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Russian investors should seize the opportunity to invest in Ghana

Kester Kenn Klomegah

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For nearly six decades, Ghana and Russia have had an excellent diplomatic relations and still looking to build a stronger economic cooperation. In this exclusive GNA interview, Ms. Shirley Ayorkor Botwe, Minister of Foreign Affairs and Regional Integration, explains to Kester Kenn Klomegah, the Moscow Bureau Chief, a number of significant corporate projects being undertaken by Russians as well as some aspects of the current economic cooperation between the two countries.

Hon. Minister, how would you assess the current diplomatic relations between the Republic of Ghana and the Russian Federation?

Currently, Ghana and Russia have an excellent diplomatic relations, which has been developed over the years, precisely 59 years. Although, for a relationship lasting this long, one would have expected it to move past where it is now. In short, there is still room for improvement.

Specifically, what is the level of economic cooperation between the two countries? And what are your priorities in the economic and business sphere?

Ghana and Russia are presently building stronger economic ties. Through the framework of the Ghana-Russia Permanent Joint Commission for Cooperation (PJCC), the two countries have pushed forward the agenda of fostering economic cooperation, first and foremost, in their relationship. Two sessions of the Ghana-Russia PJCC have been held already following the reactivation of the PJCC in 2013, with the last one taking place in Accra in September 2016.

The PJCC brings government officials and business leaders of the two countries together to discuss and forge cooperation on a wide range of issues of mutual interest to both nations such as Peaceful Use of Nuclear Energy, Immigration, Narcotics Control, Reciprocal Promotion and Protection of Investments, Agriculture, Fisheries and Aquaculture, Mutual Legal Assistance in Criminal Matters, Trade and Industry, Geology and Mineral Resources, Education and Science, Health, Transport, Housing, Information Communication Technology, and the Military.

Russia is an Energy giant. Ghana has persistent energy problems. Do you think Russia can play a significant role in providing long-term solution and most probably support the proposed nation-wide industrialisation programme of the current government?

Certainly, Russia can play, and is being engaged to play, a significant role in the long-term generation of power in Ghana. Negotiations are progressing steadily between the Ministry of Energy of the Republic of Ghana and ROSATOM of the Russian Federation in the construction and operation of the first ever Nuclear Power Plant (NPP) in Ghana and West Africa, with Russian design power units 1000-1200 MW capacity, together with other affiliated nuclear projects. It is hoped that both sides would expedite the negotiations, come to early consensus and have the project take off in good time.

Ghana is open to all the support that it could get from its friends and development partners in the nation-building drive, particularly in the nation-wide industrialisation programme of ‘one-district-one-factory’ of the New Patriotic Party (NPP) administration. Ghana could benefit a lot from the rich experiences of Russia, which has advanced knowledge, in the area of industrialisation. In any case, getting the power generating project going will impact considerably on the programme since the role of electricity cannot be downplayed in any industrial development.

Hon. Minister, what opportunities and incentives are currently available for foreign investors especially in the medium scale (size) businesses in Ghana? What is your special message for potential Russian investors here?

Ghana has one of the most attractive investment packages for foreign investors in Africa. Opportunities abound in nearly all the sectors of the Ghanaian economy, for instance in transportation, construction, real estate, banking, health, education, manufacturing, energy, agriculture and commerce, for every kind of foreign investor and on any scale, being large, medium or small.

The investment incentives include tax holidays right from the start of operation up to five, seven and 10 years depending on the type of investment. Five years for real estate investment, seven years for waste processing investment and 10 years for free-zone enterprise or development are few of the examples. Besides these attractions, there are investment guarantees, beginning with the constitutional guarantee, investment laws that guarantee 100% transfer of profits, dividends, etc., as well as negotiations of Bilateral Investment Promotion Treaties (BITs) and Double Taxation Agreements (DTAs).

The message to Russian investors is that Ghana is the gateway to West Africa and, therefore, the right place to invest in West Africa and Africa as a whole. With solid political stability and security, together with the very attractive investment package and easy accessibility to the entire West Africa market, not to mention the legendary Ghanaian hospitality, investing in Ghana is worthwhile and extremely profitable to all foreign investors. Thus, Russian investors should seize the opportunity to invest in Ghana for it is the right time and the right place to be in Africa.

Ghana celebrated its 60th independence in March. In your opinion, what are the landmark achievements in the economy? How important are these achievements for attracting foreign business into the country?

Sixty years ago on 6th March, 1957, Ghana attained its independence from Great Britain. The country has had its share of ups and downs as expected of any growing nation or individual for that matter. The country has come a long way. A number of landmark achievements in the economy could be identified in most sectors – human resource development, telecommunication, services and infrastructure, among many others.

However, the prevailing stable political climate and security could not be overlooked. It is viewed to be the striking achievement of the nation at this point in time, out of which outstanding achievements could be attained in all the sectors of the country, be it the economy, health or education.

Finally, Ghana and Russia will also mark their 60th year of establishment of diplomatic relations in 2018. How would you like to see the diplomatic relations developed in the next few years?

As stated earlier, as much as there exists a very good relations between Ghana and Russia, greater efforts need to be employed in fostering stronger economic ties. It is hoped that as Ghana and Russia commemorate 60 years of formal diplomatic relations, the level of economic cooperation between them would catch up with the well-developed bilateral political relations in the coming years. Emphasis should also be placed on developing ‘people-to-people’ relations, whereby the peoples of both countries would have better understanding of each other. Cultural cooperation, tourism, dissemination of information of each other’s customs and practices should be emphasised in bringing the people together for their mutual benefit.

Kester Kenn Klomegah is an independent researcher and writer on African affairs in the EurAsian region and former Soviet republics. He wrote previously for African Press Agency, African Executive and Inter Press Service. Earlier, he had worked for The Moscow Times, a reputable English newspaper. Klomegah taught part-time at the Moscow Institute of Modern Journalism. He studied international journalism and mass communication, and later spent a year at the Moscow State Institute of International Relations. He co-authored a book “AIDS/HIV and Men: Taking Risk or Taking Responsibility” published by the London-based Panos Institute. In 2004 and again in 2009, he won the Golden Word Prize for a series of analytical articles on Russia's economic cooperation with African countries.

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Unprecedented humanitarian crisis in Mali revealed in new report

MD Staff

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Escalating violence and insecurity in Mali have sparked an unprecedented humanitarian crisis, rendering 3.9 million people in need of assistance and protection – an increase of 700,000 since the beginning of the year, the UN said on Thursday.

Citing a recent report from the NGO Refugees International, Deputy Spokesperson Farhan Haq told correspondents in New York that the number of internally displaced people has also jumped from around 80,000 to nearly 200,000 in one year with more than half being children and women.

The data shows that 650,000 people face food insecurity, compared to 185,000 at the same time last year and that number is projected to nearly double to 1.2 million by June 2020.

These figures are the highest recorded level over the last five years, said Mr. Haq.

The report notes that eight years after the onset of the political crisis that has destabilized Mali, “the international community remains heavily focused on stabilization and counterterrorism, at times to the detriment of the worsening humanitarian situation.”

While insurgent violence in the north rages on, anti-Government elements have spread south into central Mali, where they have inflamed intercommunal tensions.

Some 70 per cent of the people affected live in the conflict regions of Mopti, Timbuktu and Gao.

Throughout the year, UN and humanitarian partners have assisted about 900,000 people with food assistance and in 2020, the Humanitarian Response Plan seeks $365.6 million to assist nearly three million in urgent need.

Needs, grievance must be addressed

Mali has been the scene of perpetual conflict and displacement for nearly eight years, when in January 2012, tensions in the marginalized north came to a head as rebels took over almost one-third of the country. A peace agreement signed in 2015 between the complex web of warring parties, has failed to take hold.

While the UN Multidimensional Integrated Stabilization Mission in Mali (MINUSMA) has restored some semblance of peace and government control there, the country’s northern and central regions remain trapped in cycles of violence.

The report maintains that there is no purely military solution to the country’s crisis.

Although international humanitarian aid must be strengthened, Mali’s citizens also require a government willing and able to meet the needs of its people and address grievances at the root of the conflict while implementing the terms of the peace agreement in a timely and transparent fashion.

“The real war will be won by whoever wins over the population. And for now, the state is perceived to not even be trying”, one UN representative said in the report.

At least 71 dead in Niger

Against a backdrop of rising extremist violence, lawlessness and extreme weather linked to climate change across the whole Sahel region, neighbouring Niger suffered a major blow after at least 71 Government troops died during an attack on a military base, claimed by the ISIL terrorist group.

Mohamed Ibn Chambas, Head of the UN Office for West Africa and the Sahel (UNOWAS) condemned Tuesday’s attack on the camp located in Inates, Niger, close to the border with Mali. A further 12 soldiers were also injured during the assault involving “several hundred” militants, according to news reports.

The Special Representative extended his heartfelt condolences to the families of the victims and to the Government and people of Niger, wishing a prompt recovery to the wounded.

He also called for the perpetrators of this crime to be swiftly brought to justice.

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U.S. Policy on Zimbabwe Leaves Door Open for China

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The clearest image yet of the failure of United States’ policy towards Zimbabwe was on display last week when President Emmerson Mnangagwa toured the site of his country’s new parliament building, funded by the Chinese government and being built by a Chinese contractor.

Scheduled for completion by March 2021, this $140 million building at Mount Hampdennear Harare will stand six stories tall as the largest building in Africa funded by China. It will soon be the seat of Zimbabwe’s democracy as the country ends its decades of isolation. But rather than western democracies coming forward to support Zimbabwe in this transition, it is China which has filled the gap.

“We cannot tire in repeating our sincere and deep gratitude to China for the magnificent gesture…we are grateful,” President Mnangagwa said as he toured the site.

According to the Johns Hopkins School of Advanced International Studies in Washington, China extended loans worth $2.2 billion to Zimbabwe during 2000-2017.Recent loans have been awarded for the upgrade of Harare’s airport as well as construction of the Hwange 7 and 8 power plant project.

The West, on the other hand, has stuck to sanctions as its foreign policy tool. These were first imposed on Zimbabwe in the early 2000s by the U.S. and European Union in response to the alleged crackdown on political opponents by former president Robert Mugabe. This included financial and travel restrictions against specific individuals and companies.

Many of these measures are still in place today despite Mugabe’s resignation in 2017 and Mnangagwa’s election last year. The EU, however, has begun to normalise its relations with Zimbabwe, with only a few sanctions remaining.  The start of political talks in June was perceived as a positive sign towards abandoning all EU sanctions in the near future.

An EU memo ahead of talks in Harare last week, noted that Zimbabwe has made progress by not enforcing its empowerment law, which would have required all foreign investors to cede at least 51% of their shares in local operations to Zimbabweans.

The memo also said the government’s interim compensation of white farmers whose land was seized under Mugabe was a positive gesture towards re-opening export markets in the EU. In a budget statement last week, Finance Minister Mthuli Ncube set aside $24 million to compensate white farmers, 768 of whom had consented to the interim compensation scheme.

The U.S., meanwhile, has maintained wide-ranging sanctions, at least until March 2020. Officials in Washington claim this is due to Zimbabwe’s failure to change laws curbing protests and media freedoms – a strange assessment since Mnangagwa’s government is currently modernising 30 Mugabe-era laws to meet Western standards. A controversial emergency law has already been replaced, and media laws are being replaced with new legislations currently in Parliament.

Following decades of open hostility with Zimbabwe, the West is now jeopardising the opportunity to work constructively with the Mnangagwa government. Under Mugabe, Zimbabwe had actively pursued Chinese investment under his ‘Look East’ policy. But after Mugabe resigned, Mnangagwa said restoring ties with the West and western financial institutions was one of his major priorities.

That was the moment when the U.S could have helped turn Zimbabwe around, bringing in international investment and technical knowhow. But the U.S. instead chose to extend its sanctions, leaving Zimbabwe’s economy reeling from high inflation and power shortages, exacerbated by the effects of climate change. Despite signals of keeping the door open, the Mnangagwa government is slowly but surely being forced to turn back to the arms of a willing China.

Guo Shaochun, the Chinese Ambassador to Zimbabwe, summed up the West’s short-sighted approach.“No country is perfect. No country knows Zimbabwe better than Zimbabwe. Zimbabwe doesn’t need other countries to teach it to do this or not to do that. Zimbabwe needs real partners and real help without any political conditions. Zimbabwe has the wisdom & ability to address its own issues,” Guo tweeted on November 16.

At the site of Zimbabwe’s new parliament, President Mnangagw aexpressed his frustration last week, saying Western countries had done “nothing except criticise” Zimbabwe.

“Those countries who speak against our relations with our good friends have done nothing except to impose sanctions on us,” the president pointed out.

The situation is not yet completely lost, however. If the U.S. were to reach out to Zimbabwe and acknowledge the painful reforms undertaken by Mnangagwa, it could still turn this southern African country towards the West.

The U.S. should also immediately allow Zimbabwe access to international lending agencies and provide technical expertise that is urgently needed, and, above all, eliminate sanctions when these come up for renewal in March.

Winning the hearts and minds of Zimbabweans – the most educated population in Africa – will take more than the ‘stick’ approach that has been tried so far; a ‘carrot’ will do the work much better. If the West doesn’t grab this opportunity, then it should not be surprised when China steps in to reap the benefits.

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A New Currency Offers New Hope for Zimbabwe

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For many Zimbabweans queuing up outside banks last week, it must have felt like the beginning of a new era. A decade after the Zimbabwean dollar was abandoned after falling victim to years of hyper-inflation, crisp new “Zimdollars” have once again entered circulation. However, this time around the denominations come – at least for now – in two and five dollar bills, instead of the 100 million dollar notes that were printed towards the end of the last Zimbabwean dollar.

This new generation Zimdollar is the latest salvo by the government to combat the physical cash crunch and a crucial step ahead in its currency reforms. The Reserve Bank of Zimbabwe plans to incrementally inject $1 billion into the economy over the next six months, stimulating demand and production in a measured manner while keeping money supply in check.

“We will make sure that we drip-feed the physical cash into the market in order to ensure that there is sufficient cash in the economy,” said central bank chief John Mangudya. “We believe this will also help in eliminating queues at the bank where people spend countless hours of productive time queuing for cash.”

Mangudya added that the new Zimdollar would take the place of existing electronic money, alleviating the fear that the cash injection in the middle of an economic crisis would stoke inflation. Keeping price increases and speculative behaviour in check is also one of the reasons why the Reserve Bank is initially issuing lower denomination notes and coins.

For Zimbabweans, the new cash is a welcome relief. Over the past 10 years, they had to juggle a multitude of currencies and proxies. Following the collapse of the old Zimbabwean dollar in 2009, a basket of currencies became legal tender in the country, from the US dollar to the Chinese yuan. By 2015, the foreign currency notes dried up at the banks, which started the chronic cash shortage in Zimbabwe. The central bank introduced bond notes as a surrogate currency, but black market speculation quickly eroded their value, which then triggered the creation of electronic notes.

Given Zimbabwe’s disastrous state of affairs, a popular uprising ensued against the country’s long-time strongman Robert Mugabe, leading to his resignation two years ago. He was replaced by Emmerson Mnangagwa, who then won the presidential election in July 2018. He inherited a struggling economy marked by hyperinflation, cash shortages, a budget deficit, endemic corruption and a lack of monetary sovereignty.

Promising wide-ranging reforms, Mnangagwa appointed MthuliNcube as Finance Minister, a respected economist who was a professor of Public Policy at Oxford with a PhD in Mathematical Finance from Cambridge University. Mnangagwa tasked him to stabilise and transform the Zimbabwean economy so that it could achieve upper middle-income status by 2030, in line with countries such as Russia, China, Thailand, Costa Rica, Turkey and Malaysia (in fact, Zimbabwe was upgraded by the World Bank from a low income to lower middle income country in July).

Facing large fiscal deficits due to the expansion of underground economic activity and the sanctions imposed on Zimbabwe during Mugabe’s rule – which restricted access to U.S. dollars – Ncube launched the Transitional Stabilisation Programme (TSP) a year ago with far-reaching currency and structural reforms. The move was endorsed by the International Monetary Fund (IMF), with whom Zimbabwe signed a two-year monitoring programme that could earn it debt forgiveness and future financing.

In February this year, the government introduced the so-called Real Time Gross Settlement (RTGS) dollar and abandoned its multi-currency system four months later. By now, most Zimbabweans had resorted to mobile money, which became an integral part of the country’s payment system. But it too had its challenges, as wallet holders had to pay premiums of up to 50% to price-gouging mobile money agents to access their funds in cash. This contributed to the rapid depreciation of the currency and compounded the cash shortage. This month’s issuance of the physical Zimdollar bills aims to alleviate that problem, as the availability of cash will eliminate the extortionate premiums incurred when transacting through mobile money.

The new currency likely faces an uphill battle. But the government is confident, urging Zimbabweans to embrace the freshly minted bills and coins to ensure they find traction in the market. Leaders from politics, business and civil society need to play their part as well, shedding their differences and quarrels and rally collectively behind the Zimdollar.

Its roll-out comes at a critical time for the government’s reform agenda, coinciding with the presentation of Zimbabwe’s 2020 budget, which revolved around enhancing productivity, growth, competitiveness and job creation, and the passing of the Maintenance of Peace and Order (MOPA) bill, which replaced a controversial emergency law that dated back to the Mugabe era, a key demand by the U.S. government to remove sanctions.

Implementing reforms – especially after decades of mismanagement – is a painful process and Zimbabweans are tired. But with political will tangible results are gradually being achieved. The country may be on the cusp of a better future, finally putting the years of isolation behind it. Perseverance and collaboration will help to ease the way.

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