GHANA ECONOMIC HIGHLIGHTS -- JUNE/JULY 2005

UNCLAS SECTION 01 OF 02 ACCRA 001435

SIPDIS

SENSITIVE

E.O. 12958: N/A
TAGS: EAID GH PGOV TBIO EINV UNGA
SUBJECT: GHANA ECONOMIC HIGHLIGHTS -- JUNE/JULY 2005



1. (U) This report covers noteworthy economic events in Ghana
for June-July 2005. The issues covered are:

-- Jeff Sachs Reiterates Call for Higher Aid flows
-- Visit of State's Senior Advisor on Biotech
-- Kufuor Hosts Ghana Investors Advisory Council

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Jeff Sachs Reiterates Call for Higher Aid flows
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2. (SBU) Dr. Jeffrey Sachs, well-known U.S. Economist and
Special Adviser to the UN S/G, met with GoG officials and
donors in separate meetings July 8 to discuss issues related
to official development assistance (ODA). Sachs, who is
Director of the UN's Millennium Project, repeated his
frequent call for dramatically increasing ODA to help
countries like Ghana achieve the Millennium Development Goals
(MDGs). Sachs stated that a proper MDG strategy requires net
ODA of $75-100 per capita, or around $1.5-2 billion for
Ghana. Ghana's gross grants and loans top $1 billion per
year, but net of repayments are about $700 million. Sachs
stated that an additional billion dollars aid was "doable"
given G8 discussions on doubling aid to Africa.


3. (SBU) Sachs argued that priority areas should be health,
education, and physical infrastructure, and aid money should
not go to consultants. His main theme was for donors to work
on comprehensive malaria control, since Ghana is at the
epicenter of the crisis in West Africa. He criticized the
concept of social marketing for treated bednets, specifically
pointing to USAID and DfID as the main proponents of this
strategy. He urged donors to look at it from a public health
perspective and told them not to worry about sustainability.
He said the focus should be the major impact on development
of reducing malaria by 80-90%. Sachs said he was working
with the Japanese government to increase production of
long-life treated bednets, and also made a push for indoor
spraying of DDT. This has had a great effect in South
Africa, Mozambique and Swaziland, but "we still need to
explain it to environmental groups."


4. (SBU) Sachs called Ghana the best potential aid recipient
in Africa, the most likely to achieve the MDGs, and the one
with the best absorptive capacity for higher aid flows. He
highlighted Ghana's strengths -- quality governance, sound
democracy, peaceful, political and macroeconomic stability,
local talent, and the best chance for rational allocation of
resources through existing administrative structures (Ghana
Poverty Reduction Strategy and Multi Donor Budget Support
process) -- and commented that if there is any country the
international community can help move up to middle income
status, that country is Ghana.

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Visit Wrap-up of State's Senior Advisor on Biotech
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5. (SBU) State Department Senior Advisor for Agricultural
Biotechnology, Madelyn Spirnak, met June 15-17 in Accra with
GoG officials, Parliamentarians, and private sector to
discuss the state of biotech in Ghana. There is some
appreciation in Ghana for the possible benefits of biotech,
especially among private research institutions and at the
Environment Ministry, which has the lead on biotech and
biosafety issues. However, other Ministries -- particularly
Agriculture and Trade -- and Parliamentarians expressed
reservations or displayed sheer ignorance on the issue.


6. (SBU) The GoG has drafted a biosafety law, which will
create the regulatory structure and oversight body for
biotech, and the Christine Churcher, the Minister of
Environment and Science, has pledged to submit it for cabinet
review soon. However, from comments made in Madelyn
Spirnak's meetings, especially with Parliamentarians, it is
not clear that there is sufficient support to obtain
Parliamentary approval this year. (Note: although many
Parliamentarians are poorly informed on biotech and
influenced by negative press reports, a core group with
agriculture experience is supportive and believes the
products are seeping into Ghana anyway, so better to have a
strong regulatory framework in place. End Note)


7. (SBU) The Agriculture and Trade Ministries were
particularly cautious, with Deputy Ministers from both
emphasizing that there is insufficient awareness and has not
been enough debate on potential benefits and risks. Both
questioned the safety of transgenic crops, raised concerns
about Ghana becoming dependent on foreign (read U.S.) seed
companies, and worried about risking their European export
markets. Although both acknowledged the potential benefits
-- better quantity and quality, fewer pests, less soil
erosion -- they argued that major education is needed before
sending the biosafety law to Parliament, and then Ghana must
ensure the regulatory system is strict to limit
environmental, health, and food safety risks.


8. (SBU) Representatives of local research institutes were
more supportive and optimistic, particularly CSIR (Council
for Scientific and Industrial Research) and BNARI (Biotech
and Nuclear Agricultural Research Institute). CSIR's
renowned Chairman, Dr. Edward Ayensu, stressed the need for
foreign assistance to help change the mindset of Ghanaians,
and to help the GoG to "operationalize" biotech, since Ghana
does not currently have either the institutional or human
capacity to do so. Ayensu appreciated Spirnak's comments
that biotech has to be adopted to a countries' specific
circumstances, so local research capacity and involvement is
a critical element.

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Kufuor Hosts Ghana Investors Advisory Council
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9. (U) President Kufuor hosted the sixth annual Ghana
Investors Advisory Council (GIAC) meeting, June 24-25. The
GIAC is composed Ghanaian and foreign companies, government
representatives, and foreign and domestic observers (e.g.,
IMF, World Bank, UN). The President invited representatives
of diplomatic missions to attend the opening and closing
ceremonies. Modeled on South African President Mbeki's
similar advisory council, the GIAC has become the best
opportunity each year for the private sector to highlight its
concerns about Ghana's economy and the GoG's economic
management. Private sector representatives are organized in
five working groups and this year reported on progress on
reform in these areas: 1) financial sector; 2) customs/civil
service; 3) land; 4) agriculture/agri-business; and 5) labor.



10. (U) The GIAC structure has resulted in identifying key
constraints to doing business, i.e., high costs, low
competition, excessive regulation in the financial system,
customs delays and corruption, and difficulty in obtaining
clear land title, and the working groups have produced and/or
vetted important legislation, particularly for the financial
sector. However, while private sector reps are pleased with
the opportunity to raise concerns and express grievances,
this year they expressed some frustration with the slow pace
of actual implemented reforms.
YATES