A friend made sure I saw this article in the Wall Street Journal (WSJ) ... it reads well if you live in the United States and have never worked in developing countries. From my experience the expectation of multinational corporate investors belongs in medieval times rather than in the 21st century. The people of resource rich countries should be benefiting from the exploitation of resources ... not merely an oligarchy comprising the corporate community and the government elite!
Why Africa Is Poor-II ... Ghana talks nice while strong-arming foreign investors.This is a serious matter ... way more serious than the rather short article would suggest. In my view, the foreign investor community has a completely unrealistic appreciation of history, and continuing expectation that the economic rape pillage of developing countries is acceptable in the 21st century.
Ghana hasn't been a model citizen when dealing with foreign investors lately, but to hear the country tell it, more U.S. companies should be jumping in to develop its nascent oil resources. In a speech at Oxfam on Monday, Ghanaian ambassador Daniel Ohene Agyekum said the country's stability makes it fertile ground for foreign capital and dismissed problems with investors as an "irritant."
That might not be the first word that comes to mind for Texas-based Kosmos Energy. In recent months, the company's plans to sell a $4 billion stake in a Ghanaian oil field to Exxon Mobil degenerated into a spectacle of official thuggery as government ministers threatened to block the deal. In a recent letter to this newspaper, Ghana Minister for Information John Tia Akologu admonished that government meddling in the Kosmos/Exxon deal was merely evidence that Ghana "insists that all investors operate lawfully." The government still hasn't cleared the deal.
The fiasco has become an embarrassment for the Obama Administration, which singled out Ghana as an example of good governance during the President's trip to Africa last year. The State Department has lately stepped up criticism of the country, suggesting that future aid and investment will be contingent on the country's behavior, noting that the resolution of the Kosmos issue "reflects on Ghana's reputation as an investment destination."
While reviewing funding for foreign aid grants, U.S. lawmakers have also questioned the practice of giving hundreds of millions of dollars to a country in the habit of menacing U.S. businesses that invest there. Instead of a new process in Ghana, House Foreign Operations Chairman Nita Lowey noted that "we're seeing business as usual, corruption as usual, and we're not seeing the lifting up of people in the country to make this really different."
In January 2009, the Ghana National Petroleum Corporation insisted it would handle distribution of the natural gas that comes out of the oil fields, rejecting a Kosmos plan to bring the gas to shore. Now, only months away from the first oil being pumped, no pipeline has been finished and no infrastructure is in place to handle the natural gas, a failure that will force Kosmos to inject the gas back into the ground rather than using it as the next power supply for Ghana.
At the Oxfam gathering this week, Ambassador Agyekum said Ghana wants to have the issue with Exxon and Kosmos resolved "sooner rather than later" and that foreign investment is the key to Ghana's successful development. This would be more credible if the country showed it believes in property rights and the rule of law.
I wrote the following comment:
Dear ColleaguesNot sure that this comment will stay posted very long ... but we shall see!
I am an engineer, economist, accountant ... a former corporate CFO ... and someone who has done consulting with government and the official development assistance (ODA) community for a good number of years
I would observe that European colonialism ended about half a century ago ... but progress out of poverty for developing countries has not be anything like what was anticipated 50 years ago. Part of this is an imperial corporate community that has out-negotiated local authorities almost everywhere foreign direct investment (FDI) is in play. I know something about corporate return on investment ... and know something of the returns that come from modest social investment. There is very little to show at the social impact level!
I am not privy to the details of the Ghana controversy ... but it is high time that the people of developing countries get some return from the resources that are being extracted from their countries.
Clearly the local "government" and the local "people" are two very different stakeholders ... and this issue needs to be understood and handled. In general for the past several decades government has gained modestly and people not at all while the corporate community has prospered mightily.
I challenge any major corporate multinational investor to show me the social impact at the community level in any country where they have been operating in the past fifty years!