GHANA, Enhancing Trade and Accruing Investment LATEST REPORT February 4th, 2002	Ghana The rising star of west Africa. Economy - Development - Financial sector - Stock market - Private initiatives - Private sector - Investors - Open skies policy - Ghana's treasure trove - Tourism - Agriculture - Energy sources - Telecom - Roads - Rawlings Legacy Interview with Mr Edward Salia the Minister of Roads and Transport, August 30th 1999 Ghana’s economy has improved dramatically in the last couple of years. What has been the impact on your sector as a whole? The significant improvement of the economy naturally puts a lot of pressure on infrastructure because as we all know infrastructure is key to any significant economic development. Our ports are now more utilized than before so you have cargo throughput both at the Kotoka airport and the Ghana’s sea ports at both Tema and Takoradi significantly increasing but it also brings the need to expand the capacities of the facilities that these infrastructure agencies already have. Beyond that most of the goods apart from being moved through the ports have to be moved within the country and with increased prosperity more goods now come in and so there is pressure on the road infrastructure, the available stock of vehicles.What is worse is that with the growth of the economy has come the increase in prosperity and therefore the increase in supply for vehicles on the road. Unfortunately this has been in the respect of private cars so there has been an increase in congestion on our roads and the roads need to be improved on, faster and new roads have to be constructed to accommodate the increased traffic on our roads. In all, one can say 2 things; first the improvement of the economy has brought more prosperity to the institutions in the transport sector such as Ghana Airways, Ghana Ports and Harbors and Ghana Civil Aviation Authority but at the same time it has contributed significantly to the pressure on the existing facilities that we have and the more so on the road infrastructure. Given this pressure and the requirement of development to what extent do you work hand-in-hand with the other sectors like manufacturing, agriculture, tourism, export? In the ports for instance our developments have been moved by the other sectors like the exporters and importers who continuously demand improvement in the services rendered. We have had joint meetings which have led to significant changes it the way we handle cargo and ports services. We can see the significant improvement in the Kotoka International Airport especially in the arrivals hall. It used to take forever to claim your luggage, this was unacceptable to all travelers and because of numerous compliance all the sectors were under significant pressure to improve the facilities so there is a lot of collaboration and cooperation between the transport sector and the other sectors such as tourism, manufacturing, and the trade ministry. Do you have regular board meetings with the Ministers? Yes, we do so regularly. A lot of us belong to the Gateway oversight committee which oversees the implementation of the Gateway Project. As you can imagine this project requires improvement in the ports. There can be no Gateways if there are no entry or exit points. The ministry that actually plays a critical role is the Ministry of Roads and Transport as we are to facilitate trade, which is what the Gateway is all about. We are to facilitate the movement of goods and people through Ghana ensuring that Ghana becomes the gateway to the West African sub-region. What would you say are the biggest problems that you are facing within this Gateway project? Habits are not easily given up and as people have been used to doing things in certain ways, when change comes there will definitely be some resistance before they capitulate. It is the whole process of change coupled with the fact that they also require some preparatory works before the changes can be effected. For example you want to clear customs quickly but at the same time you want to be sure that the right guys are not detained and the crooks left to go. You have to find ways of removing the chaff from the seed and this requires time and effort. Unlike in the other parts of the world where you say nothing to declare and a lot of people really have nothing to declare, they have lots of auxiliary activities to confirm that there really is nothing to declare. In our situation it is not yet gotten there. The X-ray machines have to be there, people have to be observant, behavioral scientists have to know who is likely to behave in a particular way. All these require training and these are all in their infancy in our system. The change is coming but it cannot change faster than people learn to do things better. I would say it is a matter of time before things become perfect but in the interim there is the need to get equipment and other appropriate gadgets to support the human effort. Are you therefore putting a lot into human resource development? Yes, we are doing that so that the front line staff are better trained and therefore well equipped to handle their jobs in order to appreciate that the people who come through the ports are their clients and they have to render them good services. It is not a matter of the customers owing the workers a job because if those guys did not pass through the customs they wouldn’t have a job. They have to be taught to collaborate and cooperate with the users of the facilities. Ghana is to privatize Ghana Airways before the end of the year. We are more than half way through the year, is this program on course? Not exactly because I know it is a government policy to privatize but I am not aware of the time dimension that you have given. Even though it is a government policy you would appreciate that even though I am the sector minister divestiture is a different kettle of fish. It is under the auspices of the Divestiture Implementation Committee. They determine the pace and the process of divestiture, so specifically I do not know if by the end of the year it will have been divested. Do you think Ghana Airways is attractive enough for strategic investors and what would you say are their strong points? Ghana Airways must be attractive to any strategic investor wanting to operate in Africa. If you look at the African aviation landscape, apart from the Ethiopian Air and South African Airways Ghana Airways is one of the other very successful ones. It is probably the best airline in Africa when it is in the air. It has a very high safety record with the best pilots in Africa. Recently its management has undergone a change and they are increasing their fleet to create more flexibility. Looking at the location of Ghana, she will be the hub and there will be spokes coming through to Accra because from Europe coming to sub-Saharan Africa this is probably the best place to land. From America it is also the place to land and redistribute cargo and passengers so the location of Ghana is unique. An efficient airline operating from Accra would be very profitable and useful for any strategy that any strategic investor would have for Africa. I do not doubt the attractiveness of both Ghana and Ghana Airways as an investment destination and as an investment. Are there any investors who have shown interest in Ghana Airways? Yes, there have been inquiries but has not been placed on the market yet. A lot of people are asking when it will happen. A lot of airlines would want to do deals confidentially in a way that their competitors do not know their strategy. So its not easy to determine the extent of investor interest without going to the market. As part of the country’s effort to attract direct foreign investment for the improvement of the road infrastructure the government is to privatize the sector. What has been the response so far from the private sector? I do not know whether the word is privatize. It is not the entire sector that is going to be privatized because what we are doing is encouraging private sector participation on roads that are deemed tollable or viable. You could take any road that has significant traffic, either reconstruct the road or construct a new road altogether with several lanes and collect toll so that it can facilitate movement particularly between commercial centers. In that respect there is a lot of interest. It is just that the experiences elsewhere tend to slow down involvement. For example the recent Asian crisis where a lot of toll roads were built in countries like Indonesia and Malaysia and the experiences of the financiers were nothing commendable. Investors naturally had to be a bit cautious. Mexico and Argentina have had similar experiences. In America from Washington to the Dulles airport, the toll road was constructed and they estimated that traffic would be so much but presently it is just a fraction of the traffic that is flowing on it. I can say that some interests have been expressed but they have just fallen short of a commitment to begin action. What we are doing is trying to demonstrate that on our own, even with our existing roads, because we have established an independent road fund board, we are collecting some tolls and we have recently introduced new roads for tolling. The purpose of this fund is to get as much fund as possible to continue scheduled maintenance so we can continue to improve the maintenance culture of roads in our country. In a lot of developing countries maintenance is relegated to the background because new roads are more attractive. We have become the first country in Africa to have an independent private road fund. Since it became effective in 1997 there has been significant improvement in our road condition. It is also interesting to mention the fact that the first toll road in Africa was built in Ghana. It is an 18 mile road between Accra and Tema: the Tema Motorway. It was not built by private money but by state money and the important thing is that it was tolled. If we had continued with that practice perhaps all our roads would have been well developed by now. We, however, need to bear in mind that rural feeder and local urban roads cannot be constructed and maintained with private sector funds. Who constructed the new road between the Tema roundabout and Akosombo? The government of Ghana with German funding by a German contractor built it. We plan to toll it because we believe that it is equitable that if you are using a very good road which reduces travel time you should make a contribution towards its maintenance. We plan to toll a lot of roads and Cabinet has already approved of it. When we are able to do this on government roads then it goes without saying that the private sector can follow suit since the ordinary Ghanaian would have gotten used to paying tolls. The objective of the Ghana Highway Authority is to have 70% of the road network in good state by the year 2005. Is this road fund one of the ways of helping the GHA? Exactly. Until a couple of years ago the road maintenance was always in significant arrears and annually less than 30% of the network saw any maintenance. With the road fund which is dedicated only to the maintenance of roads, (under the law until you finish maintaining all roads you cannot build new roads). We have seen significant improvement. It means that the existing network will continue to be improved so that the network would get to the target set off. We expect trunk urban and feeder roads all to be improved because the fund is for the maintenance of all these types of roads. To what extent are you planning to develop your railway network? The railway system historically had been the main mover of bulky commodities but somewhere around the 70’s and 80’s it lost its market share to the road sector and it has been difficult for it to recover its lost share of the market. For one thing the roads have improved and the motor vehicles are now fast so you can reach your destination faster than maybe 13 years ago. People want just on time delivery and the tendency is for them to use the roads. Apart from that we have had the problem of not until recently asking users of motor vehicles to pay for the true cost of using the road. It was like a big subsidy that was paid for them to destroy the roads with big logs, overweight axils and misuse of that nature. They simply crushed the roads, it became a public cost born by government and there was a private gain by the transporters. The railway has really fallen on evil days and what is worse is that there are too many curves on the route so trains cannot go beyond 60 km/hr and due to this number of curves derailment is rampant. We do not think they have been as efficient as they ought to be. In any case experiences in a lot of the countries in our sub-region is to let the private sector get involved because the railway systems were constructed mainly for extractive trade; to take cocoa, timber, manganese, bauxite to the port, so there are no intra-urban rail systems. We intend to introduce concessions so that the private sector would take the lines and run them. We believe it would be more efficient than the state owned enterprise continuing to run the rail system. Do you not think that the development of the railway system would help to reduce the congestion on the roads, and if so what are you doing to attract private investors? First they need to tell us what to do to attract them because what we might think of as being attractive may not be so to them. We will go through a transparent process in meeting the needs of the private sector so that they can take over. We cannot start second guessing them, we must give them the opportunity to make an input, with the support of the World Bank, within the next couple of months we will begin the process of trying to concession the various lines. At the same time we believe that a very effective concessionaire would improve the intra-urban rail system. Between Tema and Accra for instance there is a bridge that is broken and the railways does not have the money to repair it. Their own schedule is not the best. Lately they have tried to improve by carrying fuel from Tema to Kumasi but they still require a lot of work to improve their performance. They are collaborating with the manganese and bauxite companies and we hope that the exports of both companies would improve so that the rail company can earn significant revenues and modernize their network. For the moment even though we have a good number of locomotives the tracks are not the best and they require a lot of improvement. What would you say are the benefits for foreign investors to come to Ghana and invest in your sector? My sector is almost a green field in the sense that this is the first time we have private people getting into infrastructure, we have not had a road concession before, there has never been an investor in Ghana Airways. What all this implies is that they have an opportunity to tell us what they want, what best fits their requirements. Our objective is to reduce our involvement in these areas. If the private sector must take over we must find something attractive for them. We are prepared to give them what is attractive but we cannot define what is attractive enough. We have to do it in collaboration with them. Since it is a green field they have a better opportunity than in a matured area where the ground rules are set and processes are all outlined. In my sector I cannot say what I will do or will not do, it depends on what makes sense to the private sector and whether it is reasonable for Ghana. There will always be the need for infrastructure, it is not a dying industry, it does not mature and even if it had a maturity period it would take some time for this sector to mature so it is always a growth area. No part of this country can boast of enough roads, so there still is a lot of opportunity for anybody to invest in the transport sector. Since we are all committed to the private sector and the government has announced its commitment I do not see why the private sector is not making the effort to get in. This could be something beyond our wildest imaginations. Of course apart from my sector Ghana is the place to be. First it has a lot of cultured people, it is a friendly society and it is a safe country. If you ask any African where they would like to be it is Ghana. A lot of them are hoping for their countries to be like Ghana so there must be something good here. An ambiance that is truly Ghanaian. The lack of xenophobia is particularly attractive to anyone who wants to settle and work genuinely as an investor as he will not regret it. Our democracy is growing, we would rather sit down and sort out a problem than use brute force, we do not have too many crooks and when we do have a crook we smoke him out. What would you say has been your biggest achievement since you have been Minister? I have introduced some business practices into everything we do here without sacrificing the political dimension. I have come from a business background and I have not seen government as politics per say. I try to ration things out in a business like manner; does it make sense? Is it done at the least cost? Will it bring the greatest benefit to the greatest number of people? These are some of my considerations. In general I have tackled my problems with a lot of business sense. Sometimes against a lot of odds and criticism but fortunately at the end they only agree with the approach and results. This is not my first ministry, I have been a Minister since 1992 but in the sectors as Minister of transport and communications. I can say that with the support of the government, the telecommunications in this country was transformed. I am sure that by the time I leave here it will be said that I had a very tough schedule but I did my best. I am always prepared to work with anybody and I put a lot of effort into my work and people notice that I lead by example. The rest is for other people to say particularly how much I have contributed to improving the transport sector of Ghana. What do you think will be the consequences of the Ghana bilateral air services agreement with the US? I have not seen the final draft but it is nothing extraordinary. In aviation terms it is simply a bilateral arrangement between us and the US which is supposed to enhance the Gateway concept. If you have only one airline that goes to the US and every time there is overbooking, there is insufficient competition and apart from that you cannot travel when you want to. It is not going to enhance tourism, facilitate businessmen coming in because a businessman always wants choice so we think that by opening up we give an opportunity to the traveler. Of course, merely saying that it is a liberalized sky regime does not mean that you will find American Airlines or Delta flying to Ghana. They all have coach-shared relations with European carriers. They always route through Europe and that is not good enough so if there is a direct flight it would be faster, could be cheaper and we could get more tourists here. This agreement is not a laissez-faire thing, it is an offer that will be evaluated by Cabinet since they gave the approval to negotiate. There is no danger of us losing ground because the negotiating team includes representatives of Ghana Airways, the Civil Aviation, Attorney General, our Ambassador, the ministry, tourist board. If there were any special interests to be protected they would be protected. I have not heard them blowing out that they disagree so if they agree in general it must be a win-win situation otherwise there should be a deadlock. As you know Forbes Magazine reaches over 4 million readers mainly businessmen, so what is your final message to them? My final message is what I said about Ghana and the sector, that Ghana has opened its arms and has embraced the private sector as the engine of growth in the economy. We have a vision to be a middle income country and our strategy is to be the Gateway to Africa. We would work hard toward it and to everything that it takes to make us achieve our objective. To make us realize our vision we will do everything and we believe this is the time for the private sector to come to Ghana. If you do not come now you might be too late, others would have preceded you and taken the pearls. The Gold Coast was a land of gold and it still is. It may not be the metal gold, we have other gold that is not metallic so they should come and join us to exploit it.   Read on   © World INvestment NEws, 1999. This is the electronic edition of the special country report on Ghana published in Forbes December 13th 1999 Issue. Developed by AgenciaE.Tv