Some Excepts
“…Ghana today is not Ghana of 2000. You have a vibrant civil
society. You have a critical mass of private sector. You have Banks.
You have entrepreneurs. You have a large share of the population engaged
much more productively than in the past, in agriculture, kids going to
school. I mean it’s a country that’s making it...”

“…Look, let me say that the NPP Government over 8 years
achieved a whole lot. The economy was for most of the period was
buoyant, and grew at 5, 6% per year, agriculture grew a lot. And its
agriculture really that’s all over the country that brings those
bolts up. The education system developed a whole lot, the primary
schools became - for free… then the NHIS was put together, the
media was very free, so much has happened in these 8 years…”

Host: So eh, how long have you been Ghana Country Director?
Ishac: Eh its coming to three years now.
Host: Three years! I see. So how have you found it?
Ishac: Wonderful! Great experience. Host: Really!
What were your expectations when you were coming to Ghana? I am sure that
was your first time. What did you know of Ghana before you came?
Ishac: Ehm, I have Ghanaian friends, many of them at the World
Bank and elsewhere. I came from, eh Ethiopia, where I spent five (5)
years before coming here. So it is a bit like moving from New York to San
Francisco, if you like. From the east to the west coast.
Host: I see. And ehm so, in terms of the three years, I am sure
you will say you have enjoyed it. But did anything about Ghana surprise
you, in terms of how we work, how you were able to acclimatize for
example. Did anything shock you about Ghana?
Ishac: Eh, shock me, NO. But It’s a land of mystery -
Ghana. I keep discovering things. It’s a place of with eh.. you
know, with very complex social relations, complex questions such as eh..
, with all this wealth of nature why isn’t it a rich country? For
somebody like me in development, It’s a big question. Social
relations are very complex. You have, at the same time, formal system
that works very well. Ghanaian democracy is seen as a big success, and
traditional authorities that co-exist. So, yeah - it’s a place of
contrast where one’ s mind is always constantly asking questions and
trying to understand. Host: So coming to Ghana as Country
Director, what is your mandate. What do your bosses tell you to come
and achieve. Ishac: My mandate, what I am asked to do is to work
with the Ghanaian authorities to reduce poverty and foster development.
Host: “Reduce poverty and foster development”.
Ishac: That’s it.
Host: What is the meaning of that?
Ishac: We add, “with professionalism and passion”
Host: Ha ha! You are even complicating matters! I mean…
Ishac: Well, these are things that can be measured. The number of
people below a certain poverty level. Its something that is measured
every two years. So it is an objective criteria of what we try to do.
Host: So you want to reduce the number of people below.. say,
less than a Dollar a day for example,..
Ishac: Exactly!
Host: ..That’s it. And then, to foster development.
Ishac: Foster development, growth in incomes - people to be
richer. To be able to have better health and be able to send their kids to
get better education. Again, these are all measureable objectives. The
Millenium Development Goals are very good summary of these objectives.
Host: So you want to reduce poverty and foster development and
one would assume that, that is what every reasonable government would want
to achieve. So there should be no problem there, if World Bank wants to
reduce poverty and enhance development in a sustainable way.
Ishac: Absolutely! There is no problem.
Host: There is no problem.
Ishac: There’s a problem.
Host: There should not be any problem.
Ishac: No.
Host: But the relationship between the World Bank and a country
like Ghana, has not always been cordial. Or, I mean your people do not
necessarily view you as being real partners per say. There is a lot of
skepticism about what you do, suspicion about your motives. Is that fair,
if I say that a lot of people feel that.. yes, you say you want to bring
down poverty, foster development but really that is not what you said to
do. Is it a fair reflection?
Ishac: I think it is not unfair to say that some people have
suspicions. And this is why communication is so important. I think the
reason this happens is that, once in a while, there are difficult moments
or scandals and the like. And we, get eh, we were brought into that
picture because we were a party, if you like, to this, and often we are
asked to come to the rescue as well. And so we show our face small during
face small during difficult moments, unfortunately. Which is why I really
value moments such as this.. where, it’s a peaceful moment and we
can talk about health and education and transport and energy and water and
waste and urban development…you know, all the things where we really
spend our times working on.
Host: So lets talk about poverty reduction for a bit. So can you
say, say… between 1999, 2000 and 2008, may be almost a decade, eh
what is your assessment of the poverty situation in Ghana. Has it come
down? You have proof….
Ishac: Yes, you know objectively, when you measure peoples’
income poverty in Ghana has gone from about 45% of the population in the
late 90’s to about 25% today. It fell by half.
Host: Mmmm mmm
Ishac: And compared to other countries in the world, it is an
amazing success story. Now let me quickly say that that’s not
necessarily the way people feel. Because when incomes start going up, and
a generation goes to school, at the same time their expectations and what
they want from and like, how they see themselves perhaps to others also
goes up. And so it may be that people don’t feel. Eh, there is the
kind of progress, that objectively on paper or a long period you see it
happening.
Host: May be it is important you have said that. Because I have
spoken to politicians and they have tried to understand why, for example
the previous Government - I mean they know that poverty came down,
between 1999’s and 2000. Like in 2008 poverty reduced from mid 40s
to mid 20s, the size of the economy quadrupled and in some cases, or
doubled. But the GDP overall, more than doubled.
Ishac: Ahh!
Host: Let me just build - there is a premise! And then, so they
had consistent growth. The growth rate of the country, the first year was
about 3.7%. At the time he was leaving the latest figure, he said, was
7.3% so the country apart from 2004 had consistent increasing growth
rate. All these things have happened yet, people, as you say, do not
believe that their lives have been improved significantly and they show
that in an election and vote the Government out and if you took a survey
of people about how they felt about the economy in Ghana, I am not sure
they would say that they were significantly better off than in the year of
the survey, than may be say, three to five years ago. So I am asking
– Dosen’t that may be, question how we conceive poverty,
growth, development ? Because may be, there is a disconnect between what
we objectively measure and what people face really?
Ishac: Yeah, you are putting your finger on complex stories.
Look, let me say that the NPP Government over 8 years achieved a whole
lot. The economy was for most of the period was buoyant, and grew at 5,
6% per year, agriculture grew a lot. And its agriculture really
that’s all over the country that brings those bolts up. The
education system developed a whole lot, the primary schools became - for
free, nearly 100% of the kids scored there, then the NHIS was put
together, the media was very free, so much has happened in these 8 years.
Now, the last year was more difficult. There was an international
crises. Commodity prices collapsed, oil prices went up the roof, it was a
very difficult year. And, especially the young urban people, I think,
were hurt in the past year or two of the administration by those
international developments. Food prices became much more expensive, with
inflation real wages went down. So the economy as a whole was hurt and
some people bore the brunt of this. And so you have this distinction,
between what you remember - what happened between last year and this year
and the longer term, where the achievements really can be measured over
10 years or an 8 year period. Ghana today, is not Ghana of 2000. You
have a vibrant civil society. You have a critical mass of private
sector. You have Banks. You have entrepreneurs. You have a large share
of the population engaged much more productively than in the past, in
agriculture, kids going to school. I mean it’s a country
that’s making it. And so you can have at the same time, a balanced
sheet that is strong and vibrant and doing well, and an Income Statement,
you know, particular year where you are losing money. You are not doing
as well, and it is hurting your Balance Sheet a little bit but still your
strengths are there. I think it is this paradox that got people confused.
Host: But people got upset that in a certain letter you had
written, I have not seen the letter, but your verdict on how the NPP
managed the economy in its last year, being 2008 was not very positive.
And that, you thought that for example, some of the spending they did was
irresponsible and is that the case, do you think that the last year of the
NPP – the commitment to management was not on?
Ishac: Yeah, eh, I still think so. Look the big progress in this
country has been political. But this is now the age of economics. The
future is about having good economics. Not just me, it is the case that
2008 was a year of splurging – spending was enormous, when the
economic situation was difficult and in retrospect, this is not something
that should be repeated in the future.
Host: What did they spend on? You said splurging.
Ishac: I mean, if you look at the deficits at the end of the day,
eh today we can tell it’s about 20% of GDP. Meaning, if you look at
the whole government budget, they spent perhaps twice as much as revenues
and the differences spent…..
Host: For that year?
Ishac: For that year. In 2008.
Host: But in analyzing that, shouldn’t we think about what
they spent on? Did they spend on recurrent expenditure or on investments,
for example. Do you know what they spent the money on?
Ishac: You know, a lot of the spending was not in the budget. It
was off-budget and it was done quickly. This is something, I think, for
institutes and researchers to look at. This is the past. What’s
really important is to draw lessons from that past. And, I am not
pin-pointing my finger to any single party. It is just that politics is
extremely competitive and it is very important in these circumstances, for
the structures to be such that they disciplined – they discipline
the party in power, and I am very happy that the society has drawn the
lessons. I think that the Freedom of Information Act is a direct –
or came directly from that episode, where during the campaign, people did
not know about exactly the economic situation is. With the Freedom of
Information Act, people will know in the future what exactly the situation
is, every two/three months in real time, and that is really important.
Host: I am still thinking and sorry if I am dwelling on that. I
am still thinking about the spending of the NPP government and the answer
you gave implies that the exigencies of politics forces or leads
governments to do unusual things in election year. So, I mean so that may
be, they have to spend more on may be emoluments, salary agitations, to
subsidize fuel to get people to like them. Okay, so if they have to do
that, that is an unfortunate consequence of what we have chosen as a
system of government. Democracy – we want to vote for every four
years. So, I am not saying that it is justifiable to splurge in an
election year. I am not saying that you have said they have done so. But
I am thinking that, if you look at the fact that this government has or
that government seem to be getting everything well, and then there was a
difficult year and an election year – I mean negative, then they
start spending and our deficits down to 20% of GDP. May be we have to
think about the competitiveness of our elections, by-elections, our
politics and the fact that it forces government to take certain action
that they do not necessarily take in ordinary year. So that in trying to
assess those governments, we should have this at the back of our minds and
in advising them, moving forward.
Ishac: Absolutely. Absolutely. I mean what I really love about
Ghana is the way in which the society learns and grows. And it has
happened during those years that - faced with enormous political
competition - that has given stability to this country, but at the same
time, has created difficulties. You know, transition of power took a long
time, as you said the incentive to spend a lot before election years.
There were various periods of government - like 4 years, - very short term
now. There are various problems that are arising and instead of saying
democracy is not good, what I see is a lot of thinking, about how to
improve democracy. How to impose rules that strengthen those weaknesses
and move away from those weaknesses and talk about constitutional reviews,
ensuring that winners don’t take all, smoother transitions, rules
about budget deficits, fiscal responsibilities, rules – freedom of
information so that the voters know always what exactly is happening. All
these are attempts to improve democracy.
Host: But what’s… I just want to find out - I know
that some countries spend a lot of money, and countries run huge deficits
all the time. So what’s wrong with Ghana having a budget deficit
which is may be more than 1/5th of the size of the economy. So
what’s wrong with it!
Ishac: No, there is nothing wrong in general about running a
deficit in a particular year, when there is a good reason and if the
spending is on things that are worth it. So eh, I mean, this is not an
ideological issue. Eh, what is less good, perhaps, is spending a lot of
money very quickly off budget, in a way that is not thoughtful
during….
Host: So that is your feeling, that the spending was off budget
and not….
Ishac: Well, it was very large and l mean, look at Greece these
days, right, and everybody is talks about Greece having huge deficits
– it is undermining the whole Euro. I mean they have a deficit of
about 9/10% of GDP. Ghana had a deficit of 20% of GDP – this is
world record. It is reckless!
Host: The effect or the cause being reckless, lets not …
Ishac: Its enormous! That’s what I was saying. It is an
issue of magnitude!
Host: Eh eh, because I am asking this… because I know that
there is a view that your institution prefers stabilization to anything -
that you prefer economies to keep things at manageable levels. I feel for
example, that in some cases you may want to spend a lot, to trigger some
kind of development – put a lot of money into infrastructure so that
you will run huge deficits for a while but the effects will start showing
after 3, 5 to 10 years. So, is it an ideological position that you
don’t like excessive spending or you feel that the circumstance in
which we found ourselves and the manner at which the spending was done
– it just was reckless!
Ishac: No, it is not an ideological issue. I mean, I agree with
you that good spending – that sometimes you can take a huge loan
from the Bank and do the investment of your life and that changes the
prospects for all your life. No, it is the fact that it was very large,
that it wasn’t planned, that it wasn’t known, and that whoever
was going to win the election would not be able to deliver on promises
made during the elections; would inherit an economy that was very
different from the one that they thought they were getting.
Host: Mmmm
Ishac: Now in terms of what is the position of the World Bank, eh,
we are really ... we are supermarkets and we are cooperatives. We are
cooperatives that’s owned by our countries. On our Boards, sits
Ghana. Whenever I take something to the Board, Ghana makes the case to
the other shareholders about why this is a good investment. So we are
cooperatives owned by countries and we are supermarkets in the sense that
the World Bank does not have particular opinions on issues. It has just
lots of specialists and depending on what we are working on with our
partner, our first and foremost partner – the government in power at
any particular moment in time, my job – a bit as a producer –
if you like, is to pull on these expertise and bring them to dialogue and
try to solve particular issues. Eh, we don’t see ourselves at all
– as in in-charge or in-control of anything. I sleep that and
relax every night.
Host: I wanted to interject on something you said, that Ghana has
representation. I mean that … how strong is the representation of
developing countries on your Board. Does Ghana have the same
voting… I mean you have the US. People feel that the US are really
influential …
Ishac: that’s a very good question.
Host: yes.. in not only selecting who the next director of the
World Bank should be but also in decision-making. So, if you said that
Ghana has a vote proportional to what? Does every country have a single
vote? I am sure there are countries that vote, who are more influential
– that is the fear that because we have countries that have more
resources have undue influence and by extension, representation of the
Board, the interest they pursue - that the World Bank pursues, is of those
countries that are more influential and not of countries like Ghana and
Ethiopia.
Ishac: Mmm two comments on what you are saying. The issue of
voice is very important. Very popular these days because its being
reopened at the World Bank. As the world changes, and moves from G8 world
to G20 world, if you like, other than the G88, the issue of voice at the
World Bank came to the table and there was a deal recently to increase the
representation of developing countries from, I think, from 40 to 48% -
closer to the majority. And, there are pressures by some larger share
holders such as China, India, Brazil – whats called the
“brics” to increase the capital and become eh more dominant .
So this is happening, I mean the world is changing. The African seats
went from 2 to 3 and we add one more. And so we …
Host: 2 to 3? 53 African countries!
Ishac: yeah but countries are… there are 24 seats altogether.
Host: But you admit that the issue of voice is important. That
Africa is under-represented.
Ishac: Absolutely, absolutely. But the broader , the broader
issue is the way in which the international economies is organized and the
rules and the governance of trade and of capital and migration of the
international organization, technological movement, now the climate change
and how is the world governed. Eh, we work within that world. So we use
the rules of that world.
Host: You don’t work to ensure that the status-quo would
remain? I mean it would sound dis-ingenious to reply but I am…..
Ishac: What I mean to say is that, we live in the current world
and we can discuss the extent the current world is helpful or not helpful
to developing countries such as Ghana.
Host: I mean, I am sure you have seen Joseph…that this is
of course, this wasn’t planned, just because you are saying….
I am sure you have seen Joseph Stizgler’ s book on the World Bank
and the IMF and how he feels. And he gives a very interesting example
that I want you to comment on, before we take a break. He said, China,
Malaysia and Poland took a different path than what was prescribed by the
IMF. Now it says, he feels that the its part of the reason why China is
doing so well today, and Malaysia felt less, the effects of the 90’s
Asia melt-down because they took an orthogonal path and he contrast that
with Russia. The Russia took the exact prescription of the World
Bank/IMF; and look at where Russia is today. So, in saying that, for
someone like me, I will say, so how do you go about advising countries and
in whose interest. How to you explain this China, Poland, Malaysia versus
Russia conundrum.
Ishac: Look, first in terms of the World Bank, Joseph Sigrist was
a Chief Economist at the World Bank and I worked for him.
Host: yeah!
Ishac: As I said before, the World Bank is a supermarkert. There
are people on the right, people on the left. All these issues you are
talking about are debated within and people have different positions.
It’s not the one of them, it was one position. Russia listened to
some advise by the Bank that came very much from the right - privatized
everything, bring foreign capital in. China, well the Bank, the World
Bank equally worked in China. China listened to what it wanted to listen
‘because it knew how it wanted to use the Bank for its own
purposes. So, eh, it isn’t black and white. China developed in a
much better way than Russia. Clearly, it’s a successful story.
Countries need to make their choices. Countries are led by their own
leaders, by their own intellectuals, their own societies – they make
their choices.
Host: Do you give them the wherewithal to make that choice in
countries that are in economic dire-strait? China can afford. It’s
a huge market – can afford to use the World Bank and ride upon it
and but a country like Ghana, Cameroun – smaller countries – I
mean as we speak, you said that the present government is broke and the
coffers are almost empty. It inherited a terrible fiscal position.
Ishac: You know, I tell basically - when I give advice to a
country, I tell them I am gonna do my best and give you my best advice
but listen to other advices and make your own choices, because
development is about self-discovery. Every problem is unique. Every
country is also unique. There is no certainty about the future. I
don’t know what is the best way to go. I can give you my own ideas,
but ah, the future is about making something out of the an uncertain world
– taking chances, going where you think it would work and the
solution cannot come from outside. What is the future of the planet, of
eh trade – nobody knows. Its all about making choices and we always
talk about country ownership and we truly believe in it. Now, on very
particular issues, and may be we can move into particulars - price, if you
like. May be we would come with some particular advice – some
things don’t work. This particular project when you look at it
carefully, the investment, the returns – its not worth it. This
other one is great, but if you change things a little bit it will get even
better. We get involved in particulars. Our job…
Host: When we come back we will deal in a few particulars –
in some of the projects you have sponsored and some of the positions you
have articulated about Ghana. So this is CITI Breakfast show, my guest is
– Ishac Diwan, Country Director for the World Bank in Ghana. We are
talking general and also specifics, and also you can send comments to
0543391333 and we’ll be happy to read your comments and he’ll
take your questions also if you write on the CITI breakfast show good
morning column and also, face book, write your comments in terms of how
you feel the World Bank has been. So we’ll be back after this
break. Stay tuned.
Host: So let me ask you to do this clarification. Most of the
times people lump the World Bank and the IMF together, describe you as the
“Brenton Woods Institution”. Ehm, how different are you from
the IMF?
Ishac: We are very different. The IMF is the Bank of last
resort. It comes at moments of crises – ehm when there is a big
whole in the budget, like in Greece today, and gives short-term money
against reforms that will plug that hole. So they come at the last moment
– they are the pipe pipers – they are always associated with
crises which is why people don’t like them.
Host: Okay. But…
Ishac: We do something very different. Eh, we invest in the
structures of development. If you look at our investments in Ghana, like
now. We have about a billion dollars of outstanding loans – eh they
are in the health sector, in education, in transport, in energy, in water,
in waste, in agriculture, small and medium enterprises – we are
invested in the productive structure and in the social services in the
economy. We are completely different.
Host: Do you work with them? Eh you are two exclusive bodies but
is there a collaboration between you?
Ishac: Yes. We work closely together. We are actually neighbors
in Washington. If you want, we focus on the budget .. on the line by
line, which is the instrument of government action. They focus very much
on the deficit and how much is financed.
Host: Ok, I see. So let’s talk about what you specifically
do in Ghana. You mentioned some broad areas. So what are you doing with
water for example?
Ishac: With water, we have several. I mean we invest … we
work with the government , with Water institutions both in the urban and
rural areas. We are either rehabilitating or building water systems in the
major towns and in eh small villages, all around the country.
Host: You’ve been doing that yourselves. I mean
your’re not doing this through the Government.
Ishac: Through the Government. All our work is through the
Government.
Host: You’re doing it through the Government.
Ishac: Yes.
Host: Do you understand why Ghana’ s urban water problem is
so serious. In Accra as we speak, there are large areas, including where
I live, where we never have water in our taps, and in sometimes the
problem becomes so serious that many parts of the capital do not have any
water at all. Do you understand our water problem?
Ishac: I am trying to understand. For the past few months I have
been going around, I visit the Weija and Kpong and various parts of Accra
to try to understand. Because we are working hard now with Ghana Water
Companies to find a comprehensive solution to the water problem in Accra.
Its going to take, may be, a billion dollars, it’s a lot of money
and several years of work. Ehm, what is the problem? Accra is growing
very fast. Its growing very fast in the peri-urban areas, faster than
infrastructure. Eh in – on the coastal area where the pipes end, it
is very hard to dig for water because it is saline so there are technical
issues. The system is very old. It was built about 30 to 50 years ago
and it has decayed, there are large technical losses, about half the water
leaks through pipes; there are illegal connections, many people
don’t pay for their water so it is hard for the water company to
make enough money to maintain the system. Its basically a system that has
aged and thats poorly maintained. So, with a city that is growing so fast
– so all in all, it requires a lot of effort.
Host: So, so you say there is need for investment and then I get
the sense there is the need to improve how it is managed, to reduce the
loses. But, how can that happen. I mean, some people may say that the
current arrangement for managing water itself is wrong, and even if you
pump that $1million or $1billion dollars into water, you still will have
leakages, you still will have inefficiencies and therefore, may be there
is a different kind of arrangement that is needed. What is your, or
organization’s view on that.
Ishac: Eh, you know it’s a difficult situation because there
are water scarcities. Some people, eh, try to have some incentives to try
to hook on to the system illegally…
Host: yeah.
Ishac: … to sell water. So, eh the system is a bit in a
hull. The question is how you snap out of it. Eh, I mean, the standard
practice is to fix the incentives, fix the leaks, the police, the systems
so that nobody steals and then increase capacity. Its very difficult to
do. Our sense is that, like now, an unusual strategy may work better for
Accra because, increasing the production, pumping more water into the
system from Kpong and Weija at the margin does not cost that much.
Perhaps what will work better – the current strategy that we are
exploring is to pump a lot of water, and then, to fix the system.
Host: Do you think that the water should be managed by a private
institution or by a public institution.
Ishac: I think that is a secondary question. What’s
important is that it should be managed well.
Host: Yeah, but we do know that….but what is the verdict on
public management of the World Bank. I mean, it might be secondary but it
is important. So if you wanna put $1 million into water, you want to be
sure that the person managing the water has expertise in managing water
and will run it efficiently and do you have a view on the best arrangement
for managing such?
Ishac: Yeah, yeah. I mean, look, Ouagadougou’s water is
perhaps one of the best in the region and its run by the public sector.
Host: Really!
Ishac: Eh, in Dakar, the company is owned privately. It runs very
well as well. So, systems vary. Right here, you have a middle solution.
It is owned by the Government but its run, managed by a private firm that
is hired for a few years to manage the system. That’s an
intermediary solution.
Host: Is it working?
Ishac: I think it is working, yeah. I think AVRL is managing
quite well. Its just managing existing assets. That’s what people
don’t know. The assets are very poor. They are not building or
maintaining the assets. That’s the job of Ghana Water, which is
publicly owned.
Host: Interesting! So that’s on water. What about the
power situation. Only this morning the... I am sure… I asked this
because you are interested in – I do not want to mention ….
Ishac: Power
Host: ….power. So, there, we are told that the
rains… that we are going to have some sort of a drought so the main
supplier of power – VRA through the Akosombo dam will have some
problems. And, I don’t know it seems Ghana had a heads start when
it comes to power. And we actually got to a point where we were supplying
power to other countries but we’ve become…we’ve
developed the habit of having power crises every year. What do you think
is wrong with our power sector?

Ishac: Yes, again it’s a paradox. ‘cos in the big
picture as you said, the sector is doing quite well. I mean, this is a
sector that was lucky to have Akosombo with excessive capacity for decades
and then when the economy caught up, there was a crises and there was not
enough electricity. The system reacted quite quickly and brought in
capacity. Now of course, it was a lucky time when there was HIPPIC and
Fiscal space and there was the Euro Bond. And so, money was brought.
Capacity was brought in, the private sector was brought in as independent
producer and although it cost a lot of money, it wasn’t done
efficiently. Like now, Ghana is one of the few countries where you can
increase capacity quite easily and the gas is coming, which could give you
even more – would give you cheap energy. So Ghana, is very well
poised to be major supplier of energy to all of West Africa. You know,
all these countries are getting connected – like Cote I’voire,
to Burkina to Benin and Togo and even to Nigeria. So the future for
electricity and energy in Ghana is, I think, extremely promising. Now, at
the same time, there has been enormous difficulties; especially about the
pricing – the tariffs. They keep being below cost. It happened
first because, you know, Akosombo produces very cheaply and you had to
move to thermal when there wasn’t enough capacity. So the
Government didn’t therefore increase the tariffs before they
delivered the quantity and in the meanwhile there were enormous losses. I
mean the consumption was so large and even at that time, even a small
subsidy adds up to enormous amount of money. That was the first round.
Second round is when the oil prices shot up. All the thermal power, which
at that time was about 50% became much costlier and yet tariffs were not
adjusted for a long time, resulting in close to a billion dollars loses.
Host: So your advice then was that … Government should…
Ishac: Wait a second. That ‘s the phase two. Now Round
Three. We are in Round Three. There was 50% evaluation of the currency.
Therefore the tariff is very low now relative to cost. And again, loses
in VRA and ECG today are about $50 million a month.
Host: Mmm
Ishac: Now, who is consuming electricity? The 60% richest people
in the country including of course and middle income but nevertheless they
are being subsidized. They are burning $50 million a month that can go
into building school and clinics and hospitals. The question to society
is this – is this a good way of using your money? Burning it!
Host: So, so in this case do you think the logical thing for
Government to do is to adjust the tariffs to recover cost? Now the public
may say, “we do not have enough money to pay that tariff that you
consider to be efficient”. So it is a difficult question you put.
But I am sure your advice would be “bite the bullet and pay
realistic to improve the system.
Ishac: No! No! No. Our advice is – if you want to subsidize
electricity, pay it from the budget. Don’t consider that companies,
like VRA and ECG, can make those loses and survive. You know, these are
solid Ghanaian companies that should become - in the top 50 firms in
Africa in the future. Don’t destroy them.
Host: So, I get the sense. I mean, now this morning we were
talking about TOR. It is the same challenge with TOR – the
under-recovery. So the model is, pay from the budget and allow the public
to buy….
Ishac: If you wanna subsidize, pay for it!
Host: You are not against subsidy but pay for something….
Ishac: I think its for social change. Not for me to say whether I
am for it or against it.
Host: Because I think a view that has been articulated
erroneously is that, you - your institution is anti-subsidy …
Ishac: No!
Host: … for developing countries and then the countries
that you represent. This is the view I am articulating from what I have
heard and I am sure you have heard it before. That, your countries
subsidize farmers – do lots of subsidies but when they come to
Africa, all they say is “no subsidies, no subsidies”.
Ishac: Look, we have the buyers for investments over
consumptions. Because we care about the growth, and development. You
know, we are the champions of growth and development. The more you
invest, the more that you put your money at work – the faster you
grow. So we have the admirers but we are extremely mindful and respectful
of social choices. We think on important issues, like how you spend your
money. Its for your society to decide. We like to clarify choices, so we
would organize a debate for example, where we would put these numbers on
the table and the people would scratch their heads and say “wow. Now
we understand the situation better” – but the choice
shouldn’t be ours.
Host: Ok. So what I would do is that, I want to move to OIL
briefly but I can… I want to say that if you want to contribute to
this program urgently, you can give us a call on 224922, 230075 and
224959. This is strictly World Bank discussion, so - I know a lot of my
callers like to box issues together. But I want to take a few comments on
the World Bank. How do you assess our relationship with the World Bank.
Do you agree with what he said that countries like China have leveraged
the relationship and it has benefited them so it does not necessarily
depend on the World Bank as it does on the country itself. How do you
think our Governments should position themselves in relating with the
World Bank? And I am sure you would want to discuss the World Bank/IMF
discussion. Ishac does not work for the IMF but hey, they are neighbors.
So may be you can take a few punches for them.
In the interim, start thinking about Oil – that is where I will
end. A lot of people have made projections about oil and they feel that,
that is what we are waiting for. Oil is what is going to change
Ghana’s fortune.
Caller (Alhaji Bawa): Good morning my dear brother. Good morning to your
resource person. We are very grateful for him coming on radio to educate
us, because you cannot be educated without radio. I want to find out from
him, how possible one can assess their reports – (World Bank
reports, annual reports). And also I want to know whether he thinks that
in exportation of oil, country to country is the best or country to
private commercialization would be the best. Thank you very much.
Caller (SS from Legon): Good morning to Bernard, our resource person and
the public. Bernard, I think the alternative to weaning ourselves from
the World Bank is by consolidating the building up of infrastructure in
the country. When we are able to do that, then the country has
appropriate legs to stand on. You see, there must be a caution here
– where by governments that we elect into power are not going to
remain in charge. In order words they are not going to be in power
forever. Obviously some governments will come and some governments will
go. So when we get those infrastructure in place, let no any other
government come later on - to destroy, to loot, to do anything that it
want to do – taking, siphoning money from the government coffers,
like NPP did. NDC always build and NPP comes to destroy. Thank you very
much.
Caller (Paapa Bissiew): Good morning Bernard. I realize that you were
shocked when Ishac said that the last year of NPP government (2008)
– they spent recklessly and that is now a world record – you
understand me. You were shocked, but then that is how things go when we
do not have the people in power – when you only the people who are
only looking for their interest when in power. Now, I just want to go
straight to the TOR something. I do that is also important. I do not
want workers agitating on behalf of a particular foreign company, like
Sahara. You understand what I am saying. TOR should just wait. As soon
as we start drilling our own oil – the crude, they will have a lot
of jobs to do. So they should just relax. Thank you very much.
Host: Thank you, you seem to be doing a lot of PR for the
ministry of Energy. Let me come to Ishac in the studio now.
Somebody wants to assess your oil, what you think about
oil importation. I am sure you can predict your answers and a few others.
And, I have some texts that some people have sent for me to read to you
too.
Ishac: Our reports, you can find on www.worldbank.org\ghana or
just google World Bank in Ghana and you will get there. You can also
visit our Knowledge Space (Library). We have part of our offices open to
the public. All of our reports are there. It’s in Accra, next to
the ALISA Hotel at the North Ridge and the telephone number is; 021 21
214100. Also, we hold development debates, every month or two on
important national issues and its open, we invite different opinions, we
present our reports and it will be advertised more broadly in CITI FM, I
am sure in the future.
Host: Ok, absolutely! Let me take a few comments. ·
The World Bank, to me, is a strategic planning agency for the G8. They
capitalize on the ignorance of developing countries and manipulate them.
· This is from somebody called “Still Loving You” in
Legon. Somebody says the mismanagement of NPP was from 2006.
· Now Kuuku Ofofi-Attah says: Why is that immediately there is a
government in power, they shower praises. Immediately the power leaves,
its rather the opposite. If you can come clear on this one, I will be
glad.
· And Daniel says, what is the government doing about the copying
water project. We haven’t water for about a month – Daniel
from Aburi. I think you should answer Kuuku’s question: You
appear to double change – you change your tongue about the
government eh – I do not know what evidence he is using, but what
can you say – that When you were assessing the NPP government, 2007
World Bank Report was like, the government was doing very very well. And
then you say that in their last year, they spent recklessly. They think
that your comments are a bit inconsistent. Ishac: But I
don’t think that they are inconsistent. I mean that’s my
first answer. As I said, you can be doing very well in your Balance Sheet
and being doing badly in your Income Statement for a particular year. I
spoke earlier about the NPP’s eight years in government as being
extremely successful and the last year being a delicate, difficult. But
let me say more importantly, that we should not be seen as the judge. I
mean, economic development is not about good and bad. Its about specific
files and figuring out solutions. And as I said, the solutions are never
obvious. So to the extent, that we can help clarify the choices so that
social decisions can be made, I think we would be much happier than being
perceived as the judge that say that this is good and this is bad. Ah, we
would really prefer to be seen as the champion of the country abroad.
This is part of our role, to promote the countries abroad and this is
sometimes perceived as, you know, championing a government. But, it
isn’t. Its championing the country.
Host: Do you – this is my final point. How do you think
Ghana’s Jubillee Oil field – oil discoveries is going to
change the structure of our economy?
Ishac: You know, the fear with oil, is that it will end up as a
curse. Ah, the Delta syndrome if you like. And the hope, of course, is
that it would be a blessing – Its more. More is better and I think
it is a major challenge for Ghana – how to digest oil and turn it
into a blessing. It’s a new challenge! For a long time, extra
resources for investment came from Aids, from us and other development
partners. The downside of that is the dependency that people talk about.
The checks and balances come and unfortunately, to a large extent from us,
and as opposed to the Parliament and to the institutions. With oil,
that’s not going to be possible any more. That’s your oil.
And so there is a full challenge of good governance of oil. The good part
of the story is that it’s a bit of oil when the society and the
institution are pretty mature. So all in all, I am very optimistic.
Host: Mmm
Ishac: We shouldn’t think of oil as a one-year game! I
think there is much more oil. What we have now is just the first phase.
This 100 and 120,000 barrels that will start being produced in the next
few months. That’s only the first phase. The next phase will come,
at least in the next five years, because that’s how long it takes
for those investments. And so the first phase is wakening Ghana to the
various difficulties, how you add domestic contents, eh how you
………