The Ghana Telecom Sale, Manifesto Uproars, and a Fascinating Link

Monday, July 28, 2008 

By Bright B. Simons & Franklin Cudjoe 

Ghana TelecomWe prefer not to comment on highly partisan issues, since they tend to be belaboured, and the prospect of adding value to the discussion therefore diminishes according to the extent of partisan passion.

But we couldn’t help wade into the GT saga and the sizeable hubbub generated by the launch of the CPP manifesto. Especially as we believe we have an original thing or two to say about these two, fascinatingly-related events. And no, by "fascinatingly related" we are not referring to the irrepressible Nii Moi Thompson’s center-stage role in both contexts.

The thing with the GT brouhaha is that the more you listen the less clear the contentions of both side appear to become. Apart from the few ideologues on both side – those who object to the sale of a "national" asset in principle and those who hold to the view that it is criminal for the state to run any enterprise – very few commentators have concise and consistent positions regarding what is actually wrong or right about the deal.

The government’s cardinal position appears to be that because GT’s competitors are multinationals, GT hasn’t got a dog’s chance in the current cutthroat terrain. One expert friendly to the deal cites global supply chain practices that make it cheaper for multinationals to procure goods and services, compared to their mono-national counterparts. A Minister of State has argued that multinationals have better access to global talent and therefore to management expertise of the most refined type.

But reasonable people can, and do, disagree about whether this is genuinely the case in observation. National champions like Petronas and Aramco often successfully match multinationals in their areas and regions of operation. In Ghana, local pharmaceutical manufacturers maintain a firm grip on their niches in the market notwithstanding multinational participation. The foregoing appear therefore to suggest that other dynamics than the mere labels of "multinational" and "mono-national" may be more determinative (those acquainted with our work will be reading in-between the lines and muttering, "free markets & rule of law" with a sardonic grin – but that’s another conversation).

Critics of the Vodafone deal nurture their own monologues. The argument that GT is a monopoly and therefore ought not to be unloaded to the private sector is clearly not all there logically. If it is indeed a monopoly, then that is the problem, not its sale. At any rate, the facts suggest that the company is neither a legal nor effective monopoly. Private operators like Tigo and MTN have begun efforts to develop their own fibre-optic lines, and Zain may well decide to expand Westel’s rump fixed line network.

The important fact is that were Vodafone to exercise any ostensible monopoly to raise prices/underserve the consumer, that action will certainly serve as a signal for the other operators – who we all accept have the capacity, being multinationals – to enter the space in a bid to diversify their revenue model and siphon off some of the supernormal profits being reaped by Vodaphone. Economics 101. And that’s even ignoring the NCA’s role as a regulator with fair-competition enforcing powers. Hence our argument that Vodafone is neither a legal nor effective monopoly.

Some analyses appear to suggest that GT has remained a nominal monopoly only because of the non-existence of a business development model, sufficiently mature, to make fixed line and bandwidth retailing sufficiently profitable. If that is the case, then that is where the problem lies, and not in some fanciful notion of what is or isn’t a "strategic national asset".

But by now, you are asking: "so what’s your point?"

Indulge us for a moment, as we bring up the other issue on our two-item menu. We promise we will in due course make our point!

A quarrel has been intensifying over "manifesto promises" ever since Dr. Paa Kwesi Nduom unveiled the next phase of the Nkrumahist blueprint for development. There is talk of "building castles in the air" and "throwing dust into the public eyes". One party swears with unwavering earnestness that its upcoming tenure, should gracious voters so oblige, will coincide with free secondary education for all qualified students in the country. Another hints that free tertiary education may be on the horizon. While a third, obviously aghast, protests loudly about the insanity of expecting promises of such nature to be ever fulfilled. "Where will the money come from" a fuming party activist on the cynical side of the divide demanded furiously to know on a local language radio station noted for promoting ideological cockfights.

In fact, there is a party, which with forbearance suffer in undeserved obscurity, that promises to provide free electricity to the "masses", should magnanimous voters spray them with precious votes come 12/08.

How will they do it? "By permanent magnets" their youthful flag-bearer recently revealed to an interviewer.

So here is our point.

Notice how in both instances – the GT sale saga and manifesto rumpus – nobody has done what should customarily be the routine: produce numbers.

One will have thought that with all the consternation flowing about over the GT sale, some critic or the other would have commissioned an independent valuation of GT assets. For let’s face it, those urging sale or preservation of the status quo on grounds of principled ideology are by far the minority. The majority of objections relate to whether "Ghana is getting a good deal". Regardless whether you agree with our distribution of views or not, will you contend our view that the only way to properly critique the deal will be to independently verify whether Vodafone is paying a fair price? After all, such an exercise will arm even those who object out of principle were it to be found that the Vodafone offering falls short of financial decency. So why hasn’t anyone done this, so far?

And if folks are so concerned about the credibility of manifestos, why haven’t we moved to the stage where all political statements of intent come with pro-forma national budgets? Without a full statement of projected national accounts, will you not agree with us that very little room exist to criticize the credibility of a rival’s or counterparty’s proposed initiatives? Free secondary education in the current dispensation of manifesto-making might as well lay claim to the same level of credibility as free electricity by permanent magnets. We appreciate the fact that some individual proposed schemes may have been costed by their respective proponents, but that is beside the point. It is possible to cost a scheme to turn Enyinam into a suburb of Accra. The feasibility, and of course desirability, of such an undertaking can only become evident upon the balancing of a pro-forma budget listing competing or parallel initiatives and prospective sources of national income.

A phobia of numbers has descended like a curtain upon Ghana, and its elites cower under it tremblingly. Any wonder that in a recent survey of national performances, our pupils came near the bottom of a Global math league?

Credit: Bright B. Simons & Franklin Cudjoe
(Libertarians affiliated with IMANI, and who believe that cost-benefit analyses are imperative in every context.)