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Thoughts from Ghana

I spent today at the University College of Agriculture and Environmental Sciences at Bunso and the nearby Cocoa Research Institute of Ghana. Those who have read my memoir The Catholic Orangemen of Togo and other Conflicts I Have Known will know that rural development in Africa has been the abiding passion of my working life. The good news is that for the first time a paperback edition of The Catholic Orangemen should be out in a week or so.

The abiding impression of today was the extent of local awareness of environmental issues and the need to maintain a fragile but wonderful ecology. This faces enormous challenges. I was intellectually aware of the extent of illegal gold mining in Ghana but unprepared for the evidence of its scale. Rivers that provide the drinking water for millions have been transformed into dead sewers of brown sludge. Having known them as live rivers, I was really shaken.

Ghana is looking to develop its bauxite industry and finally bring its aluminium smelters to life. This will impact the precise area I was visiting and I know from Jamaica that the environmental impact of bauxite mining is hideous. It is perhaps the most destructive of all extractive industries. It is a horrid irony that the bauxite scheme should impact the exact area where local traditional leadership (the Okyenhene) has pioneered environmentalism.

I feel conflicted. Our standard of living in the developed world has been based on the destruction of the forests which we conveniently forget once covered our lands. We wish to keep what remains of wild Africa as untouched as possible, because we know that otherwise it impacts us. But we are not prepared to expend serious resources into raising the standard of living of those who would be denied the immediate material benefits of industrial mining. My instincts are all to oppose the bauxite extraction on environmental grounds. But I am not so intellectually dishonest as to pretend that, with all the pollution and illnesses and destruction, the industry would not bring important wealth and employment. It would. I do not feel morally able to lecture poor communities on why they should remain undeveloped when they are excited by rare hope. I suspect many of you will think I am wrong.

On a more positive note, I was inspired by the commitment of the faculty of the University College, their research interests and their ability to deliver a first class curriculum to the students with minimal resources. It struck me how a major improvement could be made to their efforts by the injection of comparatively modest sums into laboratory equipment, for example. I shall be working on this and in the longer term on developing possible academic collaborations.

I loved the new canopy walk at Bunso built to promote eco-tourism.

It has five of these bridges, all of which are high, and one very high indeed as it crosses a valley. It is a great deal more adventurous than the one at Kakum. And yes, I did cross them all.

I am often very critical of the FCO, so it would be churlish of me not to note that Jon Benjamin leaves Accra this summer after an extremely effective and principled tenure as High Commissioner, including playing an effective and helpful role behind the scenes in the third peaceful transfer of power between political parties since Ghana became a real democracy in 2000. The more so since, most unusually, the UK was acting against the desires of the USA, and I suspect Jon was pivotal in that.

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Nana Akuffo Addo Elected President of Ghana

With 185 out of 275 constituency results in, I am calling the election for President Elect Nana Akuffo Addo. There is a surprisingly uniform swing to Nana across every region of the country, and he cannot lose from this position.

This is the swing to Nana region by region, based on my constituency by constituency analysis of the results. There is a swing to the NPP in every single region.

Swing to Nana Akuffo Addo

Ashanti Region 6.1%
Brong Ahafo 6.3%
Central 7.6%
Eastern 5.1%
Greater Accra 4.2%
Northern 4.7%
Upper East 5.6%
Upper West 6.2%
Volta 3.2%
Western 9.2%

Ultimately I predict Nana Akuffo Addo will get a strong mandate with 53.1% of the vote once counting has finished.

I believe this result is a popular reaction against levels of corruption in Ghana that had become terrifying. I am very happy indeed that Ghana has yet again shown it is a mature democracy, and for the third time this millennium the ruling party has been democratically replaced by the opposition.

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IMF and USA set to ruin Ghana

Just ten years ago, Ghana had the most reliable electricity supply in all of Africa and the highest percentage of households connected to the grid in all of Africa – including South Africa. The Volta River Authority, the power producer and distributor was, in my very considerable experience, the best run and most efficient public utility in all of Africa. Indeed it was truly world class, and Ghana was proud of it.

Obviously the sight of truly successful public owned and run enterprise was too much of a threat to the neo-liberal ideologues of the IMF and World Bank. When Ghana needed some temporary financial assistance (against a generally healthy background) the IMF insisted that VRA be broken up. Right wing neoliberal dogma was applied to the Ghanaian electricity market. Electricity was separated between production and distribution, and private sector Independent Power Producers introduced.

The result is disaster. There are more power cuts in Ghana than ever in its entire history as an independent state. Today Ghana is actually, at this moment, producing just 900 MW of electricity – half what it could produce ten years ago. This is not the fault of the NDC or the NPP. It is the fault of the IMF.

Those private sector Independent Power Producers actually provide less than 20% of electricity generation into the grid – yet scoop up over 60% of the revenues! The electricity bills of Ghana’s people go to provide profits to fat cat foreign corporations and of course the western banks who finance them.

Indeed in thirty years close experience the net result of all IMF activity in Africa is to channel economic resources to westerners – and not to ordinary western people, but to the wealthiest corporations and especially to western bankers.

Not content with the devastation they have already caused, the IMF and the USA are now insisting on the privatisation of ECG, the state utility body which provides electricity to the consumer and bills them. The rationale is that a privatised ECG will be more efficient and ruthless in collecting revenue from the poor and from hospitals, clinics, schools and other state institutions.

Doubtless it will be. It will of course be more efficient in channelling still more profits to very rich businessmen and bankers. I suspect that is the real point. That privatised utilities bring better service and cheaper prices to the consumer has been conclusively and forever disproven in the UK. What it does bring is huge profits to the rich and misery to the poor. To unleash this on Ghana is acutely morally reprehensible.

Ghana has a political culture in which the two main parties, NDC and NPP, heatedly blame each other for their country’s problems. But if they only can see it, in truth the electricity sector has been ruined by their common enemy – the IMF and World Bank. I pray that one day the country will escape the grip of these bloodsucking institutions.

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Election Day in Ghana

Today is election day in Ghana, both for President and Parliament. My phone has been hot all day with calls from around that country, and it seems strange to be following from a snowy Ramsgate.

I am in the curious position of being a good personal friend of both the main Presidential candidates, Nana Akuffo Addo and John Mahama. As you can see from the photograph above, they are fairly good friends themselves. I was actually there in Kyebi when that photo was taken a year ago. John was there for the Odwiratuo festival as Vice President, Nana was present as a member of the Akyim royal family, and I was there as a guest of the Okyenhene. In yet another example of the appalling slip in BBC standards, they today report wrongly that Nana is an Ashanti!

Both John and Nana are two of the nicest, best motivated and most “normal” people ever to be involved in high politics. They are both particularly kind individuals. It says something about Ghana that two such pleasant men are contesting for President. By contrast, politics in western countries seems to necessitate a degree of sociopathic ruthlessness that is entirely absent from both men.

I find myself thinking less about who will win, than being concerned for whichever of my friends loses. Ghana’s genuinely democratic elections have all come down right to the wire, and last time there was a tiny majority for the NDC – Nana lost by only about 20,000 votes across the entire country, after being just ahead but below 50% in the first round.

Nana is not getting younger and whether he will get another chance if he does not win this time remains to be seen – though the late President Mills won the last Presidential election after two successive defeats. John Mahama’s position in the NDC is also not automatically secure should he lose, having been promoted from Vice President to President on the demise of President Mills, but having had only a few months to consolidate the affections not just of the Ghanaian people but of his own party.

Whichever of my friends loses cannot therefore be certain of getting another chance in 2012, though I very much hope they will.

I was absolutely appalled by the standards of the Ghanaian media in the last election. There was no debate on policy, but merely unceasing stories about the candidates’ private lives and health. Thankfully this year has been a bit better, with Nana’s promise of free senior high school education breaking new ground in introducing real policy discussion into the election. John’s commendable agreement to participate in the televised debates was also a breakthrough, and the inclusion of the “minor” candidates with full rights in those debates shamed western “democracies”.

One unfortunate feature of modern western democracies has however been reflected in recent Ghanaian politics. The theoretical right/left split between the NPP and NDC appears not to reflect much in real policy difference. I expect the NDC would have done rather better had they tried harder to regain their role as the representative of the poorer sections of society. Rent control is an urgent necessity for the urban poor as property prices boom with oil development, but nobody wants to take on the World Bank over the issue.

We can expect a swing to Mahama in his native north, with probably the NDC holding on to some of 2008’s gains in the West. But the Presidential election will really be decided in the huge urban constituencies of Accra and Tema, with the Ga vote likely to be decisive. Peculiarly the Ga are virtually never mentioned by political commentators.

From 2000 to 2008 Ghana enjoyed a golden period of economic growth under John Kuffour, which propelled them to the front of the first rank of African economies. However pre-election fiscal looseness by the NPP in 2007-2008 coincided with the global economic crash. The NDC inherited a large deficit and debt problem. Kwabena Duffour, the Finance Minister, has done an extremely good job of keeping economic growth going while repairing the budget deficit. Kwabena is worth six of George Osborne any day.

But the deficit remedy medicine did require a reining back of government infrastructure spending, and this will hurt the NDC; Ghanaian voters do like to see something tangible for their money. There was a real sense in which 2008 was a good election to lose, as the winner was constrained from doing popular things.

By contrast, 2012 is a great election to win; as the booming of the economy accelerates towards double figure growth and oil revenue starts to flow through properly. Whoever wins this election will have the opportunity to undertake projects that will make a real mark in Ghanaian development, and ought to be well placed to win a second term.

Ghana will be in extremely good hands in 2013-17 whatever the outcome. I cannot feel either John or Nana deserves to lose, and my thoughts will be with the loser, much as I shall congratulate the winner. Remember, politicans are people, too. If you cut them, do they not bleed?

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Lessons From Ghana

I am off back to work in Ghana for a few weeks next month.

Anyone who believes the crime in England was related to poverty or to race should visit Ghana, where crime is at a low level and society is extremely helpful and supportive. People are much poorer than in the UK yet are not ignorant of the possibilities of western levels of consumption, but they would not dream of seizing them by force, and those few who do have no pro-criminal social milieu in which to shelter.

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The Cancer of Corruption: What $150million Gets You In Ghana.

zakem%20site.jpg

This is the Zakhem power station site at Kpone. The particularly distincitive feature is the lack of any power station.

I am grateful to CitiFM in Accra. Having been misled into publishing photos of a completely different power station, they have had the grace to apologise and publish a corrected story.

http://www.citifmonline.com/site/news/news/view/3556/1

Unfortunately their original photos of a completely different site, nothing to do with Zakhem, were seized on and re-used by almost the entire Ghanaian media as evidence that I was talking nonsense.

My favourite recent news headline was “Craig Murray is Not In His Right State of Mind”.

http://elections.peacefmonline.com/politics/201002/38966.php

Zakhem are loudly threatening to sue me. They make the following key points:

– Zakhem Construction Ghana is a separate company from Zakhem International Construction Ltd of London

– They have received only 39.5 million dollars to date towards the turbine installation

– They have carried out a good deal of work including engineering design, land clearance, construction of perimeter wall, and 40% of the procurement of balance of plant

– Work was delayed by a change of site

My information on some of these points differs. But none of that alters the fundamentals. The Government of Ghana bought the turbines direct from Alsthom. Zakhem were to install them and provide the balance of plant. They have been paid tens of millions of dollars upfront, starting over three years ago, but have never even started digging the foundations, nor supplied the key components they were paid to procure, including transformers and fuel tanks.

Ordinary people, some of them struggling below the poverty line, pay taxes in Ghana, particularly through VAT. Over a hundred million dollars of their tax has already gone forever into the power station pictured above. There is no sign of them getting any benefit for their money. Meanwhile Zakhem and former government functionary Paul Afoko have pocketed millions.

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Ghana Corruption

The debate in Ghana over my article on corruption has become very fierce. Zakhem International are threatening legal action. The Minister of Energy and Moses Asaga have said things which are broadly supportive of me.

http://news.myjoyonline.com/business/201002/42231.asp

http://blogs.myjoyonline.com/sms/2010/02/17/energy-minister-speaks-on-murrays-claims-of-uk-corruption-in-ghana/

I outlined today that I had been raising the Zakhem contract with both NPP and NDC governments at the highest levels. I was so concerned at serial payments being made to Zakhem with no work undertaken that I took Kwadwo Mpiani, then Chief of Staff to the President, to the site. He indicated to me that he was very disappointed with progress and that he had been told the foundations were finished, when in fact they were not started.

Kwadwo’s brother Sarpong came on air in a radio interview today and said that Kwadwo did not say that. I am sure that he did (and there were other witnesses), but I don’t quite understand Sarpong’s point. It was plain from this and other conversations with Kwadwo that Kwadwo was not involved in any corruption. Equally I found John Kuffour not well informed on the issue but disappointed with the lack of progress.

I then raised it with the new government, with Vice President John Mahama, and with Energy Minister Joe Oteng Adjei. They initiated an investigation which I believe is ongoing.

Zakhem have put out a statement in which they claim they had received only $39 million. That is contrary to my information, which I believe to be well sourced. They also give a breakdown of how $39 million was spent. If I find it, I will post a link.

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The UK and Corruption in Ghana

THE BRITISH GOVERNMENT ARE THE BIGGEST HYPOCRITES

British High Commissioner Nick Westcott is not afraid to step in to controversy. Having boldly told us that Vodafone did nothing wrong in their acquisition of Ghana Telecom, he now lectures Ghana that incoming governments must respect contracts entered into by the outgoing government.

Of course, that is true. As a general point, it is a simple statement of the legal position.

But we all know that Dr Westcott did not mean it as a general point. He meant that investigations into contracts including Kosmos and Vodafone must be stopped. Otherwise, he warned, investor confidence would be damaged ?” a warning that foreigners would take their dollars elsewhere.

But what is the logic of this position? No government may question any contract entered into by a predecessor, no matter how corruptly? That if you are a dreadfully corrupt foreign businessman, who has bribed a minister, you only have to hang on until the government changes, and then you cannot be investigated? Plainly this is a nonsense.

The fact is that, as detailed in a series of articles in the Financial Times of London, there are a whole number of questions about the Kosmos deal which give experienced observers great cause for concern.

One which particularly worries me is how, on the best oilfield in Ghana, Kosmos were able to get a royalty rate of only 5%, when the average on other fields is over 11%. There are suggestions that partners from EO were active on the Ghanaian government side of the negotiation.

There are also credible stories of Kosmos handing EO millions of dollars in cash notes for “marketing and publicity”.

Is Ghana forbidden from investigation because the government has changed? No, and they must not be bullied out of it by the British, Americans, IMF or World Bank. Those will always back wealthy Western companies against a developing African nation.

The Vodafone deal suffered ?” at the very least ?” from a lack of transparency and a lack of a level playing field for others ?” including France Telecom ?” who wished to compete. The final sales price was definitely too cheap.

I would like to know how Ghana Airways’ invaluable routes were awarded to GIA – a bunch of obscure and inexperienced investors who came only fourth in the official assessment of bids. The result has been the almost total disappearance of Ghana’s whole aviation industry.

I would like to know how industrial development funds were given to a network of companies the ultimate ownership of which traced back to the Minister of

Industry.

The British High Commissioner has the problem entirely backwards. It is not that the government is not honouring existing contracts. I am Chairman of several companies, including Atholl Energy. Atholl had a contract with the NPP government which has been honoured by the NDC government, because we carry our our work diligently and honestly.

The problem is that where contracts are not honest, action has not been fast enough or decisive enough to root out corruption.

Two of the worst examples are in the energy sector. Let us look at the case of another British company, Zakhem International Ltd. They are building the Kpone Power Project for VRA.

VRA bought the turbines from the manufacturer, Alsthom for US $70 million. They then paid Zakhem US $80 million upfront to install them and provide the ancillary equipment.

After three years, what do Ghanaian taxpayers have to show for their US $150 million? Absolutely nothing. An empty field at Kpone, surrounded by Ghana’s longest concrete wall so the Ghanaian public cannot see that their money has been stolen.

What is happening about it? Nothing, because Zakhem and their Ghanaian partners have stolen enough money to bribe all the officials involved. They are now claiming around town that the new government is also “In their pocket”.

Most of the $80 million has vanished forever, while the $70 million turbines are now badly damaged by disuse.

Or look at Balkan Energy. They claimed to have spent US $100 million on refurbishing the Osagyefo barge, at a time when they had really spent less than US10 million.

Under an astonishingly corrupt contract, Balkan are to lease the barge for $10 million per year, from the government of Ghana, but then charge Ghana over $40 million per year for its use as a “Capacity charge”. They will in addition charge the government of Ghana for the fuel, and make a profit on that too.

It is as if I rented your car from you for 100 Ghana cedis a month, then rented it back to you for 500 Ghana cedis a month plus charging you a premium on all the petrol you use.

Balkan stand to make a total of about $1.5 billion dollars in profit from the people of Ghana from this terrible deal. It is the most corrupt contract I have ever seen. It is astonishing that a country like Ghana would enter into a contract with Balkan, whose owner, Gene E Phillips, has stood trial as a gangster in the United States.

These are not crimes without a victim. Everyone who pays any VAT or other tax in Ghana is putting money into the pockets of these disgraceful conmen. Most of the taxpayers of Ghana are very poor, and the money is being taken by people who are very rich.

That is why I am speaking out. I am not supporting any political party. I am supporting the ordinary people of Ghana.

I first spoke out about corruption in Ghana back in 1999, when I was Deputy High Commissioner there. It caused a sensation in the Ghanaian media at the time. But people do not know that I was nearly sacked by the British government as a result.

The British government did not object at all to my attacking corruption in Ghana. The reason I was nearly sacked was because I said “Sadly some British companies have been involved in this corruption”. I was carpeted by the British government and told I must never mention British companies’ corruption.

At the time I was thinking of the British company International Generics Ltd and their involvement in scams over the La Palm and Coco Palm hotels.

The hypocrisy of the British government in defending corrupt British companies was most famously seen when Tony Blair ordered an end to a prosecution of the arms company BAE over massive bribes they had paid in Saudi Arabia. Blair declared that prosecuting BAE was not “In the national interest”.

Last week BAE again escaped criminal prosecution and were allowed to pay a fine instead, for corruption in Africa including Tanzania.

So Nick Westcott is only continuing a British hypocritical tradition of condemning corruption, unless it is British corruption.

The truth is that sadly there was a major increase in corruption in Ghana especially in 2007 and 2008. That was a major reason why the Ghanaian people voted to change their government. But so far there is little indication that the new government has done much to root out the corruption.

The danger in this is that ordinary people will become disillusioned with the political process.

Ghanaians are not stupid. People know who stole money, and they see them swanning around town in their fancy cars, unashamedly living the highlife. This can corrupt society. Young people can easily draw the conclusion that the way to make money is to be a corrupt politician or a drugs dealer.

The further danger is that, just like in Nigeria, they conclude that all the politicians of all the parties are into the corruption, and that is why everyone gets away with it.

I did not used to think that was true in Ghana, but I really am beginning to wonder, unless we see some effective action soon.

So rather than protecting the corrupt, the British High Commissioner should be offering help and assistance actively to attack corruption. That includes corruption by British companies.

He should also remember that, with oil revenues within touching distance, Ghana will soon have her own investment funds and no longer be so dependent on foreign investors. It is not for the colonial master to kick Ghana. The boot will soon be on the other foot.

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Cadbury’s Demise a Disaster for Ghana

Cadbury’s were using Fair Trade Cocoa for generations before the phrase was invented.

Cocoa in Ghana is a smallholding crop, with individual farmers having a hectare or two of mixed crops, including cocoa. It is not a plantation crop as it is in Brazil or Ivory Coast. That is why Ghanaian cocoa is of higher quality, and commands a premium on commodity markets. Cadbury’s chocolate in the UK uses 95% Ghanaian cocoa.

The Catholic Orangemen of Togo, p184

A major reason that Ghana is the most stable and successful of Sub-Saharan African countries, is that traditional landholding patterns were not broken up by colonial usurpation. (White men ?” and their cattle ?” died like flies in the climate here. Wheat wilted).

Cocoa farming has for well over a century provided the backbone of a thriving agrarian society in Ghana. That widespread economic base has in turn enabled the continuation of traditional chieftaincy institutions and other indigenous forms of government.

Colonial population displacement is the root cause of many of Africa’s conflicts. In Kenya and Zimbabwe, conflicts we dismiss as tribal or as the result of African bad governance, in fact come down to the long term consequences of tribes displaced from their land by the British, and being forced to settle in other tribes’ territory.

If you don’t understand that, you don’t know Africa. The idea that the land was desolate before whites came, or that African forms of agriculture are unproductive, is nonsense which I tackle in The Catholic Orangemen of Togo.

Displacement to form vast cocoa estates has been part of the cause of conflict in Ivory Coast. The estates are attended with other evils ?” erosion and devastation of soil nutrients caused by monoculture, widespread use of child labour, and the conversion of independent small farmers to landless day labourers. These are but some of the ill effects.

The estates also produce low quality cocoa. It seems a truth in agriculture that over-intensive monoculture produces tasteless food. Most British people realize that Cadbury’s chocolate tastes better, but don’t know why. The answer is in the cocoa.

What Cadbury’s use in the UK is from independent Ghanaian smallholders, and is the equivalent of wines from an ancient small chateau or boutique Californian estate. They pay extra for it, and their willingness to pay extra has been a key part of keeping the Ghanaian small farmer going.

Kraft on the other hand use the mass produced estate cocoa; the equivalent of soulless and tasteless wine from multiple fields and huge stainless steel tanks. They source mostly in Brazil ?” the World’s most tasteless cocoa ?” and Ivory Coast. The bad taste in the mouth from the cocoa is both real and metaphorical. The estates in both countries make massive use of child labour.

It is a fact that Cadbury’s practices in dealing fairly with small African farmers dated back directly to the ethical precepts of their Quaker founders. I had occasion to prepare a report for the British government on the Ghanaian cocoa industry, in response to concerns about the use of child labour on Ivory Coast estates. I visited numerous Ghanaian farmers and Cadbury’s headquarters in the process, and have met Cadbury’s buyers in the field in West Africa over twenty years.

I have no doubt that in order to rack up the return on their vast investment, Kraft will switch to the cheap and nasty cocoa they normally use. This could be the worst thing to hit the Ghanaian rural economy since blackpod disease.

I sympathise entirely with those concerned about the effects in the UK of this takeover ?” just the latest manifestation of the fact that our society knows the price of everything and the value of nothing.

But try to spare a thought for the ill effects in Africa too.

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Oil Must Benefit Ordinary Ghanaians

Ghana’s discovery of major oilfields is set to transform the country. But there has been little public debate on the fundamental effects that this will have, or even on upcoming short term government decisions that will have a major impact. So I contribute a few thoughts to encourage debate with my Ghanaian friends.

So far, there has been more interest in the international media than in the Ghanaian media over the question of whether the Ghanaian government will allow Kosmos Energy to sell its stake in Ghana’s bonanza Jubilee oilfield to Exxon Mobil for over 4 billion dollars, as Kosmos and Exxon Mobil have already agreed.

But Ghanaians should be very keenly aware of what is happening. The issue raises complex questions which go to the heart of the future of Ghana, a future that will be radically influenced for good or for ill by Ghana’s new position as an emergent oil rich state.

It may help to isolate and consider the following issues involved in the case, each of which is both critically important for Ghana, and a vexed point of dispute in Ghana’s vibrant political culture.

So let us look at Kosmos in the context of:

Property rights and state interference in the economy

Benefit to Ghanaians from Ghana’s mineral resources

The struggle between China and the West for influence in Africa

Environmentalism

Corruption

Property rights and state interference in the economy

To start with property rights, it has been put to me by Western diplomats in Accra that the government interference in Kosmos’ desire to sell its shares to Exxon Mobil is a signal that the NDC has not changed its spots, and is still a statist party opposed to free enterprise. But I am not sure that is fair on the NDC. Oil and gas concessions are not simple property rights. They are governed by long complicated contracts setting out many and onerous obligations on the owner of the concession, including for example obligations to carry out agreed exploration programmes.

A senior government minister has told me that Kosmos’ contract includes a clause giving GNPC a right of first refusal should they decide to sell, and that Kosmos agreed a deal with Exxon Mobil in breach of that clause. If that is true, then it is Kosmos, not the government, who are in the wrong. I would stress that I have not myself seen the contract and this is the province of the lawyers. But there are plenty of legitimate reasons why there should be such a clause. For example, it would be most undesirable if a single company were to buy up all Ghana’s hydrocarbon assets, establish a local production monopoly, and become an overwhelming power in the state.

Equally, the state would not wish concessions to go to a company who were interested in shutting down Ghanaian production to boost the oil price from their production elsewhere, were technically incapable of production, or were funded by drugs money. I hope that those examples illustrate that there can be a legitimate role for state intervention: the question is whether such intervention should be exercised in this case.

But the right that Kosmos do have is to receive the fair market price for their share. That must be at least what Exxon Mobil have offered. The Ghanaian government do not have any right to force Kosmos to sell to another buyer for less than the 4 billion dollars. That would indeed constitute an unfair infringement in property rights. But the right the Ghana government does have is to impose tax on the transaction.

Benefit to Ghanaians from Ghana’s mineral resources

Which leads us to the question of how ordinary Ghanaians will benefit from the oil. Here, there is one remedy that requires instant governmental action: whoever Kosmos sell to, the transaction must be heavily taxed as a massive capital gain.

An investor deserves their profit. Kosmos have bought their share of the concession, and had exploration expenses. Let us estimate that Kosmos expenditure at a generous 500 million dollars. The price they agreed with Exxon Mobil is reported variously at 4 or 4.5 billion dollars. To take the lower figure, that leaves them with a capital gain of at least 3.5 billion dollars.

The taxing of that 3.5 billion dollars must be the first major benefit to Ghana from its new oil industry. Ghana must here and now set down a marker that it is not, on oil, going to be ripped off to little general benefit, as it has been by the gold industry. The necessary amendment to the oil law must be rushed through so that Kosmos’ super capital gain is taxed at a minimum of 40% – whoever they sell to.

It is well established internationally that tax rates can be varied, windfall taxes can be imposed, and that national taxation approved by the legislature cannot be deemed limited by prior contract. Kosmos would complain, but a complaint that they only pocketed 2 billion dollars, not 3.5 billion, should be given limited sympathy. The tax should have to be paid by the purchaser direct to the government of Ghana, with Kosmos paid only the net sum after tax.

An empty government Treasury has added to the problems of the.world economic depression to make life very difficult for people in the Ghanaian economy this year. That tax money – around 1.5 billion dollars – should be pumped into programmes which boost employment and economic activity. I would prioritise social housing and water, both of which need urgent attention in Ghanaian cities.

As a side issue, with gold at over $1,000 an ounce, I would strongly recommend the Ghanaian government to slap an immediate windfall tax on the gold producers.

You cannot consider the question of how ordinary Ghanaians will benefit from the oil, without looking at the terrible warning of Nigeria. The country has become a byword for corruption, fraud, thievery, drugs and violence. It may not be politically correct to say it, but we all know it is true. Because of Nigerian oil, Ghana is theoretically up to now a much poorer country than Nigeria, but in fact ordinary Ghanaians have a much better living standard than ordinary Nigerians (and yes, I have lived over three years in each country). Nigeria’s institutions have collapsed – to give just one example, Ghana’s universities thrive whereas even the great University of Ibadan is a literal wreck.

How does Ghana avoid becoming another Nigeria and escape the “Curse of oil”?

When Nigeria started pumping oil, its currency appreciated dramatically (and was kept artificially still higher). It became cheaper to import food than to grow it. Nigeria’s agriculture and rural economy collapsed. For example, in just ten years Nigeria went from being the World’s largest exporter of palm oil to being the world’s largest importer of palm oil. With the rural economy shattered, there was a massive population influx to the cities. But the oil wealth was monopolised by a small elite, and the majority found only squalor and degradation.

The first economic priority for Ghana once the oil starts flowing must be to keep the Cedi value low. Very low domestic interest rates, and the discipline to isolate a healthy amount of oil revenue in offshore development funds, will be an essential part of this strategy. At the same time, revenue must urgently be directed to rural infrastructure, to increasing farm prices and developing agro-processing industry, on a scale not previously attempted. Ghana already has a major problem keeping young people in farming. Think how much this will worsen when oil starts to flow. If the rural economy collapses, much of the weft of Ghanaian society will go with it, such as meaningful chieftaincies.

Plans to increase electricity generation and replace and extend Ghana’s aged electricity distribution network are an essential part of a policy to encourage economic activity and production throughout Ghana, not just in the oil centres. The failure of NEPA to provide a reliable nationwide electricity supply has been one of the chief causes of Nigeria’s failure to win economic development from oil.

Tax and royalties from oil production alone, nor the economic activity generated by offshore oil production and downstream industry, will generate the government revenue required to achieve all these things. For that reason, my answer to the Kosmos conundrum would be for GNPC itself to purchase the shares, at the price that would have been paid by Exxon Mobil. Hugo Chavez, while I am sceptical of his democratic credentials, has shown what a determined government can do for social equality with oil money. GNPC has offers on the table from major banks to fund the acquisition.

The struggle between China and the West for influence in Africa

China has an active policy of seeking to extend its influence in Africa, at the expense of Western influence. The Kosmos deal, and indeed the development of Ghana’s petrochemical resources, has become mixed up in this. As known to the Western embassies in Accra from their government contacts, rather than Exxon Mobil, the Ghanaian government wishes the stake to go to the Chinese National Offshore Oil Corporation.

That has made international news headlines, as a competition for an African mineral resource that pits China and the USA in head to head conflict. The US Embassy in Accra and the Obama Adminstration certainly see it that way. I suspect the Chinese Embassy do too.

Having just come back from Washington, I would assure you that the Americans are going to be very unhappy with Ghana if Exxon Mobil are blocked by the government, just in order to give it to the Chinese instead. If the Ghanaian government forces the sale to the Chinese for less than the Americans were prepared to pay, that would cause widespread outrage in the international community.

The clue is in what I just wrote: “Competition for an African mineral resource”. Those who kid themselves that either side is in this primarily for altruistic reasons, are easily deceived. Outsiders want African resources; that has been the truth of African contact with the rest of the world for centuries. That is not to say that there is no altruism in the relationship. From the West, I think of it as guilt money for slavery and colonialism. But whatever the motivation, the truth is that Ghana has over the years received hugely more free aid money from the UK and US than it ever has from China – totalling billions of dollars – and that it will do so this year too.

When asked by Ghanaian friends about .the relationship with China. I always tell them that, if offered genuinely free money, they should certainly take it. Equally, if these Chinese buses are reliable (time will tell) and cheap with good credit terms, certainly buy them. But the much vaunted billions in Chinese aid for Ghana is not readily apparent. Have you seen it? There are some football stadia – not a huge economic driver. The Bui project is a soft loan, not a gift, and the capital price is inflated.

Aspects to the Chinese way of doing things come with what aid there is. In particular the importation of low level Chinese labour, including convict labour, rather than giving jobs to local people, and some very unfortunate Chinese attitudes to employee relations and to Africans in general.

The government is working on a plan whereby the Chinese would get Kosmos’ part of the Jubilee field in exchange for building undersea gas pipelines, and the Chinese would also develop the onshore storage facilities, and perhaps refining and downstream industry too.

The problem with this plan is that that the Chinese do not want to pay 4.5 billion dollars upfront for the Kosmos concession. But if not they, who would pay Kosmos? Kosmos can certainly be taxed. Kosmos can within reason be controlled over to whom they sell. But the absolute right which Kosmos must retain is to sell their share at the market price.

The sums of money involved are mind boggling – that a share of less than a quarter in just one field is selling for over 4 billion dollars, shows how the economics of oil will dwarf the rest of the Ghanaian economy. That is why so many companies are anxious to be involved. That goes not just for the production from fields, but for all the downstream activity too. What worries me is that there appears a government determination to hand control of the bulk of Ghana’s nascent hydrocarbon related development to the Chinese, rather than deal on the basis of fair and open competition.

To say that there is a lack of transparency would be an understatement. A convoluted deal with the Chinese over Jubilee, pipelines, processing and downstream is being put together without anyone else being invited to tender. As far as I can see, it would give the Chinese Kosmos’ stake in the Jubilee field, with the Chinese paying much less than it is worth.

I may be wrong. It may well be that the Chinese proposal genuinely involves a huge aid component, or is of high quality and competitively priced. But in that case, they would only benefit from an open process.

Environmentalism

There is no such thing as an environmentally friendly hydrocarbon industry. Production is messy, and use of the end product pollutes and causes climate change. There is no point in pretending otherwise.

But Exxon Mobil’s record on controlling local pollution effects at the point of production is abysmal. Their record in Nigeria (and Alaska) is appalling from the point of view of environmental degradation, community relations, repression and major corruption. They have a reputation as the most irresponsible polluting oil corporation in the World – with the exception of the Chinese National Offshore Oil Corporation, who are even worse.

It is worth a note in praise of Tullow Oil, partners and operators in the Jubilee field. An Irish company, their commitment to Ghana and to local employment and procurement has been exemplary.

It is vital for the future that a large part of the energy generated by hydrocarbons, and the resulting revenue, is devoted to funding the industrial development of renewable energy technologies. Ghana has great potential for wind energy, solar energy and above all wave and ocean current energy. Major projects in these areas should be developed with oil revenue.

Corruption

Those Ghanaians who have been fortunate enough to acquire stakes in Ghana’s oilfields, are set to become the richest people in the land. Their families may be in a dominant position in Ghanaian society for generations. There is an understandable concern for who those Ghanaians are, and how they acquired their stakes. That seems to me a perfectly legitimate area for investigation, perhaps initially by the parliamentary energy committee.

Many government ministers are at least partly motivated in their opposition to the proposed Kosmos/Exxon Mobil deal by a belief that those close to ex-President Kuffour own a share in Kosmos, with the inference that the share was corruptly obtained. I do not know if that is true. I have not seen any evidence. If there is evidence, let it be properly investigated and acted on. If there is no evidence, forget it. But do not let us have policy in the most vital area dictated by partisan rumour.

Strangely, it is bipartisanship which is most worrying me. I pray that Ghana will never become corrupt at all levels like Nigeria, even though we know that oil brings that tendency. Yet there appears to be very little vigour in investigating and prosecuting corruption.

Both President John Kuffour and President John Atta Mills, on coming to power after defeating the previous government in election, appear to have taken the same view. As I see it, they judged that in Ghana’s new democracy, it is essential that when the government changes, it should be seen by all that vindictive action is not pursued against members of the other party. Only a very small number of middle ranking figures have suffered from anti-corruption action.

These were the actions of wise and generous hearted men. But the danger is that this forbearance can result in a toleration of corruption. A situation can even arise where the political class as a whole see the public purse as something they can loot, with the parties taking turns as they go in and out of power, and all the politicians agreeing not to pursue each other for corruption.

I am not saying that Ghana has reached that stage. I am saying that it is a danger and that you can be too tolerant. I first became known in Ghana when I warned of increasing corruption in the last years of the Rawlings administration. The same thing happened, only on an even bigger scale, in the last two years of the NPP government.

Let me put that in perspective: Ghana’s governance is still great compared to any other African country, and a huge amount of development has been achieved by generally first class government in the last decade. Corruption flourishes everywhere, including the UK. But it must be fought with more single-minded purpose than I see at present. With oil revenue coming, it is essential that the line against corruption is now drawn.

Let me conclude by saying that I offer these opinions simply as a friend of Ghana. They are entirely my personal view. Now that I am retired I can give an honest opinion without reference to the British government, IMF or World Bank ?” all of which would disagree strongly with many of my views here. Ghanaian policy is of course for Ghanaians to decide. I merely hope that I may provoke some thoughts useful to that purpose.

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Ghana – Nana Akuffo Addo Should Concede Now

In the course of this election campaign, Nana Akuffo Addo was repeatedly accused of arrogance by opponents and commentators alike. His lack of populist body language has cost him dear, but being lucky enough to know the man personally, he is a charming, considerate, witty and good humoured man who serves you in his home with his own hands – which is not true of many of his detractors.

So it is with regret that I say that it is essential for the good of Ghana that my friend now concedes defeat. With 9 million votes cast, only the tiny fraction that is 23,000 votes separates the two candidates, with one last constituency, Tain with 51,000 voters, voting today.

But Tain is an NDC constituency and has not been strong NPP in recent history. The kind of winning margin Akuffo-Addo needs there is near impossible. There have been recurrences there, now, of the thuggery and intimidation that have marred the second round in many places.

But the governing NPP’s decision to boycott today’s Tain run-off can only be construed as a decision to repudiate the entire election result. I see nothing else it can mean. Particularly when combined with yesterday’s failed attempt to obtain an injunction against the results.

We are already seeing more political violence in Accra than we have in the past decade. If the government repudiates the election result, then force becomes the only arbiter. It has been plain in Accra the last few days that the security forces will back the NDC, as they have historically. In not accepting the results, the NPP risks starting a fight it cannot win.

Look at the broad picture. This race is quite incredibly close. I have no doubt, that if you eliminated all cheating by all sides, the result would still be within just 1%. The NDC started from a base of 45% in 2008 and have, beyond any shadow of a doubt, genuinely picked up support in this election.

If you have two runners over one hundred metres, and one clocks up 9.86 seconds and the other 9.87 seconds, that does not make the loser a bad runner. But there has to be a winner, and the adjudicator’s decision must be accepted.

It would be unfair for Akuffo-Addo to lose, but it would also be unfair for Atta Mills to lose. The NDC have the genuine and consistent support of between 43% and 50% of the electorate over the long term. You cannot keep a group with that much support permanently out of office, and a system which did keep them permanently out of office would not be a true democracy.

The NDC has its liberal and democratic wing, personified by Vice President Elect John Mahama and Moses Asaga; and it has its wing that would happily jail the opposition on any pretext, personified by Tony Aidoo and Nana Konadu Rawlings. Jerry hovers between the two. Atta Mills is a good man, though how strong he is against Jerry remains to be seen.

But for the NPP not to hand over power gracefully, would strengthen the hand of the old PNDC undemocratic tendency in the NDC, and could lead to allegations of plotting and unconstitutionality.

I was heavily involved personally in 2000 when John Atta Mills, like the gentleman he is, undercut the hardliners in his own party by conceding defeat before the result was announced. It now behoves Nana Akuffo Addo to do the same.

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John Atta Mills elected President of Ghana

It appears that John Atta Mills has been elected President of Ghana. Although the result will not be declared until tomorrow, it now appears in practice impossible for Nana Akuffo Addo to close the gap.

There remain a number of concerns about the count which puzzle and worry me. In particular the swing ti Mills in the final fifteen constituencies to declare appears to be three times the average swing over the rest of the country. Constitutencies which together delivered a net majority to Nana Akuffo Addo of over 150,000 in the first round have yielded him a majority of only about 40,000 in the second round. Looking at each in turn and the swings in the surrounding constituencies, there is no readily available explanation that occurs to me. For example Bantama and Kumawu in Ashanti region, both in the final batch of results, showed substantial falls in Nana Akuffo Addo’s vote whereas all the other seats in Ashanti Region had shown a sufficient increase. Beyond doubt the last twenty constituencies to declare have been much better for Atta Mills than any rational amalysis would lead you to predict.

However I understand that the Electoral Commissioner, Kwadwo Afari-Gyan, is inclined to accept the result as genuine. He was personally out and about during voting in some of the Volta constituencies which particularly concerned me earlier.

I would trust Kwadwo Afari-Gyan with my life. I personally witnessed him, just the two of us in the early hours of the morning, refuse to budge when soldiers held his wife and children at gunpoint and threatened them unless he falsified the result of the 2000 election. If Kwadwo accepts the result, so will I, and I urge Ghanaians to do so too.

Alternation of power is a healthy feature of democracy, and Mills is a good man. But the elephant in the room is the ex-dictator, multiple murderer and half (at least) mad Jerry Rawlings. Does he still control his protege Mills? We have no choice but to wait to find out.

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Serious Concerns of Fraud in the Ghanaian Election

I am becoming very concerned about the electoral process in Ghana. With 207 results declared, John Ata Mills has a lead of 200,000 votes, but in the first round Nana Akuffo Addo had a majority of 170,000 in the constituencies yet to declare – and has been substantially increasing his lead in his strongholds in the second round, while falling back elsewhere.

I hve already mentioned the extraordinary leaps in the NDC vote since the first round in some Volta constituencies. And now we have this extraordinary result declared:

Evalue Gwira (Central Region)

Nana Akuffo Addo 10,818 (minus 36,182 on first round)

John Atta Mills 9,094 (minus 5,906 on first round).

Elsewhere we have the extraordinary appearance of 50% more NDC voters in just three weeks. Here we have the disappearance of 75% of NPP voters in the same period.

In my book The Catholic Orangemen of Togo I introduce the concept of the margin of cheating.. There is regrettably cheating in elections in every country in the World. The problem becomes acute where the amount of cheating exceeds the margin of victory. That is the suspicion which will always hang over the Bush election win in 2000. It looks like this Ghanaian election is going to be won by a figure within the margin of cheating.

Incidentally, in Blackburn where I stod against Jack Straw in the last general election, almost a third of votes were cast by postal ballot – three times the national average. The postal ballots favoured Jack Straw by a margin far higher than the “normal” ballots. I would estimate that Labout boosted its vote by cheating in Blackburn by some 20%.

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Ghana Elections Halfway Projection: Narrowest of Wins For John Atta Mills and the NDC

Having now calculated the exact swings between the parties in 115 of the 230 constituencies, and applying the average swing across those constituencies which have not declared, we now project a win for John Atta Mills and the NDC by 14,000 votes, or by 50.08 to 49.92%.

It remains a fact that our projections have been remarkably consistent; and that the methodology proved extremely accurate in predicting the results of the first round. But again it must be stated that this is so close that it could yet go either way.

I am making a projection based on sound psephological principles and a methodology used worldwide to project election results. The calculation is then purely mathematical. This is an exercise in prediction largely for fun, but it also has a use in that, if the methodology throws up any anomalies, they could represent fraud. In fact in general the consistency of results within regions in terms of swing trend tends to support the idea that these are fair and genuine elections.

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Ghana Election Projection: Too Close To Call (again)

Based on 37 constituencies for which I have full results, the current average swing between the second and first rounds is 2.9% from the NDC to the NPP. That would result in a overall majority for John Atta Mills of 28,000 votes. That is definitely well within the margin of error at this comparaively early stage.

Turnout is higher everywhere, except in Mion where a strangely low turnout resulted in a big swing to the NPP. That may bear investigation. On the other side, turnout in Anlo, where the NDC further extended its lead, reached suspiciously high levels and may also bear investigation.

But so far the patterns of voter behaviour appear consistent and explicable and the indications are that the election is broadly fair, despite both parties positioning themselves to cry foul if they lose.

The problem is that, if the result is as close as it looks at this early stage it will be, then small disputes become critically important. I pray that Ghanaians maintain their hard-won tradition of peace and democracy.

STOP PRESS

My calculator is suffering the strain and I have bits of paper covered in figures strewn all over the kitchen table, but with 53 constituency swings now worked out I am projecting a win for Atta Mills by just 8,000 votes. Again, that is so close as to be statistically meaningless.

00.39 I have now calculated the swings from 82 different full constituency results, calculated the swing in each, calculated an average swing, and projected this on to the first round results nationally.

The projection now shows a majoriy for Atta Mills of 20,000. Again still too small to be decisive, but there has been a real consistency to the projection results which reduces the margin of error. I am confident that, whoever wins, they will not obtain more than 50.2% and probably less than 50.1%.

01.31 With swings fully calculated for exactly 100 constituencies, the projection is for a majority for Atta Mills of just 5,000 votes. Again the projections are remarkably stable, but again the result is so close it could easily still go either way.

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Ghana Election Result: Narrow Win for Akuffo-Addo Projected; Second Round Probable

Our analysis of the first 76 constituencies officially declared by the Ghana election commission shows an average swing to the opposition NDC of 6.36% compared to the 2004 election. If that average swing is projected across the remaining constituencies, the Presidential election result would be:

Nana Akuffo Addo NPP 49.27%

John Atta Mills NDC 47.82%

The other parties would have 2.88% between them. No candidate having obtained an overall majority, the two leading candidates would enter a second round.

Remember this is a projection based on swing. In terms of actual votes cast, Nana Akuffo Addo currently has 50.04%. But the remaining constituencies on balance have historically very slightly favoured the NDC taken together.

To show how our projection has moved as more results have come in:

After 55 constituencies declared projection was:

Mills 48.99%

Akuffo Addo 48.3%

After 66 constitutencies declared

Mills 48.38%

Akuffo Addo 48.71%

After 76 constituencies declared

Mills 47.82%

Akuffo Addo 49.27%

The narrowness of range of movement in the projection gives us confidence in its forecasting ability, and mathematically the range of movement should now diminish barring results well out of line with what has gone before.

A word of caution. This election is different to those of 2000 and 2004, in which there were fairly uniform swings to the NPP across the country. This election has wild regional variation in the rate of swing, with the NDC doing spectacularly well in some of the coastal areas of Central and Western regions. But to win outright Mills needs an overll swing of 10.3% – a very hard task. Paradoxically it is made harder because the NDC has historically done so well in Volta Region there is no room for it to pick up many more votes there, while the NPP is suffering a swing of some 6% against it in its strongholds – well below what Mills needs to win. Meanwhile the NPP has held its own well in the North.

But the NDC is exceeding the 10% target in some parts of Greater Accra, and the large number of constituencies there yet to declare could benefit Mills. This is an extremely exciting election.

It is also being conducted in a fair and orderly manner with a lot of voter enthusiasm. Yet it is being widely ignored in the Western media, which only wants to carry bad news about Africa.

Joy FM is the vest source for Ghana election watchers. Unfortunately they have not yet given many percentages for the current elections, so we are working these and the swings out on my overworked calculator.

http://elections.myjoyonline.com/elections/2008/

STOP PRESS projection after 92 constituencies with average swing of 5.9% to NDC:

Nana Akuffo Addo 49.50

John Atta Mills 47.59

I am now prepared to go with that as a firm prediction.

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Ghanaian Justice

Two British teenagers, Yasemin Vatansever and Yatunde Diya, have been found guilty in Ghana of drug smuggling and face sentencing with a possible maximum of three years in prison. There is no reason to believe justice has not been done in this case, and I hope that we will not be swamped with hypocritical sympathy. If my position surprises you, it is a good time to refer you again to my long article on the subject here:

http://www.craigmurray.org.uk/archives/2007/07/i_am_aware_that.html

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Ghana – Democracy and Economy

In Ghana, President Kuffour has demanded, in line with his party’s constitution, the resignations of eight ministers who have declared themselves as candidates for the Presidential nomination of their party, the NPP.

John Kuffour is a good man, and he himself is standing down as President after two terms in accordance with the law, something so very few leaders in Africa do. He is right to enforce the provisions of his own party constitution, too. There is also the point that he has been annoyed for at least a year that a minority of the candidates were so engaged in preparing their Presidential campaign, that they were neglecting their ministerial duties. It is also typical of Kuffour that he did not make an exception for hiw own brother, formerly Minister of Defence. Finally, as Kuffour has battled hard (and not 100% succesfully, but more succesfully than anyone else in Africa) against corruption among his ministers, it removes the temptation of ministers to use their ministries to fund their campaigns.

But still, it is unlucky for Ghana that they should prematurely lose the services of good ministers like Nana Akuffo Addo, Jake Obetsebi Lamptey and Kwame Addo Kuffour. We wait to see whether the new team bring new impetus to Kuffour’s remaining time in office. One thing Ghana does not lack is talent

It is very difficult for me, because I count most of the presidential aspirants as personal friends, several of whom have really outstanding qualities – in mentioning the three above it would be churlish not to mention another former minister, Yaw Osafo Marfo, who has a brain the size of a planet.

Ghana is a genuine democracy and there are good people in the opposition NDC, too, particularly John Mahama. The whole Presidential process should be fascinating.

Ghana is a ready corrective to the gormless naivety of the Make Poverty History campaign. Ghana has done everything right. It is a democracy with a first class human rights record. All governments everywhere are corrupt, but Ghana’s is less so than, say , the UK (no billion pound BAE slush funds in Ghana). Because it ticks all the right governance buttons, Ghana has benefitted enormously from debt relief, and from aid flows. The money has all gone to exactly the right places – education, and bottom-up rural development.

Yet after a decade of being held up as a “Model” by the IMF, DFID and NEPAD, Ghana remains stubbornly poor. Accra is booming in terms of roads and literally miles of burgeoning middle class estates, but for ordinary Ghanaians, rising rents, transport and food costs squeeze out any improvement in their standard of living. Even when you do everything right, trickledown just isn’t happening. Why?

I fear part of the answer is, it never does. You can also point to climate change and electricity shortages because of falling water levels in the Volta Dam. I believe that part of the problem is that it was wrong for aid agencies to turn their backs on project work, and we should be building roads, bridges and power stations – fully funded by us – in addition to the increased budget support. But what Ghana shows is that the prescriptions of the development experts, which change with fashion every decade, will not in themselves bring Africa out of poverty.

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