PRESIDENT KUFUOR DELIVERS FINAL STATE OF THE NATION

UNCLAS ACCRA 000300

SIPDIS

SIPDIS

E.O. 12958: N/A
TAGS: PGOV PREL ECON GH
SUBJECT: PRESIDENT KUFUOR DELIVERS FINAL STATE OF THE NATION
ADDRESS


1. SUMMARY: ON FEBRUARY 14, 2008, PRESIDENT KUFUOR DELIVERED HIS
FINAL STATE OF THE NATION ADDRESS TO PARLIAMENT, FOCUSING ON THE
GOVERNMENT'S POSITIVE ECONOMIC ACHIEVEMENTS SINCE HE CAME TO OFFICE
IN 2001. HE SAID HIS GOVERNMENT HAD BROUGHT A PERIOD OF ACCELERATED
GROWTH, LARGELY ACHIEVED THROUGH MACRO-ECONOMIC STABILITY, WHICH HAS
SET THE STAGE FOR GHANA'S "LOOMING" INDUSTRIALIZATION. HE EMPHASIZED
MACRO-ECONOMIC GAINS COUPLED WITH VIGOROUS INFRASTRUCTURAL
DEVELOPMENT, RURAL DEVELOPMENT CENTERED ON MODERNIZED AGRICULTURE,
ENHANCED SOCIAL SERVICE DELIVERY, GOOD GOVERNANCE, AND PRIVATE
SECTOR DEVELOPMENT. HE ALSO HIGHLIGHTED GHANA'S HIGHEST-EVER
INTERNATIONAL SOCCER RANKING OF 14TH IN THE WORLD, THE RECENT
DISCOVERY OF OIL, AND THE MILLENNIUM CHALLENGE ACCOUNT COMPACT OF
$547 MILLION. IN DISCUSSING THE UPCOMING ELECTIONS, PRESIDENT KUFUOR
EMPHASIZED THE CREDIBILITY OF THE ELECTORAL COMMISSION AND THE ROLE
THE JUDICIARY PLAYS IN RESOLVING DISPUTES, MAKING AN IMPLICIT
REFERENCE TO KENYA. HE STRUCK A PARTISAN NOTE BY EXPRESSING HOPE
THAT HIS PARTY WOULD WIN AGAIN AND FAILED TO MENTION SIGNIFICANT
CHALLENGES TO HIS GOVERNMENT, INCLUDING THE GROWING THREAT FROM
NARCOTICS TRAFFICKING, ENERGY SHORTFALLS, AND CORRUPTION. THE
SPEECH PROVOKED STRONG AND NOISY REACTIONS FROM THE MINORITY AT
TIMES, AND WHILE THE PRESIDENT PROFESSED TO WANT TO ELICIT AN
"EFFUSION OF LOVE FROM BOTH SIDES," ITS TONE WAS NOT CONCILIATORY
AND WAS CONSISTENT WITH KUFUOR'S PREVIOUS PARTISAN ADDRESSES TO
PARLIAMENT. END SUMMARY.


2. MACRO-ECONOMY: PRESIDENT KUFUOR'S INDICATED THAT THE DECISION TO
"GO HIPC" (HIGHLY INDEBTED POOR COUNTRIES) HAD HELPED GHANA ACHIEVE
MACRO ECONOMIC STABILITY AND RESCUED THE NATION FROM THE HIGH RATE
OF INFLATION AND INTEREST RATES, THE INDEBTEDNESS OF TEMA OIL
REFINERY, AND WEAKNESS OF THE CEDI THAT PREVAILED IN 2001. HE
POINTED TO THE SUCCESSFUL FLOATING OF THE $750 MILLION EURO BOND IN
LONDON, ABILITY TO WITHSTAND HEAVY FUEL PRICE SHOCKS, THE SUCCESSFUL
RE-DOMINATION OF THE CEDI, AND A CURRENT GDP OF OVER 6.5% AS
INDICATORS OF THE STRENGTH OF THE MACRO-ECONOMY. [NOTE: GDP GROWTH
WAS 6.3% IN 2007. END NOTE] GIVEN THESE INDICATORS, SAID KUFUOR,
GHANA WAS ON TRACK TO MEET THE MILLENNIUM DEVELOPMENT GOAL OF
HALVING POVERTY BY 2015.


3. OIL DISCOVERY: KUFUOR HIGHLIGHTED THIS AS THE BIGGEST EVENT OF
THE YEAR. HE ESTIMATED THE FIND TO BE OVER 3 BILLION BARRELS AND
SAID IT COULD COME ON LINE WITHIN THE NEXT TWO TO THREE YEARS. THE
FOCUS, SAID KUFUOR, IS NOW ON DEVELOPING A REGULATORY FRAMEWORK THAT
WILL MAKE THE SECTOR PROFITABLE FOR THE ENTIRE SOCIETY, INDICATING
THAT IT COULD PROVIDE FUNDS REQUIRED FOR DEVELOPMENT AND LESSEN
DEPENDENCY ON DONORS. [NOTE: THIS IS GHANA'S FIRST DISCOVERY OF OIL
IN COMMERCIAL QUANTITIES. WHILE WE HAVE SEEN ESTIMATES OF 170
MILLION BARRELS PROVEN RESERVES AND UP TO 1.3 BILLION BARRELS IN
RECOVERABLE RESERVES, KUFUOR'S ESTIMATE MAY BE OF PROBABLE RESERVES.
RECOVERABLE RESERVES ARE ROUGHLY 40% OF PROBABLE RESERVES. END
NOTE].


4. EDUCATION: THE PRESIDENT EMPHASIZED EFFORTS TO REHABILITATE
SCHOOLS FROM ELEMENTARY TO TERTIARY LEVEL AND THE LAUNCHING OF NEW
PROGRAMS AIMED AT INCREASING PUPIL ENROLMENT. GHANA'S EDUCATION
REFORM PROGRAM INCLUDED THE PROVISION OF FREE COMPULSORY UNIVERSAL
BASIC EDUCATION FROM AGE FOUR TO SIXTEEN. THE GOVERNMENT ALSO
LAUNCHED A SCHOOL FEEDING PROGRAM TO COMPLEMENT FREE BASIC EDUCATION
INITIATIVE. THE PRESIDENT INDICATED THAT SPECIAL EMPHASIS WOULD BE
GIVEN TO SCIENCE, MATHEMATICS, AND INTERNET TECHNOLOGY, PARTICULARLY
AT THE SECONDARY LEVEL. THIRTY-EIGHT TEACHER TRAINING COLLEGES ARE
BEING UPGRADED WITH FIFTEEN BEING DESIGNATED TO FOCUS ON SCIENCE,
MATHEMATICS AND TECHNOLOGY. DISTANCE LEARNING, COUPLED WITH IMPROVED
CONDITIONS OF SERVICE, ARE BEING USED TO IMPROVE THE QUALITY OF
TEACHING. THE PRESIDENT LAUDED THE EMERGENCE OF PRIVATE TERTIARY
EDUCATION INSTITUTIONS THAT ARE EMERGING TO SUPPORT GOVERNMENT
EFFORTS. [NOTE: WHILE THERE HAS BEEN A SIGNIFICANT INCREASE IN PUPIL
ENROLMENT AS A RESULT OF THE VARIOUS INITIATIVES LAUNCHED, QUALITY
OF EDUCATION REMAINS A SIGNIFICANT CONCERN WITH ONLY A MODEST
PERCENTAGE OF SIXTH GRADERS READING AT GRADE LEVEL. END NOTE]


5. HEALTH: THE PRESIDENT HIGHLIGHTED EFFORTS TO REHABILITATE
REGIONAL HOSPITALS AND DISTRICT HEALTH POSTS AND TO IMPROVE THE
CONDITIONS OF SERVICE FOR HEALTH WORKERS. LITTLE DETAIL WAS PROVIDED
BEYOND A SUGGESTION THAT THE NEW FOCUS WOULD BE ON PREVENTATIVE
MEDICINE. THE NATIONAL HEALTH INSURANCE SCHEME WAS SHOWCASED AS ONE
OF THE GOVERNMENT'S MAJOR CONTRIBUTIONS TO QUALITY AND AFFORDABLE
HEALTH CARE. CURRENTLY, 48% OF THE POPULATION IS ESTIMATED TO BE
ENROLLED, AND IT IS ENVISAGED THAT THE ENTIRE POPULATION WILL BE
ENROLLED IN FIVE YEARS. HIV/AIDS PREVALENCE LEVELS DROPPED FROM 2.6%
IN 2006 TO 2.25% IN 2007 WITH VOLUNTARY COUNSELLING AND TESTING
OPERATING IN ALL 138 DISTRICTS OF THE COUNTRY COUPLED WITH 48
ANTI-RETROVIRAL SITES. [NOTE: HIV PREVALENCE HAS BEEN STABLE BETWEEN
2% AND 3% FOR PREGNANT WOMEN SINCE 1994. THIS IS AN ACHIEVEMENT, BUT
MINOR FLUCTUATIONS CITED REPRESENT ONLY SAMPLING BIAS AND NOT REAL
CHANGES. END NOTE] TO PROVIDE SAFE WATER, THE GOVERNMENT HAS ALSO
FOCUSED ON THE PROVISION OF BORE-HOLES AND HAND-DUG WELLS COUPLED
WITH MAJOR REHABILITATION WORKS ON URBAN WATER SUPPLY SYSTEMS. THIS
SHOULD LEAD TO A REDUCTION OF GUINEA WORM INFESTATIONS AND OTHER
WATER-BORNE DISEASES. [NOTE: NO MENTION WAS MADE OF GHANA'S GENERAL
STAGNANT PERFORMANCE ON MAJOR HEALTH INDICATORS INCLUDING THE INFANT
MORALITY RATE. END NOTE]


6. INFRASTRUCTURE: KUFUOR EMPHASIZED THAT THE GOVERNMENT'S FOCUS IS
ON FACILITATING THE MOVEMENT OF PEOPLE, GOODS, AND SERVICES WHILE
PROMOTING SOCIAL-CULTURAL INTERACTION. THE PRESIDENT SUGGESTED THAT
THE ROAD SECTOR WAS EXPERIENCING AN UNPRECEDENTED LEVEL OF
DEVELOPMENT. THIS INCLUDED ROADS TO LINK FARM GATES TO MARKET
CENTRES WITH $100 MILLION RELEASED TO FOCUS ON THE SIX COCOA GROWING
AREAS OF THE COUNTRY. EFFORTS ARE UNDERWAY TO IMPROVE THE ROADS
CONNECTING ACCRA WITH NEIGHBOURING COUNTRIES AND TO REDUCE TRAFFIC
CONGESTION AND IMPROVE PUBLIC TRANSPORTATION IN THE MAJOR POPULATION
CENTERS. $90 MILLION IS BEING SET ASIDE FROM THE EURO-BOND PROCEEDS
TO LEVERAGE EFFORTS TO REHABILITATE THE RAIL SYSTEM EXTENDING TO THE
NORTH OF THE COUNTRY. THIS INITIATIVE IS EXPECTED TO GENERATE
THOUSANDS OF JOBS AND REVIVE OLD RAILWAY TOWNS. THE TEMA AND
TAKORADI PORTS ARE BEING MODERNIZED AND EXPANDED WITH THE HOPE THAT
GHANA WILL BECOME THE PREFERRED ENTRY PORT IN THE ECOWAS SUB-REGION.
THE TAKORADI, TAMALE, AND KUMASI REGIONAL AIRPORTS WERE ALL UPGRADED
FOR THE JUST ENDED AFRICA CUP OF NATIONS SOCCER TOURNAMENT AND
ENJOYED A SURGE IN DIRECT INTERNATIONAL FLIGHTS. THE GOVERNMENT AIMS
TO MAKE INFORMATION TECHNOLOGY AVAILABLE TO LARGE SECTORS OF THE
SOCIETY AND IS PURSUING A NATIONAL COMMUNICATIONS NETWORK TO PROVIDE
OPEN ACCESS TO BROADBAND CONNECTIVITY. THE GOVERNMENT IS ALSO
PROMOTING A COMPETITIVE TELECOM MARKET.


7. ENERGY: PRESIDENT KUFUOR ACKNOWLEDGED THAT THE HIGH COST OF
CRUDE OIL, COUPLED WITH PERIODIC DROUGHT THAT REDUCES GHANA'S HYDRO
RESOURCES HAS PROVIDED A SIGNIFICANT CHALLENGE FOR THE GOVERNMENT.
WHILE THE COUNTRY FACED AN ENERGY CRISIS LAST YEAR THAT LED TO A
LOAD-SHEDDING EXERCISE, THE GOVERNMENT HAS DEVELOPED A SHORT TO
MEDIUM AND LONG TERM POLICY TO SOLVE THE PROBLEM. THIS INCLUDES A
MIX OF THERMAL AND HYDRO ENERGY GENERATION. THE BUI DAM, ONE OF THE
LONG TERM STRATEGIES, IS SCHEDULED TO BE OPERATIONAL IN 2012 WHILE
SMALLER DAMS ARE BEING DEVELOPED. THE WEST AFRICA GAS PIPELINE WAS
HIGHLIGHTED AS ONE OF THE LEGACIES OF THIS GOVERNMENT. THE PRESIDENT
EXPRESSED GREAT CONFIDENCE THAT THE GOVERNMENT'S ENERGY POLICY WOULD
BE SUFFICIENT TO MEET GHANA'S ENERGY REQUIREMENT FOR
INDUSTRIALIZATION.


8. PRIVATE SECTOR: THE PRESIDENT EMPHASIZED THE IMPORTANCE OF THE
PRIVATE SECTOR IN GENERATING EMPLOYMENT, AND NOTED THAT THE
GOVERNMENT HAS PUT MEASURES AND LAWS IN PLACE TO FACILITATE GROWTH.
THIS INCLUDED CAPACITY BUILDING PROGRAMS, LOAN GUARANTEES AND ACCESS
TO CREDIT. HE POINTED TO SUBSTANTIAL INVESTMENTS IN MINING, THE
SERVICE INDUSTRY, COMMERCE, TOURISM, HOTEL DEVELOPMENT, AND THE
FINANCIAL SECTORS AS SIGNS OF GROWTH. HE HIGHLIGHTED A NEW
ELECTRONIC FINANCIAL SYSTEM, TREMENDOUS GROWTH IN REAL ESTATE, AND
POSSIBILITIES FOR A DEVELOPED BAUXITE INDUSTRY. HE POINTED
SPECIFICALLY AT THE ACQUISITION OF VALCO AS BEING CRITICAL TO MOVING
GHANA TOWARDS INDUSTRIALIZATION. IT WOULD BE PART OF A BAUXITE
INDUSTRY THAT WOULD INCLUDE BOTH UPSTREAM AND DOWNSTREAM PROCESSING
AND WOULD FULFIL A DREAM STARTED BY KWAME NKRUMAH WITH THE BUILDING
OF AKOSOMBO DAM. [NOTE: VALCO IS CURRENTLY CLOSED AS IT IS DEPENDENT
ON LOW COST ELECTRICITY TO BE EFFICIENT. END NOTE] HE INDICATED THAT
200,000 JOBS HAD BEEN CREATED IN 2007 UP FROM 120,000 IN 2006. THE
NATIONAL YOUTH EMPLOYMENT PROGRAM HAS BEEN RESPONSIBLE FOR 108,000
JOB PLACEMENTS FOR YOUTH SINCE OCTOBER 2006.


9. AGRICULTURE: AGRICULTURE WAS IDENTIFIED AS LEADING ELEMENT
WITHIN THE PRIVATE SECTOR, EMPLOYING A LARGE PART OF THE POPULATION
AND HAVING THE POTENTIAL TO LEAD INDUSTRIALIZATION. THE PRESIDENT
STRESSED EFFORTS TO MODERNIZE THE SECTOR THROUGH MECHANIZATION AND
IRRIGATION. HE IDENTIFIED THAT "OUTLOOK" AND FINANCIAL CONSTRAINTS
WERE THE BIGGEST CHALLENGES TO TRANSFORMING THE SECTOR. HE
HIGHLIGHTED EFFORTS TO PROVIDE IMPROVED PLANTING MATERIALS,
EXTENSION SERVICES, AND MICRO-CREDIT TO FARMERS. HE ALSO INDICATED
THAT THE SECTOR HAD ATTRACTED LARGE SCALE COMMERCIAL FARMERS. ON
COCOA, HE EMPHASIZED THE 740,000 TONS PRODUCED IN THE 2005/2006 CROP
YEAR AS IT IS GHANA'S LARGEST EVER, WHILE NOT MENTIONING RECENT
PRODUCTION TOTALS. HE SAID GHANA'S TARGET WAS TO REACH 1 MILLION
TONS IN THE NEXT COUPLE YEARS WITHOUT ARTICULATING HOW THAT TARGET
WOULD BE ACHIEVED. GHANA'S FOCUS WILL BE ON VALUE-ADDED TO THE
SECTOR. HE SAID CURRENTLY OVER 30% OF COCOA BEANS ARE PROCESSED
LOCALLY, SINGLING OUT BARRY CALLEBAUT AND CARGILL AS EXAMPLES OF
INTERNATIONAL COMPANIES INVOLVED.


10. MILLENNIUM CHALLENGE ACCOUNT: THIS WAS THE ONE DONOR PROGRAM
THAT THE PRESIDENT HIGHLIGHTED, EMPHASIZING THAT THE $547 MILLION
TOTAL WAS THE LARGEST MCC COMPACT TO DATE. [NOTE: BOTH MOROCCO'S
($697 MILLION, SIGNED IN AUGUST 2007) AND TANZANIA'S ($698 MILLION,
SIGNED A FEW DAYS AFTER THE ADDRESS) COMPACTS ARE LARGER. END NOTE]
THE PRESIDENT INDICATED THAT THIS MAY PROVIDE THE "LONG-AWAITED
OPPORTUNITY TO TRANSFORM AND MODERNIZE THE RURAL ECONOMY THROUGH
MECHANIZATION."


12. PUBLIC SECTOR: THE PRESIDENT SAID THE GOVERNMENT WAS REFORMING
THE PUBLIC SECTOR TO BE "VERY PROFESSIONAL AND VERY SUPPORTIVE OF
THE PRIVATE SECTOR." PUBLIC/PRIVATE PARTNERSHIPS WERE HIGHLIGHTED AS
THE NEW PARADIGM. HE ALSO TOUCHED BRIEFLY ON EFFORTS TOWARD PUBLIC
SECTOR PAY REFORM, THE WORK OF THE FAIR WAGES AND SALARIES
COMMISSION, AND NATIONAL LABOUR COMMISSION.


13. GOOD GOVERNANCE: THE PRESIDENT FOCUSED ON THE AFRICA PEER
REVIEW MECHANISM. HE INDICATED THAT THEIR MOST RECENT REPORT IN

JANUARY 2008 INCLUDED PLANS TO STEM CONFLICT ARISING FROM LAND
DISPUTES, STRENGTHEN THE OVERSIGHT ROLE OF PARLIAMENT, ESTABLISH
TRADE DESKS THROUGHOUT GOVERNMENT MINISTRIES AND INCREASE CAPACITY
FOR MULTILATERAL TRADE ISSUE ANALYSIS, AND STRENGTHEN TAX
ADMINISTRATION. THE ONLY REFERENCE TO FIGHTING CORRUPTION WAS HIS
MENTION OF PARLIAMENT'S PUBLIC ACCOUNT'S COMMITTEE HOLDING PUBLIC
HEARINGS FOR THE FIRST TIME IN 2007, SAYING THAT THE FIGHT AGAINST
CORRUPTION HAD FOUND A "NEW ALLY" IN PARLIAMENT. THE ATTORNEY-
GENERAL'S DEPARTMENT, HE SAID, WOULD STUDY THE RECOMMENDATIONS FROM
THE COMMITTEE AND PROSECUTE CASES THAT REQUIRED PROSECUTION. ON LAW
ENFORCEMENT, HE INDICATED THAT THE POLICE SERVICE HAS INCREASED BY
10,132 STAFF SINCE 2001, BRINGING THE TOTAL TO 26,115. HE POINTED
OUT THAT THIS WAS STILL BELOW THE UN RECOMMENDED LEVEL OF POLICE TO
CITIZEN RATION OF 1:500. KUFUOR ENCOURAGED COMMUNITIES TO FORM
VOLUNTEER PROTECTION UNITS BUT CAUTIONED AGAINST INSTANT JUSTICE. HE
HIGHLIGHTED THAT GHANA HAD ITS FIRST FEMALE CHIEF JUSTICE,
INDICATING THAT THE GOVERNMENT HAD GOOD GENDER REPRESENTATION
THROUGHOUT, THOUGH LACKING GENDER BALANCE. HE SAID THAT THE MINISTRY
OF WOMEN AND CHILDREN HAD BEEN ESTABLISHED TO ADDRESS THIS ISSUE.
FINALLY, HE DISCUSSED THE IMPORTANT ROLE THAT PARLIAMENT PLAYS WHILE
STRUGGLING WITH LIMITED OFFICE SPACE AND STAFF FOR MEMBERS OF
PARLIAMENT. HE ACKNOWLEDGED THAT THE $25 MILLION LOAN PROMISED IN
2001 FOR MUCH NEEDED OFFICE SPACE HAD NOT MATERIALIZED, PROMISING
THAT NEW RESOURCES WOULD BE PROVIDED IN THE COMING YEAR.


14. FOREIGN RELATIONS: THE PRESIDENT EMPHASIZED THE LARGE NUMBER OF
INTERNATIONAL CONFERENCES HELD IN GHANA AND PRESIDENT BUSH'S VISIT
AS INDICATORS OF THE RESPECT THAT GHANA COMMANDS CURRENTLY. HE ALSO
HIGHLIGHTED GHANA'S ROLE AS CHAIR OF THE AU OVER THE PAST YEAR AND
TWICE CHAIR OF ECOWAS OVER THE PAST SEVEN YEARS.


15. NATIONAL HERITAGE: THE PRESIDENT HIGHLIGHTED THAT FLAGSTAFF
HOUSE, THE PRESIDENTIAL MANSION DURING NKRUMAH'S FIRST REPUBLIC, WAS
BEING RE-BUILT TO HOUSE THE NEXT PRESIDENT. THIS IS COUPLED WITH THE
REFURBISHMENT OF THREE PRESIDENTIAL RETREATS, ALSO FROM NKRUMAH'S
FIRST REPUBLIC. HE ALSO EMPHASIZED THE FOUR STADIUMS BUILT AS A
RESULT OF THE JUST ENDED AFRICA CUP OF NATIONS SOCCER TOURNAMENT.


16. ELECTIONS 2008: KUFUOR INDICATED THAT HIS TIME IN OFFICE WAS
COMING TO AN END, AND CAUTIONED AGAINST NEGATIVE CAMPAIGNING. HE
DREW ATTENTION TO GHANA'S ELECTORAL COMMISSION'S REPUTATION
INTERNATIONALLY FOR NEUTRALITY AND PROFESSIONALISM, INDICATING THAT
GHANA HAD HELD FOUR SUCCESSFUL ELECTIONS SINCE 1992 THAT HAVE
BROUGHT WITH EACH A SERIES OF IMPROVEMENTS TO THE SYSTEM. HE WENT
FURTHER TO STRESS THE ROLE THAT THE JUDICIARY CAN PLAY IN ADDRESSING
PERCEIVED PROBLEMS IN THE ELECTORAL PROCESS, STRESSING THAT THERE
WAS NO NEED TO CONTEMPLATE OTHER MEANS OF REDRESSING PERCEIVED OR
ANTICIPATED WRONGS.


17. COMMENT: RESPONSE TO THE STATE OF THE NATION ADDRESS IS HEAVILY
INFLUENCED BY WHICH SIDE OF THE POLITICAL DIVIDE ONE SITS.
GOVERNMENT REPRESENTATIVES LAUDED THE PRESIDENT'S SPEECH AS HIS MOST
BRILLIANT EVER, WHILE THE MINORITY LABELLED IT HEAVILY
SELF-PROMOTING, PARTISAN AND MISLEADING. BOTH THE MINORITY AND THE
MEDIA COMMENTATORS HIGHLIGHTED THE PRESIDENT'S FAILURE TO DISCUSS
GHANA'S GROWING NARCOTIC PROBLEM AND CONTINUED WEAKNESS IN THE
ENERGY SECTOR. WHILE GHANA HAS ENJOYED MACRO-ECONOMIC STABILITY,
SIGNIFICANT GROWTH, AND POVERTY REDUCTION OVER THE PAST SEVEN YEARS,
WIDESPREAD PROSPERITY REMAINS ELUSIVE, INEQUALITY IS INCREASING, AND
BUILDING A DIVERSIFIED ECONOMIC BASE STILL SEEMS DISTANT. GHANA
CONTINUES TO BE HEAVILY DEPENDENT ON THE PRICE OF GOLD AND COCOA.
THE PRESIDENT'S SPEECH FAILED TO ACKNOWLEDGE THE FITCH'S RECENT
DOWNGRADING OF GHANA'S SOVEREIGN 'B+' CREDIT RATING TO STABLE FROM
POSITIVE, THE RE-EMERGENCE OF SIGNIFICANT DEBTS AT TEMA OIL
REFINERY, OR CURRENT FISCAL INDISCIPLINE THAT IS THREATENING THE
MACRO ECONOMY. FURTHERMORE, THE ENERGY SITUATION HAS NOT BEEN
SOLVED, AND THE HIGH COST OF ENERGY WILL CONTINUE TO CONSTRAIN
INDUSTRY. WHILE GHANA IS BELATEDLY ADDRESSING GENERATION NEEDS, A
SUSTAINABLE SOLUTION WILL REQUIRE COST RECOVERY TARIFFS, IMPROVED
TRANSMISSION INFRASTRUCTURE AND MANAGEMENT, AND REFORM OF
DISTRIBUTION SYSTEM. NONETHELESS, PRESIDENT KUFUOR'S READINESS TO
STEP DOWN AFTER TWO TERMS CONTINUES THE TRADITION SET BY PRESIDENT
RAWLINGS AND IS A STRONG EXAMPLE FOR THE CONTINENT. THIS COUPLED
WITH KUFUOR'S EMPHASIS ON GHANA'S RECENT HISTORY OF CREDIBLE
ELECTIONS AND EFFORTS TO DISSUADE AGAINST ACTIONS THAT COULD LEAD TO
A REPETITION OF WHAT IS TAKING PLACE IN KENYA IS IMPORTANT FOR THE
UPCOMING 2008 ELECTIONS. GHANA'S RECENT ENTRY TO INTERNATIONAL BOND
MARKET AND OIL DISCOVERY PRESENT REAL OPPORTUNITIES PROVIDED THAT
THEY ARE MANAGED WELL. AT THE SAME TIME, THEY PRESENT NEW RISKS FOR
CORRUPTION AND MISMANAGEMENT AND HENCE, MERIT ATTENTION. END
COMMENT.

BRIDGEWATER