholarship considering a student population of more than 18,000 at University of Reading at that time. But, my tutor was very insistent so he went and brought the forms and asked me to fill the forms and bring it back. I filled the forms and on the appointed day went to sit the examination for the scholarship. After leaving the examination hall I just took if off my mind because of the multitude of students that sat the examination.

It was a few months later when the result came to my surprise and I won it. The Dean called me to his office and asked me where I was going with the award? I wanted to go to the  Philippines but he advised IITA in Nigeria because he had been working in Nigeria as a researcher. So I after my seconds year at University I went off to Nigeria for one year as a research scholar.

When I came back to England, I was completely sure that I wanted a career in International Agricultural Development as a Scientist. So may career choice did not happen in a day. It took a period of two years. But by the end of that two-year period, I had submitted my research work and people had gotten to know me and I knew what international agriculture was about. After graduation, I applied for a post graduate training awards with ODA and went off to do my masters at Wye College London University and then off to Mexico for another year that turned out to be three years and  Ph.D. Since then I have been travelling with my work until I arrived in Ghana from East Africa via Washington.

 

TVM: You sought to become the president at some point in time. Given the opportunity for you to assume that position or that portfolio, what key things would you want to do as a president that would change or transform this country.

ASF: The way I’ll approach it is to ask: what can I do as an ordinary person? And then, what can I do as a president that I can’t do as an ordinary person? I will then as a President address those things that I cannot do as an ordinary person.

As an ordinary person, I’m within the policy environment created by others. All I can do is to try and do my best to make whatever I’m doing work well within the limits set by the policy makers. But as a President I can change the limits set by policy makers. This is especially true for developing countries where institutions are weak and policy is still maturing and not well defined. There is obviously less room for maneuver at ministerial level than at the presidency level where the President has the greatest influence toset that policy environment for everybody else.

We have institutions in Ghana and we shouldn’t belittle them because there are  in countries where they are almost non-existent. So I have great respect for our country and what we have achieved as a democracy of sorts. But nonetheless, we are a developing country, not a developed country. Sixty (60) years in the life of a nation is like six years in the life of a man. The countries we admire so much and try to emulate have been around for hundreds of years and yet we want to fly at the same pace. Yes, we can all aspire to shared values but the rate at which such values become an integral part of our society will differ. Values demand an understanding and common acceptance of certain ethics in the society. There is need a cultural adjustments take time to make between generations.

I think that there’s still opportunity to mold or shape our country in a different way along a different path. When I think of the role of a president, what is important is the opportunity to mold and shape the country not just for the present but more for the future. I’d like to be able to address those things that are fundamental to the system of governance, the architecture of our economy and the kind of society that we want to become. And these are three separate areas that all must be worked on in tandem with each other.

I think naturally, one will ask: “So what would you do differently?” For me, I perceive that you can be a president that presides over the most efficient incremental gains but you leave with nothing really fundamentally unchanged. Or you can be a president that seeks to restructure, recreate so that the country can have big quantum leaps thereafter. Those are big challenges. Of course it is not one or the other because there is a graduation in between the two options. One must however pitch camp decisively towards one of them as the totem pole for a presidency.

I think my desire to see some big changes and be able to count them off the tip of your palm is a driving force for any ambition I had to be president. I would definitely want to go with referendum agenda for governance (one six year term limit), organize Ghana into 25 regions as units for decentralized government and abandon the farce with local government a district levels, change nature of the economy (scrap export of unprocessed cocoa beans, timber, Gold and oil) and achieve self-sufficiency in rice production in five years and sugar production in 15 years. Ensure renewable energy for 20% of our energy needs and grow our jute (kenaff) for bags so that we can completely ban use of plastics as bags. And have a compulsory two year army service for all 18 to 29 year olds.

Normally when you ask people what they’ve achieved, they start mentioning so many things but many of those many things are not fundamental changes and will be swept away in the sands of time. This is not to praise the president because he’s my friend but when you look at what has transpired over this short period, what I like is that I can count some fundamental things.

  1. He has tackled a big challenge in the education sector at a fundamental level free universal education up to secondary level
  2. He has began the journey for change in architecture of governance by the creation of five new regions
  3. He has achieved a monumental task of peace in Dagbon which eluded so many for so many years. Yes many others were involved but without his steely determination it could have easily gone on for another five years.
  4. The progress with rail transversal rail transport and industries is too early to count. So I will hold back on that for the moment, the reopening of Obuasi mines not withstanding. We must wait for the commissioning of an oil refinery that stops export of our crude oil and a Gold refinery that stops the export od unrefined Gold and indeed makes it illegal.

 

TVM: The free education?

ASF: Yes the potential  impact of free secondary education is huge. Because free universal education to secondary level will restructure the numbers of people in education and it will have a long term impact if we do it well. It help to prepare Ghana to be able to absorb those people that will come off the farms and give them the  technological skills that we need to transform the economy in a significant way.

Secondly, the recreation of the regions will fundamentally change the architecture of governance in a sense that you will have 16 region. For example, in the Northern Region we had one region covering 30percent of the land mass of Ghana, now we have three regions having 10percent each. What it means is that it will bring the higher caliber of people that one needs at the regional level to stimulate the growth and development of the region.

Also is, the long standing Dagbon crisis which has now been resolved. Again I mention these only to highlight the fact that the hard things are the ones that are worth doing and they make the biggest difference.

TVM: Should Ghanaian still be considering you as a potential presidential hopeful?

ASF: That’s a difficult question to answer. I think if something is in your destiny, it will come to pass. I think every person that has a public spirit will answer that call if it comes to you, at the right time and in the right way.  As I said, for me what is important now is to focus on building a strong agribusiness as an example of what people in agriculture can do to help people in a qualitative way, not just a quantitative way; because if I don’t do that who else is going to that?

Above all, I think there are many people who can answer that call so at the right time, if we’re lucky and blessed, we’ll get the right person to answer that call, it could be me or it could be someone else, I don’t rule myself out. In the meantime I am doing what I advice all technocrats to do, excel in your area of expertise in the private sector if you can. I like the example of the proprietor of Asheshi University.

 

TVM: How would you describe your leadership style?

ASF: I am a fairly open person because I was brought up that way. I’m also somebody who believes in systems and their principles. I tend to find my patience with people who want to bend the rules is a little bit short. I believe very much that you can only make headway if you follow the principles.  One of the things I’m not very tolerant of is that in Africa, we believe the there should be different rules governing our conduct with regards to time, seriousness and morality as if the law of gravity doesn’t apply in Africa. Time is the same anywhere. Whether you are wearing a Rolex watch or a Timex watch, it is still the same time. Whether you are in Ghana or somewhere, same is the same  in its amount. We have to give time a higher value.

It is very important that our country works and follows systems that have been proven and tested. And my leadership style is always to make sure that I push people in that direction.

 

TVM: What kind of books do you read?

ASF: I like to read biographies of people that have achieved a lot. Their lives are very instructive and also gives one a firm conviction that if one persists, one will succeed. I think sometimes, reading about other people’s lives helps. I also read science fiction and mega trends in the world.

 

TVM: what genre of music do you like?

ASF: Generally, I like cool music. I also like cool jazz as well as modern music because I’ve children. I know what Busta Rhymes sounds like. Not that I like it much but I follow what is happening and of course I’ve seen the trends and the genres of new music coming.

 

TVM: If you had the opportunity to right a wrong, what would it be?

ASF: I am somebody who has always moved on. My attitude has not always been not to cry over spilt milk and that is one of the things my foster parents built in me. My frame of mind really is always getting on with the present and the future, so I don’t like to dwell too much on the past.

TVM: A lot of Ghanaians know you as a politician, an agribusiness entrepreneur, an agronomist, what else do you do?

ASF: That’s more or less the sum total of my life. If I’m in consultancy, it’s an agricultural and development consultancy. If I’m in politics, yes it’s about society but I would like to drive the emphasis on the role agriculture can play in shaping the country because I never let go of that part of my life. I don’t try to be something that I am not, you know, I think I have a fairly broad education that allows me to integrate sources of different knowledge and use it but when I want specialized knowledge, I go to the person who has it if I don’t have it.

 

TVM: In your lifetime now, what would you want to be remembered for, as your legacy?

ASF: My legacy would not be complete without being successful in agribusiness. Because, the intellectual and development part  of my career have been done. But I want it to be punctuated with tangible success in agribusiness as an entrepreneur. I want to leave that as my flagship of an intergenerational wealth creation industry. I want to be remembered for taking a successful risk with my own resources and savings  legacy to create not just a production industry but a processing industry that is sustainable over time. I want to be remembered for putting my money where my mouth was. I hope it will be successful, if it is it will be a real legacy. As you know it is important because we can decide that from today, we’re not wearing any make-up, we’re not buying any Brazilian hair anymore. We can even decide not to buy Lexus cars or not to wear expensive suits any more, BUT we can never say we won’t eat!

 

TVM:  Interesting, now with everything that you said, I would want you to advise the government, especially, on what to do to make agriculture more productive and make the economy benefit more from agriculture, make the sector more valuable.

ASF: The real issue about agriculture is that we must walk the talk. If I would give advise to anybody, I’d say walk the talk. Let’s not talk and we don’t walk. If you walk the talk, we know what we need to do and it’ll be done. But we cannot leave it for one person to do it because that person needs help and we have to make sacrifices in other areas for it to happen.

 

TVM: How about advice for the youth and your parting message for Ghanaians?

ASF: To the youth, they should decide what they want to do; decide where their passion is, cultivate their skill set and the relevant industry experience. Rise to the zenith of their profession and then get into policy making to expand their impact. Also, they shouldn’t believe that certain things are not achievable either because they don’t have money or they come from a certain background; the human potential is vast.

The opportunity to change, the opportunity to adapt, the opportunity to overcome are always there for the taking for the person who has the courage to dare. So be somebody who dares. Don’t accept the status-quo. Push the boundaries and I’ll say for African youth that is very important because our societies are changing but not necessarily in the way we want them to change. We are subject to so many influences and we’re copying many things we shouldn’t copy, but find out who you are. Interrogate yourself: who am I? You cannot be who you are separate from your cultural identity. Put faith in your character not your degree. Don’t be rude and arrogant because it is fashionable. So just build your identity, character and passion.

 

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