In other lesser business publications, every day there are placed “puff pieces” describing how a state government is single-handedly solving the national problem by facilitating a foreign company investing in their state and thereby bolstering the economy, providing employment for state indigenes and filling state coffers with anticipated tax revenues.
Sadly, the much flaunted deals are usually not what they appear or, to use paramedic parlance, are “dead on arrival”.
Some have expired even before the article with inevitable grin and shake photograph have even appeared.
There are clear reasons for most of these demises which we will explore.
However, it is important to know that most of this news is driven by the apparatus of the state to prove how well they are doing.
It is this writers experience that the volume that these news pieces appear is in reverse correlation to the actual performance of the state administration.
What it usual indicates is an impending election, political strife or need to cement a powerful position.
Here are the categories of these “deals”.
The Photo opportunity Deals
This writer has had an initial meeting with a state governor concerning an investment in the state. Much to our delegations surprise the official photographer was there and whilst we were corralled in the governors office the grin and shake photo was taken.
This then appeared in the national press the following week announcing the approximate size of the planned investment as a completed deal and celebrating the governors successful approach to attracting investment.
Unfortunately, the lack of integrity of the process made the foreign investors pull out and it died a death just after the press piece.
The Governor received some much needed positive press, but the people of the state lost employment opportunities.
The “death by a thousand cuts” deals
State governments control land title, in this way they hold investors who need land by the testicles.
The investor who needs land (an international agricultural company for instance) naively approaches the state government to announce their intention of buying land to start their enterprise.
The state government having enticed this investor, or just having the opportunity land in their lap, welcomes them with open arms.
What an amazing opportunity to make personal short term cash and ensure that the poor rural folk remain in abject poverty.
It works like this:
- State government declares a “market price” for land in their state
- After a ego massaging amount of negotiation the investor agrees in principle and memoranda are signed.
- Area of land is identified by the state (dollar signs whirling in the eyes of all the members of the state apparatus).
- Locals are engaged by the state and surveys arranged
- Suitable land is agreed upon
- Further agreements signed
- Money handed over from the investor to the state to cover all fees, taxes and purchase price of the land. This is made to look like a good deal by giving huge discounts on the inflated official levy of taxes and fees required to secure the Certificate of Occupation.
- Flash bang – what a picture, what a photograph. The press release is created and published in several national and local publications, maybe even a piece in Channels News.
- Now the thousand cuts starts. Everyone takes their personal piece. Governor, surveyor general, commissioners of finance and agriculture and investment. Then the senator for the district, the local government chairman. By the time the purchase price has been chopped so many times there is little left for the villages that have given up their birth right for the hope of low wage employment
- Deal dies as villagers realise the scale of their rip off and how the enormous paid sum has been chopped so much that by the time it gets to them it is hardly enough for a bag of rice each, refuse to allow the security of personnel of the investing company to enter the land
The Joint Venture (JV)
A favourite of governors.
This allows money making immediately but also provides a pension scheme for the governor and one or two other officers of the state (a governors power in his own state can be measured by how many people he has to drag into share the chop, the fewer people, the more powerful the governor).
This method has the best chance of (medium term) success.
This species of deal is easy to spot as it is identified by its extravagant press coverage and lauding of the Governors “business acumen”. Usually covered in multiple state newspapers and Channels TV.
The Joint Investment
A tried and tested money spinner for governors, their family and anyone with a corrupt heart and a couple of brain cells.
The remnants of this lie across all states in abandoned “state of the art”, ‘ultra modern” industrial facilities.
The government secures funding for a joint investment in an industrial processing unit. After the money has been taken from the federal or state sources an initial portion of the investment is created (for instance a sub standard building).
After this is completed and a draw down of all available funds finalised (the private sector portoon of the investment having mysteriously never appeared) the project is abandoned with the partners in crime making of with usually 30% to 65% of the loaned investment funds in their trousers.
These are now harder to make work given the end higher degree of public scrutiny and reluctance to write off bad debt. So have been replaced by…..
Rehabilitation of state industrial assets
Paint factories, ceramics, textiles, agriculture.
Look at your state and you will see press examples of these rehabilitation being lauded with many back slapping pictures. Often with co-investors from India, Israel, Latin America, Asia and (inexplicably) Belgium.
These schemes are less lucrative than original investments but yield trouser cash in tricky times for scamming.
The mechanism is simple.
A foreign investor indicates interest in a state asset, the state government secures money to rehabilitate and the partners share the cash through shell companies.
Often part of the cash is secured against the industrial asset in question.
Doesn’t generate enough cash for Ghana must go bags to be stuffed in car boots, but enough to keep a commissioner in hotel rooms and prostitutes for a year or so (depending on their proclivities).
Due to its nature these are deals that someone lower down the structure focuses on and so is a favourites of investment commissioners and their honorable friends in agriculture and finance.
These have to be allowed by a Governor, even though His Excellency may not have a slice, to ensure their the commissioners and/or their God fathers do not mutiny.
These are especially necessary in the first 2 years of a governors term or if there is political turmoil in a state.
You may find Governors brothers and cousins also involved as it is an easy way to keep the loud and hungry mouths around the Governors nest silent but without giving away the juiciest worms
Genuine investments run for the benefit of the citizens
I can’t talk about these, as I have not yet seen one
Folks, it’s a murky and swampy world out there.
Just be skeptical of any and all investment announcements especially those with the photos of the largest grins.
If the photo is large enough check the clothing of those grinning for bulging pockets.
Don’t read the puff pieces in the press written by journalists who have substituted their meager salary with paid for lies.
Large international investment is another thing altogether. Still murky and filthy, but needs another article to cover…..more to come from this secret investor.