economy


Africa’s economic growth is steady despite the global financial crisis. The World Bank confirmed that growth in gross domestic product has been higher than the world average for five years and is predicted to grow in 2009 and beyond.

The size of Africa (click to enlarge)

An article by Frank Aneke from October 2009 provides some positive perspective for the new year:

One-third of Africa’s total trade is now with markets in emerging economies, namely China, India, Brazil and Malaysia among others. Africa is marking a shift away from previous reliance on traditional trading partners in Europe and North America.

While many of Africa’s traditional trading partners are in a recession, many of its new markets, particularly China and India, show relatively healthy growth prospects.

The image of Africa as a continent bedevilled with sufferings and wars still exists in minds of millions through television images and news reports. Most media outfits in developed nations continuously mirror the worst pictures out of Africa to maintain the stereotype. There may be drought, disease and corruption. Still, there are new generations of young, educated, savvy entrepreneurs running businesses in Africa. A great number of professionals and business managers in Africa are educated in the world’s best universities, and have worked in high profile organisations in developed economies across the globe before returning home.

As more emerging economies defy the media blitz on Africa and invest in key sectors that are generating jobs and return on investment, Africa is slowly but surely heading towards economic transformation

The map above comes from Strange Maps, where you may find quite a few interesting maps.  As the map above shows, Africa is far to big to think of it as one place or one group of people.

Locally made guns

A photo of a real Makarov gun next to a fake one made by a Ghana blacksmith. (Anna Boiko-Weyrauch)

Suame Magazine, picture from johnnypayphone.net/labels/ghana.php

The gun business is creating harm in Ghana and among the neighbors: Locally made guns business flourish in Ghana.

Blacksmith Sarpong, 35, operates a small shop in Ghana’s second largest city, Kumasi. He is trained to produce cooking utensils, but prefers to make guns as he can earn more money that way.
When sales are good his shop brings in US$1,000 a week, he said. Foreigners paying better than Ghanaians. “Most of my buyers are from Nigeria or Sierra Leone.”

Sarpong sells to clients using a gun-runner – most of them are ex-peacekeepers or mercenaries according to the UN Office on Drugs and Crime – in a growing clandestine small arms industry, according Ghana’s Deputy Interior Minister, Kwasi Apea-Kubi and confirmed by police officials.

Small arms proliferation destabilizes West African countries and has increased the intensity and human impact of conflicts in the region, according to regional arms experts.

Apea-Kubi recently toured the country to ascertain the state of Ghana’s small arms industry and along the way met with hundreds of gunsmiths who “openly admitted to producing guns”, despite that local small arms manufacturing is illegal.

“We know now that many of the armed robbery cases we are witnessing are being fueled by these small arms,” Apea-Kubi told IRIN.

Eighty percent of firearms Ghanaian police confiscate are homemade, according to Accra-based NGO Africa Security Dialogue and Research.


Gun production estimates vary. The National Commission on Small Arms, set up in 2007 to check the manufacture and cross-border movement of small arms, estimates 40,000 Ghana-made guns are in circulation; UNODC estimates 75,000, while Kwesi Aning, head of the conflict resolution department of the Kofi Annan International Peacekeeping Training Centre in the capital Accra, puts the figure at 200,000.

“Local production has recently gone through the roof,” Aning told IRIN.

Blacksmiths have the knowledge and skills to manufacture single-shot pistols, multi-shot revolvers and shotguns, according to UNODC. When IRIN investigated a locally-made pistol sale in Tudu neighbourhood – Accra’s small arms hub – a dealer known only as Musah would not go lower than $130 for a single-barrel shot gun.


UNODC’s July 2009 West Africa threat assessments report establishes a direct link between trafficked arms and instability in the region, with the chief clients of clandestine arms groups seeking to overthrow or challenge state authority.

“Instability in Togo, Nigeria, and Côte d’Ivoire has resulted in higher prices of Ghanaian manufactured arms,” Aning said.

Ghanaian gunsmiths have been invited to teach their gun-manufacturing skills to local blacksmiths in the Niger delta, Aning said.

However buyers of Ghanaian guns tend to be individuals while established insurgent groups purchase heavier weapons from outside the region, according to UNODC.


Alternatives

The government is seeking creative solutions to the problem, the Interior Ministry’s Apea-Kubi told IRIN, as past arrests and detention of guilty blacksmiths have only pushed the trade further underground.

“We know we have to do something but we don’t want to use force,” he said.

Interior Ministry officials are consulting gunsmiths across the country to explore how to attract them to alternative – legal – ways of making a living, as well as to examine how to prevent cross-border trafficking.

Apea-Kubi also hopes gunsmiths will allow their names and locations to be logged on a national database so their activities can be monitored. At least that way the industry will be less secretive, he said.

But Sarpong is not convinced. “No alternative can give me enough money like what I get selling the guns. They should not waste their time.”

Armed robbery is a dreadful scourge in Ghana. Recently we lost a young employee, shot to death by armed robbers. He left a wife and two young children. We can make sure the children go to school, but we can’t replace their father. And it has been an ongoing source of sorrow, as he was a good friend and someone who had always been there to help us. There are a number of precautions we take at the house, it is deeply painful to feel that any of them are necessary. This is the main “terrorism” we fear in Ghana, and it is only fueled by the arms trade and increasing militarization in the region. (For some perspective, I have lost more Ghanaian friends to gun violence here in the US over the years, than in Ghana, from a much smaller population of Ghanaians.)

At the same time I have much sympathy with the blacksmith Sarpong in the article. US$1,000 a week is a fabulous income in Ghana. It would be very difficult to voluntarily give that up. I would certainly find it difficult if I had the skills and was making that money in Ghana.

From Marketplace:

Drug dealers and thieves like handmade guns because they can get them under the table and don’t have to register them with the government. But, handcrafted guns didn’t used to be such a problem. Blacksmiths in Ghana have been making them for centuries, mostly for hunting and protecting farmland. When the British came in, they outlawed gun-making — but the demand continued.

Blacksmith Philip Nsiah lives five hours north of the capital.

… Nsiah says local guns are cheaper than imported ones, so they’re popular with farmers. He used to sell each shotgun for about $100. Those cheap pistols I saw earlier can go for as little as $4.

Nsiah trained for years to learn his craft. But then he found out how much harm these guns cause. Nowadays, he helps lead the local blacksmiths’ association, encouraging others to stop making illegal guns.

Nsiah: I can do any type of gun. If they allow me, I can do it. But since, I know the dangers involved that is why I don’t go in.

When the crime rate got bad, the police started rounding up blacksmiths. Many stopped making guns, because they didn’t want to be arrested and lose their legitimate business. The crackdown helped. But it pushed the industry underground.

Now, Police Superintendent Aboagye Nyarko says they’re encouraging blacksmiths to produce something else, like tools to prune cocoa trees and handcuffs for the police.

Blacksmith Philip Nsiah shows me some handcuffs he made seven years ago.

Nsiah: But you see, it’s still there rusting. Nobody is buying it.

But he’s been able to make a living without making illegal guns. He repairs authorized weapons, used by security personnel, he works on cars. And he’s made a tool-shed full of other products — garden shears, hunting traps and gong-gongs, or cowbells for making music and calling community meetings.

Nsiah says the government hasn’t been effective at promoting these types of alternative products. And without that backing, illegal handmade guns will continue to be the product of choice for many blacksmiths.

Ghana has enormously talented craftsmen. In general people are inspired by the hope of creating and accumulating for themselves and their loved ones. People in business understand business, understand its potential and its motivations. So businessmen and women should be far better suited to being partners in development than eleemosynary organizations, provided their motives are not entirely exploitive.

I may sometimes write as if I am anti capitalist, but that is not the case. Capitalism needs the regulation of democratic controls, otherwise it is the same as organized crime, but the hope of accumulation drives all of us. That is why I particularly liked this quote from the following article: what poor people need most is a way to make more money.

Slumdog engineers of Suame magazine

As he pours dangerous molten metal from a home-made furnace at a ferocious 600 degrees, a worker flings a skimpy T-shirt around his head for protection. Another worker grabs a chunk of mud and shoves it into the makeshift foundry to plug the flaming lava flow of molten metal.

None have safety helmets or other equipment. Their neighbours at nearby industrial workshops are wearing plastic flip-flops and shorts. Their welding cables are ripped and exposed, risking a high-voltage shock, and few of the welders wear safety glasses.

Safety is an afterthought for the 200,000 people in horrific conditions in one of Africa’s biggest industrial slums. Survival comes first, and they need to eat.

The slum, known as Suame Magazine because of its origins among the artillery-makers at a local armoury, is a 180-hectare cluster of 12,000 repair shops and small-scale metal works on the outskirts of Ghana’s second-biggest city, Kumasi.

At first glance, it seems like a vast wasteland of tin shacks and wrecked cars and impoverished mechanics, where the dust-choked air is filled with hammering, banging, pounding and shouting.

But some look at this post-apocalyptic junkyard and see hope for the future. If the small-scale artisans and repairmen can be linked into the supply chain of multinational corporations, could they escape poverty and work in safer conditions?

That’s the experiment a Canadian group has launched. With a new aid philosophy that aims at business-oriented solutions, the Canadians are marketing the skills and ingenuity of the slum-dwellers, connecting them to foreign investors and helping them bid on valuable contracts that could transform their lives.

“My heart beats faster just thinking about this,” says Florin Gheorghe, a 21-year-old engineering student at the University of British Columbia who has been immersed in this giant scrapyard for the past seven months.

“I’ve come to believe that what poor people need most is a way to make more money,” he says. “Many development projects treat the poor as if they were incapable of fending for themselves, just sitting around waiting for whites to give them free food and clothes. It creates dependency and crushes local capacity …. The difference in our business-like approach is the dignity that comes in choosing to live a life that you value.”

Though the mechanics and metalworkers of Suame Magazine are poorly educated and 98 per cent lack any Internet access to help them seek customers, many are astonishingly skilled.

Some build entire buses or fuel tankers from scratch, or design drilling rigs or foundries. All they need, the Canadians believe, is a helping hand to market themselves.

Mr. Gheorghe, supported by a Canadian non-profit group called Engineers Without Borders, arrived at the slum in January to work for its industrial development organization. He put on a suit and tie and began knocking on the doors of multinational companies around the city, giving out his business card and sending a deluge of e-mails to companies around Ghana.

After weeks of going door-to-door, he and his colleagues began to persuade some companies to award business to slum-dwellers. They won contracts at several major U.S. companies, including Newmont Mining Corp., Coca-Cola, and the cocoa division of Archer Daniels Midland Co.

Under the first Newmont contract, valued at $30,000, the Suame Magazine artisans and repairmen were hired to build stairways, railways and platforms for massive Caterpillar trucks at the mining company.

It was followed by agreements on further contracts from Newmont, providing the much-needed prospect of steady revenue for the workers.


amusement and disdain soon gave way to respect as the mining company saw what the artisans could produce.

One group of 10 workers earning less than $4 a day were able to double their income when they landed the Newmont deal, with the prospect of further revenue from profit-sharing at the end of the contract.

The contract helped them learn new skills, including the ability to read computer-aided engineering drawings. And it encouraged them to invest some of their profit in safety equipment. For the first time, they have switched to steel-toed boots and safety glasses, instead of flip-flops and bare eyes.

“When we went to Newmont, our guys came back flabbergasted at the safety equipment there,” Mr. Gheorghe said. “Now they are always reminding me to put on my equipment.”

The workers say they’ve benefited from the marketing efforts and the multinational contracts. “We’re getting more experience and more jobs,” one worker said. “Since we started wearing the safety equipment, we don’t get injured any more.”

George Roter, the Toronto-based co-founder of Engineers Without Borders, says the project in Suame Magazine is an innovative approach that could produce broader lessons for the foreign aid sector.

“The concept of stimulating business development using demand from international resource-extraction operations could be powerful in many countries in sub-Saharan Africa,” he said.

“It’s certainly a contrast to traditional aid-based approaches, and fits well with EWB’s philosophy of development that sees successful African businesses and entrepreneurs as the engine of development.”

As for Mr. Gheorghe, he is returning to the University of British Columbia this fall to finish his engineering degree after seven months of toil in the slum. But he’s already planning a life of activism. He is convinced that he can find more capitalist innovations to help the developing world.

“My ambition,” he says, “is to become incredibly rich, and to lift a million people out of poverty. I don’t think you have to be poor to help people.”

I like Mr. Gheorghe’s ambition.

There is another story I read recently that may relate to the guns:

Niger Delta militants training Ghanaians


A respected legal practitioner and lecturer at the University of Ghana, Law Faculty, Dr. Raymond Atuguba has chillingly revealed that militants in the Niger Delta region, notorious for blowing up oil pipes, kidnapping and demanding huge ransoms and causing unrest in the oil rich Nigerian region have started tripping to Ghana in droves.


He said, when he visited the Western region a few weeks ago, he discovered that “groups there were already creating linkages with groups in the Niger Delta”. According to him, the people were “preparing to create the same amount of chaos we have in the Niger Delta if we neglect their concerns.”

Dr. Atuguba stopped short of stating the exact ‘lessons’ the Ghanaians could be taking from the ‘visiting’ militants, but said people were preparing to protect their interest. He remarked that if the security agencies were on their toes, they would have noticed the movement of arms.

Dr. Atuguba is of the view that the culture and livelihood of the people located at the coast of the region will be greatly affected due to the infiltration of various forms of social vices the region will have to embrace.

As if making a case for the them, Dr. Atuguba said as a result of the governmental decision to drill oil in their area, “prostitution is going to increase in their community, stealing and contract killings are going to increase in their community, land grabbing has started in their communities such that they can’t even buy a piece of land in their communities to build a house.”

“You have dislocated the man in his own society and you expect him to sit there and watch you do it …and the politicians will take the money and stuff it in their foreign accounts somewhere…”

Dr. Raymond Atuguba who is also the director of the Law and Development Associates warned that it will be ghastly to ignore the concerns of those communities. “We should not underestimate it…”he advised.

I wonder about this. The oil in the west will be offshore, so, other than potential oil spills, the environmental degradation should not be similar to the Niger Delta. There are certainly some in the Western Region who feel agrieved. And there is much potential for them to feel more agrieved. I also get the impression that there are those who want to stir up more trouble over oil in the west. When I asked friends about this they said it was someone trying to make trouble, but I think this was more opinion than information. I wondered when I first read this story whether it might be part of a US Africa Command “information operation”. I don’t have enough information myself to make an intelligent guess. Dr. Atuguba may be trying to do his best for the people of the Western Region.

Land ownership issues are huge throughout Ghana, and are particularly bad around cities and towns, but hardly limited to the urban areas.

There are Delta militants across West Africa, and there are certainly some in Ghana, and likely in the Western Region. If they are there in organized groups, they are probably not buying the locally made guns, as the …

… buyers of Ghanaian guns tend to be individuals while established insurgent groups purchase heavier weapons from outside the region …

If the militants are visiting the Western Region, it is unlikely they are there to learn gunsmithing, because the skilled practitioners are likely to be in the larger urban areas where there are more customers. The proximity of Ivory Coast, and its recent civil conflicts might be a factor if there are organized militants in the area. I am doubtful about how much organization there is at this point.  People from the Niger Delta are moving away in many directions, to avoid the problems there, and to try and make a living.  Unfortunately some bring criminal training and skills with them.

The government needs to listen to the people in the Western Region and throughout Ghana. The business model in Suame Magazine working with the Canadians, described above, is something that the government and other organizations interested in development should look at long and seriously. And suggesting people go into another form of business, as with the gunsmiths like Mr. Nsiah or Mr. Sarpong, without assisting them to reach current markets or create new markets, is a waste of time and effort.

Ruaraka Export Processing Zone, EPZ, near Nairobi.  This is the fifth or sixth hour of production.  The 900 indicates the total number of jeans produced at that time.  But the daily target is indicated on the green papers, which is between 1200 and 1500.  If the EPZ workers do not meet this target by 5pm, they will have to stay until they finish.  They will not be paid overtime because they were supposed to reach the target in 8 hours.  (picture from Pamoja Tunaweza slideshow)

Ruaraka Export Processing Zone, EPZ, near Nairobi. This is the fifth or sixth hour of production. The 900 indicates the total number of jeans produced at that time. But the daily target is indicated on the green papers, which is between 1200 and 1500. If the EPZ workers do not meet this target by 5pm, they will have to stay until they finish. They will not be paid overtime because they were supposed to reach the target in 8 hours. (picture from Pamoja Tunaweza slideshow, link below)

In Jendayi E. Frazer’s 4-Point Plan to Plunder and Pillage Africa Sophia Tesfamariam writes a devasting indictment of the AGOA program, the African Growth and Opportunity Act. Tesfamariam has also collected and included some of the most searing criticisms made by a variety of people familiar with the program. She shreds all of Frazer’s points, but AGOA gets the most extensive treatment.

Almost 10 years since the introduction of AGOA by the Clinton Administration, oil imports to the US from Nigeria, Angola and Gabon still make up over 94% of Africa´s export to the US under AGOA. So who benefited? As we shall see later, the much touted “success” in the textile sectors were a gross exaggeration and in some cases actually reversed development of these sectors and destroyed nascent industries. Many African economists and analysts had reservations about AGOA and I, as a longtime Africa observer, had strong reservations about it and said so. I was actually happy when Eritrea was unceremoniously removed from the list…it turned out to be a blessing in disguise.

I was not alone in my suspicions of AGOA; here are some of the voices that were just as skeptical and critical of AGOA from the very beginning, voices that were ignored and gagged by the likes of Frazer:

“…African countries are pressured to adopt WTO-like, and even WTO-plus, provisions relating to intellectual property rights protection, investment and financial liberalisation, and labour – all in exchange for some illusory benefits. The AGOA is a US law enacted by the US for the purpose of securing opportunities for US businesses, to the detriment of African economies. It offers no benefits for African economies. The AGOA is a Trojan horse used to trap African governments into giving up their legitimate rights under the WTO…”-(Dakar Manifesto 2001)

“… we reject on principle the “conditionality” approach, which tramples on the sovereignty of African nations and the democratic rights of its people to shape national policy…”-(Letter signed by 35 Africa based NGOs)

“…This is a matter over which we have serious reservations… To us this is not acceptable…”- (Former South African President Nelson Mandela )

AGOA is the “Africa Recolonization Act”-(Congressman Jesse L. Jackson, Jr.)

“…the only groups targeted for assistance are the multinationals who largely control Africa’s trade and access to rich markets…”-(The Association of Concerned African Scholars)

“…To argue that AGOA will be the means by which we can penetrate the US market is a delusion. The main effect of AGOA is to link aid to economic reform, [such as] the dismantling of a states regulatory environment. There are no benefits, and the costs include clear manifestations of deepening structural adjustment and deregulation. AGOA is simply another way of undermining Africa´s ability to mobilize domestic resources for development…”-(Charles Abugre, director of the Integrated Social Development Center in Ghana)

There are several conditions that have to be met to become eligible for AGOA, including one that says that the country has to have a “market-based economy” and has to “eliminate all barriers to US trade and investment”. There is also a provision of AGOA that is not listed amongst the formal conditions for eligibility and is not often mentioned by Frazer and her cohorts. It is the one that says that unlimited duty-free exports of textiles and apparels are allowed only if they are produced with American raw materials. In addition, the President has the authority to suspend duty free apparel if they “cause serious damage, or threat thereof” to the domestic US industry. So Africa, with its unlimited raw materials had to sell in the world market at lower than cost to others who then turn around and sell finished products to Africans who then make the apparel to send to the US. It is actually mind boggling that African leaders actually agreed to do it, essentially destroying their own farmers.

Since Frazer mentioned Lesotho´s textile sector, let us take a look at Lesotho and three other countries, Madagascar, Namibia, and Uganda to appreciate the effects of AGOA on nascent African textile industries.

Imagine my shock when I found out that there were over 50 Taiwanese-owned clothing factories in Lesotho, a very small country (the size of Maryland) that is completely surrounded by South Africa. The way Frazer talks about Lesotho, you are led to believe that the people of Lesotho owned the factories that were producing these AGOA eligible products. The Taiwanese sought to take advantage of AGOA and Lesotho´s proximity to South Africa´s good roads, highways and ports to ship million of jeans, T-shirts and other apparel to American stores such as the GAP, K-Mart, J.C Penney at low cost. As for the thousands of new jobs for women, Frazer forgets to tell her readers that the job migration to the capital was a result of the collapse in rural farming which used to be entirely run by women. The men in Lesotho used to earn a good living by going to mine in South Africa, but they have lost their mining jobs because South Africa stopped importing foreign workers, and decided to use mechanized mining, leaving the men in Lesotho without any livelihood. That is how the women of Lesotho became the breadwinners.

So there was no real increase in overall employment and because only women were being hired at these plants to sew and thread etc. the men were left unemployed and desperate. The situation did not create wealth for the people of Lesotho. Corporate America benefited from cheap labor and transportation costs. As a matter of fact, despite what Frazer wants us to believe about Lesotho, the textile industry in Lesotho was well underway before AGOA ever came into the picture and AGOA may have actually irreversibly stunted its growth and development. The real and serious challenge to Lesotho is what happens to it in 2015 when the initiative ends and Lesotho made products no longer have privilege to enter the United States market.

AGOA was a nightmare for the people of Namibia, they became victims of the predatory transnational corporations like Ramatex Textile & Garment Factory, a Malaysian company moved to Namibia in 2001 to take advantage of AGOA. The plant turned cotton (imported duty free from West Africa) into textiles for the US market. Herbert Jauch, head of research and education for the Labour Resource and Research Institute (LaRRI) in a 26 March 2008 Report stated that:

“…A study carried out by LaRRI in 2003 found widespread abuses of workers rights, including included forced pregnancy tests for women who applied for jobs; non-payment for workers on sick leave; very low wages and no benefits; insufficient health and safety measures; no compensation in case of accidents; abuse by supervisors; and open hostility towards trade unions etc…Ramatex used a significant number of Asian migrant workers, mostly from China, the Philippines and Bangladesh. Although the company claimed that they were brought in as trainers, most of them were employed as mere production workers with basic salaries of around U$ 300 – 400 per month which were higher than their Namibian counterparts…”

In the end, Ramatex, the only beneficiary under AGOA in Namibia, closed its factory leaving hundreds and thousands of Namibians unemployed. Rauch writes:

“…Ramatex represents a typical example of a transnational corporation playing the globalisation game. Its operations in Namibia have been characterised by controversies, unresolved conflicts and tensions…Worst affected were the thousands of young, mostly female workers who had to endure highly exploitative working conditions for years and in the end were literally dumped in the streets without any significant compensation…Ramatex had shown the same disregard for workers when it closed its subsidiary Rhino Garments in Namibia in 2005…”

On 19 November 2007 the Namibian paper quoted President Pohamba as saying:

“…AGOA has not yielded the desired results as far as American investment is concerned despite the incentives provided by African governments to potential investments…”

The story of Tri-Star in Uganda is basically the same story of exploitation and destruction of nascent indigenous industries, plunder of abundant human and material resources and another example of how African governments have squandered the peoples´ resources in order to curry favor with Washington. Lowery Museveni´s Ugandan government promoted Tri-Star in order to cash in on AGOA. During its operation, Tri Star imported fabric from Asia and then made finished clothing products for US markets, even though there is ample cotton in Uganda. Instead of investing Uganda´s resources on establishing milling factories, the Government of Uganda chose instead to do what was the quickest and best option for US importers. The expectations were high. According to a report published by the BBC in 2004:

“…The Tri-Star apparel factory in the Kampala suburb of Bugolobi is bright and clean. Large motivational signs urge staff to build the nation. Banners on the wall read “Made in Uganda, sold in USA”…Tri-Star supplies clothes to a range of US companies…There are more than 2,000 workers at the site, stitching clothes to sell to American companies such as Wal-Mart, JC Penney and Target…”

Judy Auma, a Uganda based Staff Writer for African Executive wrote the following about Tri Star, in a January 2007 article:

“…The factory, which was launched 5 years ago, received high government support and was viewed as an opportunity for Uganda to exploit USA´s tariff and quota free market. Ugandans were made to believe the establishment would not only nurture a rich and stable market for Uganda´s struggling cotton farmers, but also become a reliable source of employment…Since its inception, the factory has neither bought a single bail of Uganda´s local cotton nor exported a stitch from locally produced fabric. Worse still, it has promoted nearly zero growth in terms of employment and the development of the cotton sector…”

The company left the country without repaying any of its debts, leaving behind a destitute workforce and an industry struggling to remain afloat.

What about Madagascar, the other nation that Frazer and company tell us benefited from AGOA? It too has not fared well. A segment of the population, again, only women, may have benefited from its textile sector, but all that is at risk today, not because of anything of their doing but because of political problems in that country that may disqualify Madagascar from the AGOA list. As for AGOA benefiting the Malagasy people, let us take a look at the statistics. A 29 March 2009 Africa Rising report says:

“…the promised AGOA benefits have not translated to a better life for Madagascar´s people. Madagascar ranks at 143 out of 179 countries measured by the United Nations´ Human Development Index Despite its economic progress on paper, the country ranks 164th in terms of gross domestic product per capital…”

Reports surfaced in June 2009 about Washington threatening to pull the plug on Madagascar´s AGOA certification. These reports said:

“…Madagascar could be removed from eligibility for trade preferences under the African Growth and Opportunity Act due to a recent change in government that the U.S. has determined was “undemocratic and contrary to the rule of law… the State Department has classified the change in government as a coup d´etat and is therefore moving to suspend assistance to the government of Madagascar…”

Madagascar is a good example of the US State Departments hypocrisy and duplicity. Everyone knows that Ethiopia is by no means a democratic country and that the minority regime has:

Violated international law and the Eritrea Ethiopia Boundary Commissions´ final and binding delimitation decisions and numerous Security Council resolutions on Eritrea and Ethiopia, it has also violated both the African Union and the United Nations Charters by invading and occupying sovereign Eritrean and Somali territories

Committed international crimes in Somalia including rape, murder and wanton destruction.

Violated and continues to violate the human rights of the Ethiopian people by detaining thousands across the country for voting against the regime in the 2005 elections. Thousands more are being held on trumped up charges, including Birtukan Medeksa, a prominent Ethiopian opposition leader and a judge. It should be noted here that Ethiopia is one of the countries used by the Bush Administration in its extraordinary rendition program where prisoners are taken to places like Ethiopia where in secret CIA run prisons they are interrogated and tortured.

Committed genocides in the Gambela, Ogaden and Oromia regions of Ethiopia. Genocide Watch and other rights groups are seeking a ICC indictment against the regime.

Yet, the US State Department that is threatening to remove Madagascar from the list for violating one of the AGOA conditions today, has refused to take any punitive actions against Meles Zenawi´s regime that has committed even graver crimes.

I am in no way suggesting that Ethiopian textile workers pay for the crimes committed by Meles Zenawi and his regime by having their AGOA status revoked, I am however suggesting that the US State Department, if it wants to salvage its fledgling credibility, can “look the other way” and don´t punish the Malagasy textile sector workers for the “coup” in Madagascar, for which they had no part. By the way, Madagascar may turn out to be the only “success” story on AGOA.

Today, the US State Department´s own Inspector General in his August 2009 agrees with this author and others who were skeptical of AGOA from the get-go. Here is what he said in his scathing Report about Frazer´s Bureau of African Affairs and AGOA:

“…the economic impact of AGOA has been limited even though most of sub-Saharan Africa is now in AGOA… Many African countries have yet to benefit substantially from AGOA preferences. Poorly developed infrastructure, a lack of affordable credit, weak merchandising, and an inability to meet U.S. phytosanitary regulations are among the many factors that thus far have limited the intended trade promotion and diversification effects of AGOA… The bulk of AGOA exports result from petroleum and other extractive industries. When U.S. imports of African petroleum products are excluded, the sum of trade for which AGOA can make some boast for promoting is relatively small…”

Johnnie Carson, the new US Secretary of State for African Affairs ought to take a closer look at AGOA and make realistic and non-parasitic recommendations to the Obama Administration.

________

Picture above from the Ruaraka slideshow by Pamoja Tunaweza, scroll down to the bottom of this page to view the pictures, and read what people say about being in or near the EPZ.

Large sums were misappropriated, and just plain stolen by the people managing the celebrations and observances for Ghana@50 in 2007, Ghana’s golden jubilee celebration. On June 17 2009 President Mills established a 90 day Commission to look into what happened, and deliver a report.

Ghana@50 scandal over vanished funds

Ghana@50 scandal over over stolen property and vanished funds

Quite a few, though not all, of the relevant articles can be found in this list: Ghana@50 Dossier
[Nov. 18, 2009:  That list appears to have been removed.  But you can get a good selection of relevant articles by going to the GhanaWeb Search the News Archive page, select the year 2009, and search for Ghana@50.  It is not comprehensive, but you'll get a good overview.]

From Commission of inquiry into Ghana@50 inaugurated the Commission is to provide:

… an objective, fair and just enquiry that establishes the cold hard facts of all transactions and activities related to the 50th anniversary celebration.

Reports and stories of malfeasance have been trickling out for some time. They really gathered steam after the election, though it was obvious well before then that something was seriously wrong. I gather from people watching the hearings of the Commission on tv, that it is breathtaking how much money just disappeared, and how those responsible appear to be totally unprepared for any reckoning. Those being questioned are twisting and squirming, and many of the major players are yet to be interviewed. I understand a few have fled the country to avoid being held accountable.

From Ghana@50 Cost US$60m:

… another irony of the situation was that while GH¢12 million was raised and used for the procurement of Jubilee Souvenirs, only GH¢318,417 was realized as proceeds from the sale of those items.

Ghana@50 in arrears; already spent $60 million:

Accra, Jan. 26, GNA – The Ghana@50 Secretariat charged to organize Ghana’s Golden Jubilee celebrations two years ago is in arrears of more than GH¢18 million to contractors.The Secretariat has reportedly already spent US$60 million and with the arrears, the expenditure so far incurred stands at US$78 million against the US$20 million which Parliament approved for the celebration in 2007.

Government auditing officials on Monday told the sub-Transition Team on Executive Assets sitting in Accra that only one out of 25 toilets for which an amount of GH¢19 million was allocated had so far been provided.

Auditor General, Mr Edward Dua Agyemang … said neither staff nor records to assist in the auditing were available, and the Auditor General’s Department had to put receipts and payments together to determine whether there was value for money.

“We just had to put things together to be able to form our opinion. There wasn’t any account over the $60 million account,”

Ghana@50: More Revelations!

27 January 2009 The interim report of the Auditor General on the Ghana@50 celebrations reveals dinner wear for 48 houses at the AU Village in Accra was procured in excess of GH¢108,000 ($100,000) and were not used.

A company was overpaid in excess of GH¢43,000 for the supply of 288 decanters or flasks and sample count of items costing over GH¢1million revealed that items valued at over GH¢467 were missing.

A loan of approximately GH¢1.3 million granted by the Secretariat to the Ghana Trade Fair Company has not been refunded.

The Secretariat is said to have overdrawn its bank account with Prudential Bank in the sum of GH¢1.2 million.

The report noted that management of the Secretariat could not provide invoices and receipts covering procured receipt books and so the omission prevented the audit team from determining missing receipt books

Ghana@50: No trace of 139 vehicles – CEPS

Jan. 27  One hundred and thirty nine vehicles imported for the office of the President by five motor firms in the country cannot be located by the Customs, Excise and Preventive Service (CEPS).

CEPS has also described the mode of disposal of the vehicles as questionable, as no records on them can be traced.

The 139 saloon and 4×4 vehicles were imported on behalf of the Office of the President …

Giving a breakdown of its finding in the letter dated January 19, 2009, the CEPS commissioner noted that 968 vehicles were imported by the Office of the President between 2003 and 2008 with the value of tax forgone on the said vehicles amounting to GH¢7,892,935.67.

It explained that imports made on behalf of and for the Office of the President were tax exempt.

On PHC Motors Ltd, CEPS indicated that its current records and enquiries did not disclose the current location or mode of disposal of the 35 Chrysler vehicles imported for the Office of the President. It said Fairllop International Ltd imported 40 Jaguar X-Type, 40 Rover 75, two Rover 75V6 and one Rover 45 for the Office of the President.

Out of the number, Fairllop bought back 35 Jaguar X-Type, while CEPS’ enquiries did not disclose the location and mode of disposal of the remaining five Jaguar X-Type and 43 Rovers.

With regard to Mechanical Lloyd, CEPS said the company imported 50 BMW 730 LI, two Land Rover Discovery, two BMW 745 Li high security, 13 Ford Ranger pick-ups and one Ford Explorer.

CEPS’ “current records and enquiries did not disclose the location or mode of disposal of two Land Rovers, 10 BMW 730 Li; two BMW Li 745, 13 Ford Ranger pick-ups and one Ford Ranger”.

The letter noted that Universal Motors imported 36 VW Passat (Comfort Line) for the Office of the President and subsequently released 35 of the vehicles to the custody of the Ghana@50 Secretariat.

… under the CEPS Law, although items bought for the Office of the President and the Diplomatic Corps were tax exempt, anytime they were to change hands into private hands the new owner was made to pay the appropriate taxes.

Some of the cars were allegedly sold, although CEPS law also requires any sales of vehicles acquired by the government in this way to be open for public bid, and there is no record of any public bid for the vehicles that were “sold” or disappeared.

Spending by Ghana@50 Secretariat questioned

[From] a statement, issued and signed by the Executive Director of NGYL (Next Generation Youth League, an NGO) Benjamin Akyena Brantuo, a former Junior Common Room (JCR) President of the Commonwealth Hall of the University of Ghana, Legon …

“Whilst we are equally alarmed, and concerned about the horrifying revelations coming from the report – the total cost of the celebrations (¢60,172,251.8400), fraud in the form of over-invoicing (¢432,000,000), purchases in excess of budget (¢1,080,000,000), failure to account for VAT deductions (¢3,796,575,000), failure to pay withheld taxes to the Internal Revenue Service (¢1,396,400,000), etc, financial recklessness, lack of proper cash books, no stock register of value books, no contract register, technically incompetent financial officer, etc, the total debt owed to contractors and suppliers ¢184,439,340,000 and the lack of priorities in spending, we are far more disturbed about the limited scope of the public debate, which has confined itself to the ability or otherwise of the Golden Jubilee Celebrations Secretariat to provide adequate documentations to support expenditures they have engaged in.”

… accountability should not be limited to the ability of public servants, to legally support their whimsical and impulse actions with documentations, but the extent to which such actions have satisfied ethical requirements, which includes adding value and bringing improvement into the living conditions of the people they work in trust for.

… anything short of this, is a proper case of causing financial loss to the state …

“For the sake of argument, let us concede that indeed, the findings in the report amount to witch-hunting, and is a ploy by the NDC-led regime and the Auditor-General to persecute their political rivals. Does that assumption change the fact that the whole concept of Ghana@50 was a fraud by a few political elites to enrich themselves?

Ghana@50 report -Mpiani Milked Ghana

The main concern raised in the report is the total expenditure incurred GH¢71.70, which is almost twice the original allocated amount of GH¢31 million.  Also, out of the 25 much-talked-about jubilee toilets only one has been completed.

For a sample of the proceedings: Prudential Bank boss grilled:

In what could be described as teacher-pupil session, the Managing Director of Prudential Bank, Mr Stephen Sekyere Abankwa, was on Thursday quizzed when he took his turn at the Presidential Commission mandated to investigate the activities of the Ghana @50 secretariat. …

Mr Abankwa had to constantly consult his counsel before giving any answer, attracting the attention of media cameras.

The first hefty punch which was thrown to Mr Sekyere Abankwa by Mrs Marietta Brew Appiah- Oppong- a member of the Commission was that : Did he (Mr Abankwa) sought to enquire whether the Ghana @50 secretariat was a corporate entity when it approached his outfit for loan?

In a shivering mood, the veteran economist (Mr Abankwa) directed the question to his counsel, Akoto Ampah who was sitting beside him to handle the question after sipping some water.

Interestingly, Mr Akoto Ampah’s response to the question was that, “Mr Chairman, my client is not a lawyer so therefore; he can not answer legal questions.”

The answer which obviously made the Commission members to wonder why then did Mr Sekyere Abankwa responded to their invitation since he was aware that the Commission had the powers of a High Court.

And more revelations continue as the Commission of inquiry continues.  There has been much discussion of vast amounts of souvenir cloth that was given away rather than sold, with no accounts kept.  And there are other items missing, houses built, home furnishings that disappeared, and more.

It is obvious that no one ever expected any accounting to be required for any of this.   I hope these proceedings serve as a warning to anyone who joins Ghana’s government who might be planning to chop and go.

On the plus side, because democracy worked in Ghana, these crooks may be held accountable.  In many countries the government would be able to get away with this, no questions asked.  It is obvious the previous government was expecting to continue in this fashion, with no accountability.

________

You can find a more comprehensive list of related stories by searching GhanaWeb here.  Enter the search Ghana@50, and specify the year.  I check the following areas to be searched:
General News
Business News
Politics
Crime & Punishment
Diasporian News
Regional News
You can also choose Feature Article, for opinion pieces.

These charts tell us all we need to know about the militarization of the US economy, which has marched hand in glove with the militarization of US foreign policy.

US durable goods shipments from 2000-2009

US durable goods shipments from 2000-2009 (shown full size)

___________

US shipments and orders of durable goods 2008-2009

US shipments and orders of durable goods 2008-2009 (shown full size)

This trend is a particularly ominous sign for American democracy. Back in 2006 Harpers published a conversation about American democracy and the military over the question of whether a military coup is possible in the United States, American coup d’etat: Military thinkers discuss the unthinkable. Participating in the conversation were Andrew Bacevich, Brig. Gen. Charles J. Dunlap Jr., Richard Kohn, Edward Luttwak, and Bill Wasik. A number of interesting points were discussed.

BACEVICH: … another crucial reason there could never be a military coup in the United States: the military has learned to play politics. It doesn’t need to have a coup in order to get what it wants most of the time. Especially since World War II, the services have become very skillful at exploiting the media and at manipulating the Congress—particularly on the defense budget, which is estimated now to be equal to that of the entire rest of the world combined.

WASIK: If we are talking about a “creeping coup” that is already under way, in what direction is it creeping?

BACEVICH: The creeping coup deflects attention away from domestic priorities and toward national-security matters, so that is where all our resources get deployed. “Leadership” today is what is demonstrated in the national-security realm. The current [Bush] presidency is interesting in that regard. What has Bush accomplished apart from posturing in the role of commander in chief? He declares wars, he prosecutes wars, he insists we must continue to prosecute wars.

KOHN: By framing the terrorist threat itself as a war, we tend to look upon our national security from a much more military perspective.

BACEVICH: We don’t get Social Security reform, we don’t get immigration reform. The role of the president increasingly comes to be defined by his military function.

KOHN: And so our foreign policy becomes militarized. We neglect our diplomacy, de-emphasize allies.

BACEVICH: … Meanwhile, we’ve underfunded the State Department for twenty-five years.

DUNLAP: Well, I don’t think it’s anything new that the State Department is underfunded. The State Department has no bases in any state, so it does not have a constituency.

KOHN: One of the great pillars in our history that has prevented military intervention in politics has been the military’s nonpartisan attitude. That’s why General George Marshall’s generation of officers essentially declined to vote at all, as did generations before them. In fact, for the first time in over a century we now have an officer corps that does identify overwhelmingly with one political party. And that is corrosive.

WASIK: So it seems clear that whether we like it or not, the military has learned how to use the political system to protect its interests and also to uphold what it sees as its values. Thinking over the long term, are there any dangers inherent in this?

KOHN: Well, at this point the military has a long tradition of getting what it wants. If we ever attempted to truly demobilize—i.e., if the military were suddenly, radically cut back—it could lead if not to a coup then to very severe civil-military tension.

BACEVICH: Because the political game would no longer be prejudiced in the military’s favor.

KOHN: That’s right.

BACEVICH: But there is a more subtle danger too. The civilian leadership knows that in dealing with the military, they are dealing with an institution whose behavior is not purely defined by adherence to the military professional ethic, disinterested service, civilian subordination. Instead, the politicians know that they’re dealing with an institution that to some degree has its own agenda. And if you’re dealing with somebody who has his own agenda, well, you can bargain, you can trade. That creates a small opening—again, not to a coup but to the military making deals with politicians whose purposes may not be consistent with the Constitution.

Looking at the charts above, it looks like there has already been a coup of sorts on the economy. If spending on the military were reported the way spending on health care is reported, people would be asking some serious questions about this. One can certainly argue that public health and health in general is an equally important part of the defense of a country and its citizens, though I have not ever seen the argument framed in those terms. Of course the money issues are not going to be reported the same way. We have just seen what happens with our corporate dominated news business. Even when news reporting results in actual news getting reported, and is good for ratings, if the major corporations who own the news companies see it as harmful, it will be censored and shut down, witness the Olbermann O’Reilly feud.

China is the paymaster for current US military spending. And China is also a target of US military attention. China is perceived as a great rival for the natural resources of Africa, especially oil, which is one major reason for the creation of the US Africa Command, AFRICOM. We can infer a number of things from the charts above, especially if the trend they map continues. Among those is that the Africa Command will grow, and increase its interference with people, countries, and governments in Africa. The other is that China will have increased ability and power to control what the US says and does, much in the way that the corporate paymasters shut down the Olbermann O’Reilly feud. After all, when your finger is between someone’s teeth, you don’t hit him on the head.

World Bank/IMF policies have consistently increased the number of unemployed, expanded poverty, and decreased productivity and self sufficiency in Ghana as in most countries. Once again Ghana is caught in that vicious cycle.

Anti WTO poster from the Thai Labour Campaign 2005, TNC = trans national corporations,  the results listed across the bottom read in English:  Privatisation, No job security, Suppression of union rights, Environmental destruction, State Violence against citizens, Displaced and landless population, De-democratization, Destruction of local culture, Increasing poverty

Anti WTO poster from the Thai Labour Campaign 2005, TNC = transnational corporations, the results listed across the bottom read in English: Privatisation, No job security, Suppression of union rights, Environmental destruction, State Violence against citizens, Displaced and landless population, De-democratization, Destruction of local culture, Increasing poverty (click image to enlarge)

An article on Ghana web gives a clue as to what Ghana is up against with loans from the World Bank and IMF, and shows it got into these problems by following the prescriptions of the World Bank and IMF. As an earlier article pointed out. Ghana has been an economic and political success story, but:

… last year world food and oil prices soared. China’s slashed demand for raw materials is harming much of Africa. Global warming caused a drought that drained the dam powering Ghana’s electricity, requiring crippling oil imports. The last government borrowed to cover these unexpected costs, the currency dropped in value, inflation rose to 20% and credit has dried up.

Economists at the NGO Oxfam point out that this was not caused by profligacy, but by external events last year. A further source of bitterness: if rich countries had kept their 2005 Gleneagles promises, as Britain did, Ghana would have received $1bn, with no need to borrow at all.


Every government knows what it has to do to get credit, so Ghana has already said it will lower its deficit from 15% to 9.5% of GDP in one year, steeply cutting public sector costs … an IMF thumbs-down means money from everywhere is cut off.

And so Ghana needed a loan, and is trapped in the vicious cycle:

…Public sector labour freeze costs Gov’t 1billion dollars
Ghana’s, dependence on donor-fundings, and their attendant conditionalities, for the implementation of her fiscal policy year in and out, is beginning to take a heavy toll on the country.

News about the recent International Monetary Fund (IMF)’s $1billion total financial facility to Ghana for her budgetary support, as approved by its board on July 15, 2009 came just a day after the Attorney General, Hon. Betty Mould Iddrissu had disclosed that Government of Ghana (GOG) owes as much as over $1 billion dollars in judgment debts which have accumulated over the past 10 years.

She explained that the problem boils down to the fact that, the attorney general’s department lacks the human resource capacity to function adequately as government’s legal advisor in all transactions government enters into.

According to her, “Ghana lacks the capacity to retain attorneys for all Ministries, Departments and Agencies (MDAs), so out of frustration, the MDAs hire private legal practitioners to guide them in some of their transactions, some of which bring about legal problems.

“The department also lacks the requisite manpower to send attorneys to court to defend the state whenever those litigations come up”, she disclosed, adding, “it is a systemic and an endemic problem with the department which has been there over the years”

For this reason, government is now saddled with such a huge debt including those to CP Construction, Attachment Awards against the government in France, Britain Belgium, USA and Holland.

It has been suggested that the genesis of the problem of the lack of human resources in the public sector dates back to the late 1980s and 1990s when government was instructed to freeze public sector recruitments in return for World Bank/IMF supported Economic Recovery Programmes.

This same condition, of freezing public sector employments, is said to have been reaffirmed by the Breton Woods institutions in the current loan agreements, but Finance Minister explains it is government’s own decision to manage public funds prudently.

However another contradictory condition is also the call on government to establish a Public Sector Reform Ministry as a requirement for further assistance from the World Bank. Opinions are divided as to where manpower would be secured to run such a new ministry if recruitments into the public sector is to remain frozen.

Although Finance Minister, Dr. Dufuor has told this reporter that the AG’s department has been given the clearance to recruit 20 new attorneys, Financial Intelligence (FI) investigations have revealed that the problem of inadequate manpower is not peculiar to the Attorney General’s Department, but a general problem that has bedeviled the whole of the Civil Service in Ghana.

Departments such as the Veterinary Department, Extension Services of the Ministry of Agriculture and other government departments have been crying over the years for more personnel to be recruited to beef-up their activities.

For the Crop Extension Services and Veterinery Services, although their training schools in Kwadaso, Nyankpala, Ohawu, and Pong-Tamale have been churning out well-trained personnel over the years, due to World Bank conditions that were introduced as a result of the Economic Recovery Programme and The Structural Adjustment Programmes, employments of these personnel have remained frozen till date, leaving the departments with the only other option of replacing retiring and diseased staffs.

The Cocoa Services Division is on record to have attracted a large number of extension officers from the Agric Ministry, while engaging many others who had either completed the Agric Training Institutions as well as some Sixth Form leavers from the early 1990s, and current gains being made in that sector is believed to be as a result of those investments earlier made in human resources.

Questions are being raised as to whether it is prudent to continue freezing recruitments into the public sector, when evidence has started emerging that it can be costly in the long run as evidenced by happenings at the AGs department.

If the MDAs can find money to hire the services of private legal practitioners whose legal advice in transactions have proven to be costly to the nation, it would have been better if the state spent money employing full time attorneys for the AG’s department, for onward attachment to the MDAs.

A senior Lecturer at the University of Ghana Business School, Kwame Gyasi … “it is the public sector which moves the private sector and not the vice-versa, then; there is a problem if you freeze employment in the public sector down here”.

“Now that the private sector is collapsing, freezing employments in the public sector would not only end up in some costly financial consequences for the state as has happened in the judgment debts, but will also create upheavals”

Neoliberal free market practices have brought disaster on the western governments of the northern hemisphere. But the World Bank and the IMF continue to impose those policies on the developing countries when they issue loans.

As one impassioned comment on the article said (all caps are frequently used in the comments):

IMF AND WORLD BANK SUCCESS STORIES SOON TURN INTO MIRAGES EVERYWHERE. I CHALLENGE ANY IMF, WORLD BANK OR GHANAIAN OFFICIAL TO CITE ONE SIMPLE EXAMPLE OF REAL SUCCESS.

THE IMF IS THE ACRONYM FOR “I MOSTLY FAIL”, “INTERNATIONAL MONSTER WITHOUT FEELINGS”, “INTERNATIONAL MISMANAGER OF FINANCES”

THE WORLD BANK (WD) STANDS FOR “WORST BANDIT”, “WORLD DESTROYER”, “WORST DEATH”.

THEY REJOICE WHEN THEY SEE AFRICANS MARGINALIZED AND IMPOVERISHED. THAT IS WHY THEY PRESCRIBE STRUCTURAL ADJUSTMENT FOR AFRICANS WHILE THEY EMBRACE RESCUE PACKAGES.

Ghana does not have the personnel to oversee and regulate contracts because those staff were laid off and reduced, due to previous World Bank/IMF requirements to lay off and reduce staff. Without those public sector legal advisors providing advice and oversight, Ghana incurred expensive judgements.

At a time when the economy is contracting and losing private sector jobs, it is a huge mistake to also reduce public sector jobs. In fact, public sector jobs help create private sector jobs, particularly in health and education, which often suffer the most under World Bank/IMF requirements and structural adjustments. A healthy workforce is productive, the more healthy, the more productive. And an educated workforce brings business and employers looking for a large available pool of smart, healthy, and well educated people to work for them. A strong public education system, including universities, attracts and creates strong private sector growth.
But as the earlier article: What Wall Street did to Ghana said:

Oxfam’s senior policy adviser and economist, Max Lawson, doubts such cuts are needed, just a loan to tide Ghana over. “The IMF is too brutal … demanding balanced books within one or two years. The only way to make such a deep cut is in social spending: teachers’ salaries are the main item.”

In the West governments are undertaking huge fiscal stimulus programs to repair their economies. But in the developing world those same governments and institutions continue to advocate reductions, restructuring and belt tightening. It looks like the plan is not to help but to prevent developing nations from developing.

________

Note: graphic above from here

Barclays off-shore banking will bring more of this to Ghana

Barclays offshore banking will bring more slums like this to Ghana

In a move guaranteed to increase poverty and crime throughout Ghana and West Africa, Barclays Bank, at the 2005 invitation of former President Kufuor, is setting up off shore banking in Ghana. Other big banks are waiting to join in the tax haven business in Ghana following Barclays lead.

Barclays bank is playing a lead role in the establishment of a tax haven in Ghana, in a move that could see huge mineral wealth in west Africa vanish into it from poverty-stricken countries’ coffers, the Observer can reveal.

The controversial British lender has for the last four years worked closely with the Ghanian government to start an International Financial Services Centre offering low taxes and minimal financial disclosure.

Development charities fear that the establishment of a fully operating tax haven so close to oil- and mineral-rich countries such as Nigeria, Sierra Leone and Equatorial Guinea will encourage a rapid increase in tax and capital flight.

There is also concern that cocaine barons, increasingly using west Africa as a trafficking route into Europe, could launder drug money through Ghana.

Oil-producing nations are plagued by corruption and drug trafficking and the creation of this international financial services centre will make this worse – not better.”

This move was initiated in 2005 by former President Kufuor. In light of what we now know about the theiving and raids on the treasury by himself and his cronies, it looks like they were planning ahead to hide stolen assets from the people of Ghana. We know Kufuor initiated this move from an article on GhanaWeb in 2005, when the offshore banking plans got underway:

Barclays Bank to assist Ghana establish off-shore banking
2005 Accra, March 30, GNA
Barclays Bank Plc is to assist the Government to establish off-shore banking in Ghana, Mr David Roberts, Executive Director of the Board of Directors of Barclays Plc and Barclays Bank Plc, said on Wednesday.

“We have to make the necessary arrangements to make off-shore banking operational in Ghana,” he said in reaction to an appeal by President John Agyekum Kufuor that the Bank cooperated with the Government to establish offshore banking.

President Kufuor made the appeal when a delegation of the Bank’s Directors attending the first International Executive Committee Meeting outside Europe in Accra, paid a courtesy call on him at the Castle, Osu.

The discovery of oil in Ghana was not announced until June 2007. But by 2005 they knew it was in the works. The Cape Three Points Deep Petroleum Agreement was signed in 2002, and potential oil fields mapped, also in 2002. So it seems likely Kufuor and his NPP cronies were planning for the influx of oil cash, and a place to stash and hide the money conveniently close to home. Even without oil, their misappropriation of government assets is impressive. There are many examples documented on GhanaWeb, such as Massive looting at Ministries, especially since the change in government has brought a bit more transparency. Financial transparency is what every watchdog group says is needed in the African oil and resource business. Financial transparency is what off shore banking is designed to eliminate.

Barclays Bank has been repeatedly implicated in illegal and unethical banking operations. In March the Guardian published a number of internal memos from Barclays, from WikiLeaks:

The documents are copies of alleged internal memos from within Barclays Bank. They were sent by an anonymous whistleblower to Vince Cable, Liberal-Democrat shadow chancellor. The documents reveal a number of elaborate international tax avoidance schemes by the SCM (Structured Capital Markets) division of Barclays.

According to these documents, Barclays has been systematically assisting clients to avoid huge amounts of tax they should be liable for across multiple jurisdictions.

A commentator to the Financial Times stated:

I was lucky enough to read through the first of the Barclays documents…

I will say it was absolutely breathtaking, extraordinary. The depth of deceit, connivance and deliberate, artificial avoidance stunned me. The intricacy and artificiality of the scheme deeply was absolutely evident, as was the fact that the knew exactly what they were doing and why: to get money from one point in London to another without paying tax, via about 10 offshore companies. Simple, deliberate outcome, clearly stated, with the exact names of who was doing this, and no other purpose.

Until now I have been a supporter of the finance industry – I work with people there regularly and respect many of them, and greatly enjoy the Financial Times and other financial papers. However this has shone a light on something for me, and made me certain that these people belong in jail, and companies like Barclays deserve to be bankrupt. They have robbed everyone of us, every single person who pays tax or who will ever pay tax in this country (and other countries!)

If Barclays can get away with this in the UK, with UK laws and enforcement, how much more can they get away with in Ghana, where the current legal and enforcement communities have a much shorter history, and are grossly underpaid.

Barclays have also been implicated in corrupt associations and illegal dealings with Equatorial Guinea, and along with other banks in Angola. From the BBC:

The same lax regulation that created the credit crunch has let some of the world’s biggest banks facilitate the looting of natural resource wealth from poor countries.

I have quoted Nicholas Shaxson in previous posts, but what he says regarding the movement of money is right on the mark:

There are basically three forms of dirty money. One is criminal money: from drug dealing, say, or slave trading or terrorism. The next is corrupt money, like the fromer Nigerian dictator Sani Abacha’s looted oil billions. The third form, commercial money – what our finest companies and richest individuals hide from our tax collectors – is bigger. The point – and this is crucial – is that these three forms of dirty money use exactly the same mechanisms and subterfuges: tax havens, shell banks, shielded trusts, anonymous foundations, dummy corporations, mispricing schemes, and the like, all administered by a “pinstripe infrastructure” of mainstream banks, lawyers, and accountants.
. . .
In this parallel secret universe the world’s biggest and richest individuals and firms, News Corporation, Citigroup, and, yes, ExxonMobil – can quite legally cut themselves loose from pesky full taxation and grow explosively, leaving smaller competitors, who pay their full dues along with the rest of us, choking in their dust. This undermines the very notion of capitalism: the big companies’ advantage has nothing to do with the quality or price of what they produce. If you are worried about the power of big global corporations, don’t always attack them directly, but attack bank secrecy instead. This is the clever way to take on the big fish, using a net that would also snag the Sani Abachas, the Mobutus, the North Koreas, the terrorists, and the drug lords.
(Poisoned Wells: The Dirty Politics of African Oil, by Nicholas Shaxson, p.225&227, ISBN 978-1403971944)

In 2007 Kufuor and Barclays raved on about what a wonderful opportunity offshore banking would be for Ghana:

President Kufuor said … the Government was fully aware of the numerous challenges and difficulties inherent in the operation of the facility and gave the assurance that the necessary safeguards had been put in place to stave off abuses.

Legal and administrative measures, he said, had been enacted to provide the needed checks and balances within the economy in particular and society in general.

“These measures should promote best practices in service delivery. More importantly, they should affirm the good faith and determination of the entire society to make Ghana a safe, secure and peaceful environment for investment.”

President Kufuor, through whose initiative the offshore banking had become a reality, said It must help to transform the financial system for accelerated socio-economic development.

He said last year, 658 billion dollars was transferred from developing countries to the developed countries, noting that if about half of this had been lodged in such a facility in Africa, the pace of development of the Continent would have been tremendously enhanced.

If that money had gone into offshore facilities in or near the developing countries, it would have made no difference. The reason for offshore banking is to evade the checks, balances, and safety measures. In fact, offshore banking will allow and promote the legal and illegal theft of money from Ghana, and is designed to do just that. Corporate money, drug money, stolen money, money from arms deals, money from illegal bunkering and corrupt politicians, all disappear offshore. Barclays and other big banks take money out of the reach of the countries those assets came from, and out of the reach of the governments and the citizens they are supposed to serve. I doubt Kufuor’s lavish praise for offshore banking was due to naivité. He was planning to be one of those advantaged by the bank at the expense of his own country. It is not for nothing he is known as Thiefuor to many of his countrymen.

Aside from those few who become very rich indeed, oil, and other extractive resources can make a country much poorer. The phenomenon is described in this article in Foreign Policy:

Collier’s model shows that producers of oil, timber, and minerals would on average see their gross domestic products rise by 10 percent in the first seven years, only to have them crash two decades later to only 75 percent of where they started. Sudden cash flows in unprepared countries, he says, lead to unsustainable public consumption, rising inflation, soaring inequality, trade protectionism, and a real danger of civil war.

As Shaxson points out:

People often put the problem like this: oil money would be a blessing but politicians steal it, so people don’t see the benefits. But it’s much worse: the oil wealth not only doesn’t reach ordinary people, but it actively makes them poorer.

Barclays and other big banks help make and keep the majority of people poorer. They insure there is no level playing field. Offshore banking is the tool that possessors of criminal money, corrupt money, and commercial money use to hide that money from its source, and to prevent reinvestment in the people and the places the money came from. That is why it is so shameful for Ghana to be setting up offshore banking. It is shameful that a former president initiated and promoted this tool to steal from the Ghanaian people, and it is shameful for the current government if they allow this to proceed as planned. If offshore banking goes forward, slums such as in the picture above will expand exponentially, people will suffer and die because their assets are being stolen from them, and they have nothing to fall back on.

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