Transcript of President John Mahama’s keynote address at an Investment Working Lunch for African Heads of State and Government at the New York Stock Exchange- September 22, 2014 Tuesday 23 September 2014 Thank you very much. Let me begin by expressing my regrets for arriving here late. Your New York traffic, which I am sure you are all familiar with, ensured that we did the last three minutes on foot. We had to walk the rest of the way to be able to get here. I am sure knowing the kind of people in this room, you have all done your research about Ghana so I am not going to bore you telling you that Ghana is on the West Coast of West Africa, and the last time I checked it was still there. In the last decade there has been a lot of excitement about Africa and there has been hope about Africa. You have phrases like Africa rising and all that. I just want to temper that and say it is not without its challenges and its problems and often one is tempted to think about an investment destination where all problems have been resolved and they lived happily ever after story. It is not exactly that. Yes, there are very good prospects for investment in Africa and as leaders in all our countries, we are doing our best to create the kind of environment that makes it enabling for investors to want to put their money in there and be able to make a rate of return. Ghana started early after independence. It was the first country to break away from colonial domination and we started with the state enterprises model. So the state was involved in almost every facet of our lives. In production of shoes, in production of matches for lighting fires, in production of plastics, building materials for houses, in the transport sector, in aviation, just name it. Every facet of our lives was based on the state enterprises model and our first President was a socialist- President Kwame Nkrumah- and he built the economy on that model. In later years we realised that we had all these state enterprises that were inefficient and government had to pay subsidies to them every year in order to keep them afloat. So from the mid-eighties when we adopted our first structural adjustment programme with the International Monetary Fund (IMF), we began to change the model and decided to go for a private sector model. We started to offload a lot of those state enterprises to the private sector. We have emphasised on creating an enabling environment for the private sector to grow and advance and we used the hackneyed phrase of the private sector being the engine of growth. So we have been creating an environment to increase foreign direct investment but also to boost domestic investments. The private sector has been growing but not as fast a rate as we would have wanted. Recently Ghana has been one of the top performers in Africa and has been seen as one of the countries that have the potential to be the next batch of emerging nations from Africa. That has not been without its challenges. Over the last five years our economy has grown significantly. In 2011 with the advent of oil and gas it was touted to be the fastest growing economy at almost 14% of GDP that year. Over the last several years our average growth rate has been above 6% and last year was 7.4%. But we have had macroeconomic challenges as a result of several factors I am not ready to recount here. But from 2012 we began to see a deficit on the fiscal of close to 12%, 11.8% of GDP and we gradually saw an increase in inflation. As at last August inflation had crept up from single digit to 15.9%. We also saw a slide in the value of the currency of almost 30%, which was significant so we have been taking corrective measures to restore macroeconomic stability. We came up with a home grown fiscal stabilisation policy, which we started to implement to increase revenues and bring expenditures back under control. One of the major problems we have had has been with the wage bill. We were implementing a new salary scheme to create equity in the public sector wage bill and it run away and created a wage spiral which increased wages from somewhere slightly above three (3) billion to almost nine (9) billion Ghana Cedis, which was a very significant increase in expenditure. But we have put in place steps to try and tame that over-expenditure. Recently we realised that we needed some more assistance to be able to get the situation under control so we made a request to the IMF to come and work with us to implement a programme. So as I was leaving Ghana we had an IMF team that was working with us to come up with a new programme. We anticipate that the preliminary talks should be over by this week, the 25th and then we will continue during the annual meetings of the World Bank and the IMF. It is my hope that by January we should start a 3-year IMF programme to try and stabilise the macroeconomic environment, but also undertake a strong programme of institutional reforms in order that we create a sustainable base for the macro to be sustainable over time. We are also looking at a strong programme, which would bring in the World Bank and the IMF and all the other developmental institutions to institute a programme that continues to guarantee investments in economic infrastructure in order that the economy can continue to grow. And also to grow the private sector in order that we are able to create more jobs. As part of the programme I want to see a strong social intervention programme that helps to cushion the poor and vulnerable in society. So this is the vision with which we are going into discussions with the IMF. We recently went to the market for our third Eurobond and I must say with some amount of success. I had feared the worst. There was anticipation of coupon rates of above 9%. We came in mercifully at 8.125%, which was quite a relief for us. A lot of that money is going to go into our capital expenditure- Investment in infrastructure- but a significant portion of it, US$250million; of it is going to go into what we call the Ghana Infrastructure Investment Fund, which is going to be a new investment vehicle for financing infrastructure in Ghana. Ghana has a huge need for investment in respect of our fledgling oil and gas sector, which has very good prospects going forward. We have several American companies out of Texas working in Ghana. Cosmos, Vanco, Hess and so many of them are active in Ghana’s hydrocarbon sector. The potential is good. We have one operational field, which is the Jubilee field, and there is a second field that is expected to come on stream in 2016, which is the TEN field that would increase the amount of oil that Ghana is able to produce. In addition we have a third prospect, which is the ENI Sankofa field, which we expect to come on stream end 2016 into 2017. So the potential of a growing oil and gas industry in Ghana is very good. We are about to commission a gas processing plant to bring in enough gas to initially power about 500 megawatts of thermal energy. That will be expanded as the new prospects in oil and gas come on stream like the TEN field and the Sankofa field which has a lot of gas. So as a result of that we are in partnership with the United States of America. I came away from the last US-Africa Summit with the most tangible results back to my people with a cheque of almost US$500million under the Millennium Challenge Compact, which is to be invested into the energy sector. We are looking to position Ghana as the energy hub of West Africa to produce enough power both to meet the increasing demand for power of our own country but become a net exporter of countries that have a deficit. Most of them who are our neighbours have a deficit in power so we are looking to increase our own power production so that we can export the excess to other countries that have a huge demand for power. The MCC investment is supposed to go into generation, transmission and distribution to improve efficiency of the whole value chain for power production. One of the things we are envisaging under the Millennium Challenge Compact is a strong private sector participation in power production in Ghana. So we have an MOU with General Electric, which we call the Ghana Thousand Project to produce a thousand megawatts of power and inject it into the Ghanaian transmission grid. There are other independent power producers who have signed power purchase agreements to set up gas-fired thermal plants to be able to produce power both to satisfy Ghana’s power demand and also for export through what we call the West African Power Pool. Ghana is a member of the power pool through which all the transmission grids of the West African countries are interconnected. So if you have excess power in one country you can transfer it to another country. We have opportunities for investment in transport. For those of you who know West Africa there are several significant ports along the West African coast washed by the Atlantic Ocean. The significant ones are the Abidjan port, Dakar Port, Tema Port, Lome Port, and the Lagos Port in Apapa. All these ports are in competition with each other to generate as much traffic as we can and so we are about to embark on a major expansion of our main port which is the Tema Port to be able to improve the volumes that come in and to improve the turnaround time of ships so that we can bring our imports in faster with less hassle and then also be able to capture more of the traffic of the land-locked countries like Burkina Faso, Mali and Niger. We are also looking to position Ghana as the aviation hub for West Africa with a strong sub-regional feed into Accra as the transit stop to put passengers on long hull aircrafts to Europe, to America, to Asia, to Latin America and the Middle East and that’s another of the visions we have. Other sectors in which there has been strong investment is telecom. Ghana has one of the widest extensions of broadband and mobile in the sub-region and anywhere I go in the country even the remotest places I am able to access my internet and do my whatsapp messaging and all that and so it’s a good environment. Agriculture is also a priority and we are looking to increase production of many staples that our people eat and other agricultural products in respect of their value chain. So we are seeing strong investments in rice production, in soya, in maize production, in poultry, in aquaculture, in tomato production, in vegetable cooking oil, and all that. So investors who are interested in that sector can take a look. Let me just end up with what most investors are concerned about and that is risks. You want to minimise your risks as much as possible. Of course Ghana is in West Africa so all the risks in respect of security, in respect of health affect our country. In West Africa the three main flashpoints are northern Mali because of the activities of the Tuareg rebels in that area. The other flashpoint is north eastern Nigeria in respect of Boko Haram and the security threat that it poses. The next risk that you may talk about is that in 2015 five of our countries in West Africa have to go to elections with different factors that could pose as risks in any election year. But I believe that we have the mechanisms to be able to handle a lot of this and we are doing that. We had a peace force into Mali to guarantee Mali’s sovereignty and since then there has been talks going on, first in Burkina Faso where a roadmap was agreed. And just a few months ago after the ECOWAS meeting, another meeting was convened in Algeria and all the protagonists to the tensions in Mali signed onto the roadmap to try and resolve that issue. So that one is going quite properly. Not so with the Boko Haram menace. Boko Haram is expanding its ability to inflict more violence in Nigeria and we need to work around and see how we can find a solution to that threat. Happily the international community has responded. US, France and UK are working together with the Nigerian government to see how they can mount a better response to the threat that Boko Haram poses in the sub-region. Like I said, in 2015 we have Guinea, we have Nigeria, we have Cote d’Ivoire, we have Burkina Faso, we have Togo all going for elections. And each of them carry their own risk. With Burkina Faso there is the issue of the term limits. The incumbent president wants to amend the constitution to allow him to run another term in office and that is creating its own tensions. In Nigeria of course I spoke of Boko Haram and what is happening there. In Cote d’Ivoire, Cote d’Ivoire is fairly more stable and as long as the alliance between the PDC and President Ouatara’s party holds my expectation is that that government might win a second term and I guess that that will be a good thing for Cote d’Ivoire having come out of a conflict that was created by a disputed election I think that some stability in Cote d’Ivoire will be helpful to the whole sub-region. Guinea has elections too and there has been quite some tensions there. My hope is that we will be able to manage those tensions in order that they have a good election and they are able to continue on the road to peace. Togo is our neighbour and we should take an interest in what happens there and I am sure that with the mechanisms we have in ECOWAS we will be able to ensure that all these elections go peacefully and we do not have any untoward situation. I guess the most topical threat is Ebola and I visited three Ebola countries recently as a visit of solidarity to try to break the ostracisation that they have been subjected to as a result of the disease. This is the first time there has been an outbreak of Ebola in West Africa and it actually caught everybody by surprise. Our people do not understand the disease. They do not really know how to react to it and so the initial reaction has been one of panic, one of misunderstanding but during my recent visit I realised that people are coming to terms with it and are beginning to understand how the disease is spread and with knowledge and awareness comes power. So the people are getting empowered to be able to protect themselves. The thing about Ebola is it goes to the most important human nature or instinct that we have and that is to give care to our fellows, either your children or your wife or your brother or your sisters. Ebola attacks caregivers. So for people who care for the sick, either a relative or a health worker, its them who are most at risk of catching Ebola and dying. And it creates quite heart-rending scenes. If you see a mother sick of Ebola and a child’s natural instinct is to go to its mother but then it risks getting infected if the child goes to the mother. Keeping the mother and child separate is a tragedy that is very difficult to accept. That is why we need to all respond and ensure that we get this back under control. The peculiar thing about Ebola in West Africa is that it has happened in East and Central Africa and it has always been very quickly contained. There have been several outbreaks in East and Central Africa that have been quickly contained and so the whole world started watching, thinking that I am sure this thing will be contained in a relatively short period. So the initial international response was very slow in coming. And I had thought that with an Ebola outbreak in West Africa it was going to be worse than in East and Central Africa because that is a more mobile region. People move more freely across borders in West Africa than they do in some of the remote communities in the jungles of East and Central Africa. And we all have a 90-day visa-free visit to each other’s country. You do not need a visa to go to another West African country. You will find a West African in Lagos today, tomorrow you will find him in Dakar, the next day he is in Ouagadougou. So when this outbreak occurred it should have struck all of us that the way people move in West Africa it was likely that the disease was going to spiral across borders. But the initial panic reaction of closing borders and stopping airline flights has made the situation more difficult. When I went to the three countries, the situation was quite dire. The airports were eerily quiet; no planes on the tarmac and the airport workers were either resting under trees or lying on top of those their tag machines with nothing to do. And what it does is to prevent personnel and logistics from being able to come into those countries. So as Chairman of ECOWAS I immediately offered to use Accra as a station post to create an air corridor into the countries and I had a discussion with the Secretary General and he accepted. On the basis of that we have this new UN mission that is going to take place and Ghana is willing to offer every assistance to the United Nations to be able to make this mission a success. My anticipation is that if all of us put our shoulders to it within a six to nine months period we should be able to turn this outbreak around and send it back to where it came from. With those words I guess I will end here and thank you very much for listening. Thank you.
Posted on: Tue, 23 Sep 2014 11:02:35 +0000