Note: This essay is a more detailed version of a piece written for the Africa Report.

As the Spring Meeting and its panoply of side events wind to a close, the recurring theme yet again is “more money” for the world’s poor. A point made with refreshing clarity by the World Bank’s President: “no amount of creative financial engineering will compensate for the fact that we just need more funding.”

There is always much talk and jargon about “reform” of the “global development finance architecture” but it really all boils down to convincing richer folks in the “Global North” to release more cash to relatively poorer folks in the “Global South”.

That convincing has had many ups and downs. Whilst the World Bank has celebrated the replenishment of its grants and soft loans pot, the IDA, in 2021 as the biggest ever in history, and is looking forward to an even bigger inflow for the next replenishment cycle (which will be known as IDA21), development activists at the global level point to the massive gap between the $5 billion more per year the Bank committed to spend recently and the trillions of dollars experts say are needed to align needs in the developing world with the climate and resilience agenda ($4 trillion, says the UN).

For those of us whose activism mostly focuses on the country level, though, we sense a major gap in the global discourse: when the likes of the World Bank get more money, that doesn’t necessarily translate to bigger and better investments in developing countries. Various factors much closer to home than in Washington appear to conspire and create a “constriction” in the flow of allocated money. Attempts to clear up the pipe and speed up “disbursements” of the money, on the other hand, can lead to a deterioration in the quality of development projects and compromise the impact on people’s lives.

To examine this idea carefully in Ghana, the prime focus of my own policy activism, I have been painstakingly probing the outcomes of the World Bank’s investments there over the last two decades for a paper that has just been published by Paris-based Finance for Development Lab (FDL).

I conclude that the results presented by the World Bank’s reports on these investments substantially deviate from the reality on the ground about 70% of the time.

This analysis excludes certain investments made through the IFC, the World Bank’s private sector arm, or the guarantees issued by the World Bank’s MIGA, even though there are other reasons to be concerned about the IFC’s growing penchant for prioritizing malls and luxurious apartment complexes over social enterprises.

The “Disbursement” Bogey

In the early 2010s, the World Bank was struggling to disburse the funds it had allocated/committed to Ghana. The disbursement rate was languishing around 10%. In the ensuing years, efforts were made to considerably boost disbursements. Today, the global Bank’s ~$4 billion Ghana portfolio has an average disbursement rate higher than 48%.

I have selected a few case studies discussed in the FDL paper mentioned above based on their stellar ratings by World Bank staff. The idea being that if these are among the best projects from a disbursement and outcomes perspective, then there is even greater concern about the rest of the portfolio.

Ghana Energy Development & Access Program/Energy Sector Reform Program

In 2007, the World Bank launched a $220 million project called GEDAP. One of its major aims was to transform the Electricity Company of Ghana (ECG). From 2010 onwards, the World Bank has expanded the scope and ticket of GEDAP to double down on the intervention. Having started with a $70 million investment, an extra $60 million soon followed. In GEDAP assessments, the World Bank touts progress in lowering ECG’s commercial losses and assures evaluators that progress on improving bill collections, especially for power consumed by government entities, is imminent.

An enhanced effort, the Energy Sector Recovery Program, launched in 2019, with even higher focus on persistent ECG arrears accumulation and value chain debt. Boasting 88% disbursement rates and a “moderately satisfactory” rating, one might easily assume that these interventions have made a significant difference to ECG’s operational situation.

According to the World Bank’s official assessment of the results of these investments, a $55 million injection to upgrade billing and revenue protection, a “Commercial Management System”, and “Advanced Metering Infrastructure”, have been critical to salvaging ECG’s finances. For example, a provision was made in the program for 156,000 smart retail-level meters and 25,000 bulk meters to support revenue management. A timeline of January 2020 for all these powerful measures to bear fruit was indicated in the official project update.

Unfortunately, the facts on the ground, amply attested to by Ghana’s Auditor General and the ongoing rolling blackouts in Ghana today, do not bear out these assessments. Official audit data shows that ECG procured smart meters costing more than $145 million without competitive tender, contrary to its own procurement policies. Consequently, Ghana’s Auditor General failed the entire exercise on Value for Money grounds. Some contractors failed to perform on contracts, and the frustratingly long waiting times for securing a meter have not improved. ECG’s losses have actually increased since GEDAP commenced, to an average of about 30% over the project horizon. Taking full account of collection failures, the loss ratio actually exceeds 50% in some quarters. Very recently, ECG’s regulators fined the company’s board members millions of Ghana Cedis out of frustration with the company’s persistent flouting of regulatory directives.

e-Ghana/e-Transform

The e-Ghana project began in 2006, was reviewed when the new government assumed office in 2010, and wrapped up in 2014, whereupon a follow-up digitalisation program, e-Transform, was put together to carry forward the broad vision of ICT-driven development in Ghana.  Besides the World Bank, the EU chipped in, as also did the British and Danish governments (about 40% of the ~$60 million ticket).

When the government changed again in 2017, the usual review occurred. The digital ID component was dropped because a politically favoured vendor was not keen to play to World Bank dictates. Newer focuses like cybersecurity, digitalisation of the postal system, and the digital transformation of the national hydromet infrastructure were introduced to complement the core e-government initiatives. By 2020, disbursements had jacked up to 74%. There are projections of the disbursement rate hitting 96% in 2024. Here is how a few of the key modules are doing.

• GIFMIS

One of the most important reforms carried over from e-Ghana to e-Transform was the automation of the payments and payments-monitoring aspects of public financial management, through a platform called GIFMIS. 

The World Bank’s assessment documents describe GIFMIS as “one of the major accomplishments of the project”. GIFMIS was said to have “added several major functions: treasury, budget formulation and execution, financial reporting and more transparent use of funds”.

GIFMIS was also hailed as having connected all key government Ministries and regional treasuries and spending units, and thus for having “improved the efficiency of government functions, in this case planning the national budget.”

The EU and the European bilateral donors disputed the World Bank’s findings. They insisted that their reading of the joint audits showed that at best GIFMIS was at 60% readiness. They pointed to persistent public financial management (PFM) challenges – like arrears, overspending, extra-budget allocations, and slippages – that a well-functioning automated payments platform should be able to address but GIFMIS seemingly couldn’t. Unable to make progress with the World Bank, the EU and the bilateral donors withdrew from the joint effort and transitioned to observers.

Recent reports by Ghana’s Auditor General also paint a very different picture of GIFMIS. It turns out that more than 86% of government payments meant to be covered by the system have been bypassing it, defeating its very rationale for existence.

• e-Procurement

The e-Procurement module of e-Transform was launched on 30th April 2019 with a unique selling point of cutting procurement costs for the government by $10 million a year over the ensuing decade. Analysts in Ghana estimate losses to the state due to poor procurement of $3 billion per year, the same as the country’s IMF bailout package. Over 600 public and state-controlled institutions were expected to make use of the new platform.

We examined 4000 of the 4875 tender results posted on the GHANEP e-procurement website. Based on our sample, we estimate that 95% of all tenders posted on the site are for amounts less than $100,000. We found hundreds of entries of less than a $100, and some below a dollar. Many records do not even feature award amounts, rendering them useless for analysis and defeating the very purpose of a transparent e-procurement platform.

For example, virtually every entry related to Bekwai Municipal Hospital and Nsawam Government Hospital was for a token amount of the cedi equivalent of a few dollars or even less than a dollar. Virtually all entries related to Asamankese Government Hospital, Oda Government Hospital, Sefwi Asafo College of Health, Asankragwa Nursing & Midwifery College, and Kade Government Hospital have no dollar amount mentioned at all. Public health institutions are overrepresented most probably because the reimbursement procedures of the national health insurance mechanism have made use of similar systems familiar to personnel. More than 60% of all entries relate to about 5 government owned health facilities.

Unsurprisingly, procurement activity related to the vast majority of World Bank funded projects do not feature on the GHANEP site. In fact, our extensive search in March 2024 revealed only one World Bank funded procurement activity featured, a Ghana Health Service office equipment purchase in December 2023, with reference number GHSHQ/2023/ODG/20. It goes without saying that all the multimillion-dollar government projects that have given Ghanaian activists serious grief over the last half a decade such as SML, the National Cathedral, and the Bank of Ghana motels do not feature.

• e-Health

The Integrated e-Health system promised in the e-Transform initiative was to deliver on telemedicine, mHealth, and training at multiple levels of the health ecosystem to enable service interoperability. Instead, the strategy never really took off in any concrete form. The clear calls for interoperability among digital solutions has been totally abandoned for a monopoly system owned by a US-based Ghanaian entrepreneur and developed in closed-source fashion by a contractor in India.

The platform, known as Lightwave, was declared by ministerial fiat as the only acceptable electronic health solution across the entire health network, even though many of the modules needed for fully-fledged health management operations were still under development. Even more perplexing, existing ehealth solutions provided by other companies were forced out, again by Ministerial fiat. The result has been extreme vendor lock-in and a decimation of the e-health innovation marketplace in Ghana. 

• e-Justice

The e-Justice module went live in March 2019. In their assessments justifying the need to extend and expand e-Transform, World Bank staff hailed tremendous early successes: 43000 legal cases had been filed electronically within 2 years of launch.  Our survey of legal practitioners however indicate that the vast majority of processes related to court functions are still operated manually.

An evaluation by independent analysts show that the website has fallen into functional disrepair, the “effective launch” date has been pushed back to 2026, and the court authorities are now looking to engage consultants to implement a change management system.

• e-Immigration

Of the different e-Transform modules, the e-Immigration system presents the most bewildering account. It was envisaged to deliver automated immigration clearance at the airport (using biometrically-enabled e-gates), digital visa processing, and the phasing out of paper-based procedures across all borders (including land and sea). In short, a big deal. The e-gates submodule alone was budgeted at nearly $20 million. Central to all this was a Secure Border Management System (SBMS) meant to replace a US-donated platform on the grounds of enhanced data security.

6 years after SBMS was expected to launch, the web version of the US-donated system continues to be the primary immigration clearance solution in use at Ghana’s sole international airport. Despite claims to the contrary in the official World Bank records about the project, the fact on the ground is that no SBMS was rolled out. The $16.3 million e-gates that the official records claim were already functional and just needed to be transferred from terminal 2 to terminal 3 of the international airport, at the cost of an extra $2.9 million, have not been deployed to automate immigration clearance five years on. The multi-million-dollar electronic visa management system launched, according to World Bank records, in February 2019, failed to deploy to most of Ghana’s diplomatic missions abroad. The individual missions have had to engage service providers to build and manage separate systems at their own cost.

Despite good intentions, reality has not been too kind

It should now be apparent to the reader that official World Bank reports diverge substantially from the lived reality of domestic activists. Even though it was already apparent in 2020 that most of the touted deliverables on e-Transform were mostly on paper, the World Bank, in 2020, agreed to extend it for a further 4 years and even doubled the commitment from $97 million to $115 million.

It is also evident that World Bank staff operate based on assumptions of the intent of political actors that are not grounded in reality. For example, in one of their assessments of the status of the institutional reforms considered necessary for the success of e-Transform, the World Bank team gave the impression that the “broadcasting law” deliverable in the program would be passed by Parliament sometime in 2014. Ten years on, lacking any serious domestic political constituency, the law has still not been passed.

Clearly, World Bank staff regularly misdiagnose the political economy of the country when designing and monitoring projects.

For example, software platforms (called “TRIPS” and “e-Register”) developed under e-Ghana/e-Transform for the tax authorities and the Ghanaian companies’ registry by a company called GCNet and launched with great fanfare in 2013 and 2015 respectively. They quickly fell into disuse and never went mainstream because GCNet progressively lost political capital. Eventually, GCNet lost its legacy port automation business to a new politically favoured contractor, and was forced to concentrate on the Company Registry automation effort only to be hobbled by employee strikes, leading to a shutdown of the e-Register system. TRIPS, on the other hand, was eventually scrapped altogether and a new system built by a new vendor, called ITAS, was introduced in 2023. The tender leading to the selection of the successful vendor, a consortium constituted by TATA and local ICT firm, IPMC, was impugned by Ghana’s Central Tender Review Committee, an advisory body, leading to protracted contracting delays.

Sometimes, projects do get off the ground nicely but fail the sustainability test. One of the main hopes in rolling out e-Transform was to turn Ghana into a Business Process Outsourcing (BPO) hub and innovation powerhouse through effective incubation of startups. “Regional Innovation Centers” were to be set up in the capital of each of the ten administrative provinces in Ghana at that time. In e-Transform project assessment documents, the evaluators highlighted considerable progress by listing startups that have benefited from the initiative and are poised to make major contributions to the ecosystem. No resilience metrics were provided. Yet, 90%+ of the 25 startups listed as evidence of the success of the innovation program had ceased to operate within 3 years.

The same World Bank assessments used the growing presence of companies like QAI, Teletech, Comviva, Tech Mahindra, and ACS, to back claims that the BPO strategy had been wildly successful.

A few years later, the idea of decentralising the program to all provincial capitals was shelved and with that the concept of using them as e-government enablement platforms. The effort was consolidated into two facilities in Ghana’s two largest cities, which today mainly function as office space for well-connected startups looking for subsidised rent. The BPO momentum has almost fizzled out.

The lesson here is that disbursement rates for World Bank and other global development finance flows cannot be improved without fundamental improvements to the quality of governance. Trying to do otherwise is not merely wasteful, it can even be counterproductive.

By contributing to Ghana’s high input but low outcome resource use strategy, the World Bank may well be weakening social solidarity. Ghana’s current growth model is one that has seen the growth elasticity of poverty (the corresponding decline in poverty as a result of economic growth) decline by a staggering 25 times from -1.18 to -0.07. Consequently, both Ghana’s poverty gap and inequality measure (GINI coefficient) have worsened considerably.

Hence, whilst Ghana’s current World Bank average disbursement ratio of 48.6% (having accelerated from 16.6% in 2018) is markedly higher than Kenya’s 17.7%, the latest available measure of the share of “problem projects” in Ghana, at a five-year average of 30%, is significantly higher than the comparable Africa-wide average of 26%. Comparatively, Kenya has seen its GINI coefficient fall from 45 in 2005 to roughly 35 today. The latest measure of Ghana’s World Bank portfolio commitments at risk at 38% is likewise considerably higher than Kenya’s 22.2%, or even the Africa-wide average of 26%. To repeat: improving disbursement of development finance at all cost does not always generate positive social outcomes.

One could make the argument that waste and inefficiency are inherent in the nature of all government bureaucracy, included that of the so-called Global North. The difference is that Global North governments account primarily to domestic stakeholders for their development finance decisions. In the Global South, certainly in Ghana and most African countries, the likes of the World Bank and the IMF are critical stakeholders that are nonetheless fully captured in domestic accountability regimes. To the extent that countries like Ghana depend heavily on external public finance actors, waste and inefficiency are compounded by the gaps in domestic oversight.

Thus, alongside the push for more money to be pumped through global development finance channels, like the World Bank, we all ought to pay equal attention to the role of domestic activists in ensuring that the money will actually go towards real social impact. Such a move would require intentional resourcing of such “citizen and community verification and rating service providers”.

It is common in the commercial world for investors to pay ratings agencies to produce rigorous information on the jurisdictions they want to invest in and the governments they want to lend to. The World Bank and other development agencies ought to take a leaf from this playbook and invest in grassroots “community rating agencies” that can provide not just information, as classical ratings agencies do, but also the necessary political pressure to right wrongs in project execution proactively, or even preemptively.

And for added bonus, such a model may even escape the neocolonialist baggage often associated with World Bank – IMF “conditionality”.

It was almost sundown today when word came of a valiant attempt to counter our recent essay on how Ghana’s national Identity (ID) Card project has turned out to be a massive ripoff.

In between flights, time was made to read through this supposed “valiant effort” at presenting a counter-thesis in which the Ghana Card is indeed a brilliant and patriotic undertaking rather than the pernicious thing our essay claimed it was. Sadly, the counter was both underwhelming and disappointing.

Our antagonist, “a pollster and financial analyst”, began his rebuttal with a wide-ranging recital of his credentials, immediately setting off alarm bells. Some things didn’t seem to add up too well.

Three main sets of credentials were presented to beef up our antagonist’s standing to write the definitive critique of our earlier essay:

• He runs a private consultancy called DWA Risk & Financial Management Consulting Limited that specialises in Public-Private Partnership (PPP) structuring;
• He was a senior executive of London Underground [Limited], in which capacity he performed contract management and performance review of some of the world’s largest and most complex PPPs;
• He has been at various times a top management functionary of the true owners of the Ghana Card, Margins Group, a non-executive director of that same entity, and chair of the finance committee of the entity’s board of directors.

Regarding our antagonist’s work at DWA, very little purpose is served by delving into it as there is scant record of the PPP activities it has apparently spearheaded in Ghana and abroad. So, we shall only look at his roles working for the London Underground and the Margins Group.

For coherence of analysis, it helps to post the claims verbatim:

Because the author of the purported rebuttal of our essay sought to ground the superiority of his analysis, at least partly, on his intimate familiarity with complex PPP design, and the importance of his role at the Margins Group, it was natural to examine these claims as a prelude to taking his claims seriously.

London Underground

From the author’s abridged biography (see screenshot above), he was the Finance Manager at London Underground Limited (a subsidiary of Transport for London – TFL) responsible for evaluating the contract management and performance review of the PPP tie-up that delivered major parts of the London subway system between 2004 and 2009.

What he fails to tell his readers is that the said PPP was one of the most disastrous projects in British public finance history. The two private partners of London Underground, Metronet and Tubelines, ended up costing British taxpayers billions of sterling in wasted funds. Had the writer been candid, he would have disclosed that reams upon reams of documents are available in British parliamentary archives to document this unparalleled mess.

In 2007, Metronet went bankrupt after declaring the PPP unsustainable. In 2010, the other private partner, Tubelines, also went bust, forcing the British government to step in and buy it out. Post-mortem analysis showed the entire PPP to have been onerous, unworkable and a financial wreck. Is our writer seriously taking credit for this disaster as part of establishing his bona fides? His claim to wisdom in guiding the Ghanaian public on matters PPP is that he was the contract manager for one of the worst PPPs the world has ever known?

Anyway, having carefully examined the parliamentary record (some summaries here and here), and gone over reams of documents generated as a result of various enquiries and court proceedings (including even pre-termination disputes such as this one), we are fairly confident that every “significant” corporate player in this saga is now well known to us. Names like Stephen Richards, Charles Doyle, Gaynor Mather, Danny Myers, and of anyone who stepped foot on any of the rungs on the reporting ladder leading up to Tim O’Toole, the larger-than-life Managing Director of London Underground in the relevant periods, dot the record. Surprisingly, there isn’t a single mention of our antagonist, not even once. To whom did he report in respect of PPP matters at London Underground? Well, maybe, we have been too harsh in ascribing blame to him for the disastrous performance of the PPPs he claims to have managed. Maybe, he wasn’t around much.

Be all that as it may, having participated in the BCV and JNP PPPs in London, in whichever fashion, should be the last thing anyone attempting to gain credibility in a debate about PPPs should mention.

Margins Group

Given how he intones so authoritatively on the merits of Margins Group’s role in the Ghana Card PPP, our antagonist clearly must have a vested interest in the matter. It is not surprising, therefore, that he claims to have serve on the board and chaired the crucial finance committee. The only problem is that we have painstakingly examined the archival back-copies of the Margins Group website going back to 2003, paying close attention to the years in which he claims to have served in that capacity, and we can’t find a trace of him.

Why would Margins hide such a critical member of its Board for 10 years and refuse to publicly acknowledge him on their Board? Why would they not disclose him to the Registrar-General of Companies, as required by law?

If, perchance, we have missed these company filings or other webpages, our antagonist can publish them, as well as better and more precise details of the specific reporting lines he participated in at London Underground.

Can we take our antagonist seriously?

Having failed by our own efforts in this preliminary stage of trying to validate the bona fides that our antagonist hoisted like a banner before proceeding to make his arguments, our first instinct was not to bother with a reply. The reason being that many of the claims he made were presented with an authority that could only have come from the privileged positions he postures to have held. However, in view of the public interest, we would proceed to tackle the arguments themselves, on their own merits.

“False claims”

Our swashbuckling protagonist commences his handiwork by labelling our assertions, even though each one was backed by easily accessible documents in the public domain, as “false claims”.

His choice of words is really funny considering the large trove of documents submitted by Margins to various government agencies on financial matters in our possession that we did not cite in order not to breach trust and endanger whistleblowers. Many Ghanaians will be shocked at the sums involved in these proposed and in-the-works deals. Yet, despite diligently choosing to rely only on official, publicly verifiable, documents, we are still met with the charge of falsity.

Let us tackle the issues one after the other

• Our sword-swinging, swashbuckling, falsehood-accusing, antagonist claims that the “main technology assets” of the Ghana Card cannot be said to belong to Margins because there is a “central site” with various facilities owned by the government of Ghana where certain components of the technology sits. This is a weak and diversionary argument. In the original essay, the point is definitely made that there has been a belated attempt to create the pretence of a transfer of the core technology assets to Ghana. This pretence has simply created conditions for Margins, as the inevitable contractor for some of these expensive projects, to make more money off Ghana that was not anticipated in the original agreement, since Margins was supposed to be fully responsible for technical infrastructure.

• Moreover, the ongoing cosmetic efforts do not change the fact that all the valuable components of the technology and the most critical licenses for the encryption, cryptography, biometric suites, etc. remain vested in Margins. Nothing in the mass of verbiage spun by our antagonist addresses this fundamental point. The most sensitive, most indispensable, and most non-reproducible components of the system, where all the value resides, are owned and controlled by Margins, and they alone can operate and allow any other system to interface with the Ghana Card. Margins’ business interests and considerations, not national policy, dictates who gets access, by what means, for how much money, and with what constraints and enhancements.

• Despite acknowledging that the Margins solution has been set up such that the government is forced to buy the ID cards only from the security printing subsidiary of Margins – ICPS (which, by the way, is not the same company that the NIA has signed the PPP contract with), our antagonist twirls and curls and dances around, arriving at no serious point. If the specifications of the system were not designed such that other security printers can create ID cards compatible with the backend software and aligned with the necessary security measures, then what will Ghana do if, God forbids, the Margins ICPS factory catches fire? There is no logic in creating a solution of multiple components that are nonetheless so closely-coupled that a whole country is forced to deal with the subsidiary of just one company for every aspect of a system on which every aspect of civil life is being forced to depend on.

• Calling the National Identification Authority, as the public+national interest holder in the Ghana Card PPP, a “zombie” was based on a very clear case, backed by very clear evidence. This is an organisation that could not develop a simple list of project definitions and had to copy the text wholesale from websites belonging to UAE agencies. Let’s even ignore the plagiarism, is such an organisation going to be capable of ensuring sound technology governance in an elaborate technical project of this calibre? Our antagonist deliberately skirts around the issue, says nothing of substance about the clearly demonstrated incapacity of the NIA, and mumbles something about why the government side in a PPP should be content about lacking capacity to influence project design in the public interest. He also has no qualms about such a critical agency supervising the rollout of technology principally to boost outcomes beneficial to a private corporation but detrimental to the public.

• In breaking down the cost of the Ghana Card, we referred to documents presented to Parliament detailing the cost breakdown to a government agency (the NHIA) planning large purchases from the Margins Group. It has always been clear that the full cost of delivering a card into the pocket of a Ghanaian isn’t fully captured in the Margins’ catalog price. This is because the NIA bears many costs, from personnel to physical infrastructure, and the country, via various agencies, subsidises the entire operation beyond the card purchase costs through direct financial transfers to Margins, software verification and integration charges, and tax exemptions.

• To get to the full cost of each Margins card, one must factor in all these hidden costs. In fact, that is why when individuals decide to obtain the card without going through the messy headaches of a “mass registration exercise”, they are charged roughly $20, an amount that still does not reflect the full spectrum of hidden costs but only covers data capture costs borne by the NIA and the cost of the Margins technology element. The De La Rue contract with Rwanda, which our antagonist airily denigrates, likewise covers the card delivery and data capture, and still comes to $0.9 per unit. Attempts to suggest that Margins’ technology is superior to De La Rue’s has never been backed with any evidence since Ghana has been known to trust the same company with printing of the national currency. In the world of security printing, currency production is the apex of sophistication. Colloquially known as the “central bank level”, and based on the minimal foundation of ISO 14298:2021, security printers that have produced currency for a wide range of governments cannot be dismissed as peddling inferior technology without evidence.

• Our antagonist makes this observation: “The writer refers to the US$124 million as a start-up contribution by IMS, again, this is a false claim.” Of course, if he had read the original essay with eyeglasses of the right prescription, he would have seen clearly that the $124 million figure was stated as the amount meant to be contributed by the government of Ghana, and NOT Margins. The argument there, which he does not rebut, is that the government has ended up spending far more than this and will continue to spend far in excess of what has already been spent without the phantom revenues that the project was supposed to generate.

• The important point here is that Ghana Card has become a fiscal albatross around the neck of the government. Shadowy figures are being enlisted to forge directives on behalf of even independent branches such as the judiciary in a misguided and, frankly ridiculous, bid to meet unrealistic and comical revenue targets. Civic initiatives of the most sensitive kind, such as voter registration, were, not very long ago, being held hostage because the country owes Margins, and until it paid, Margins wouldn’t release ID cards, and if they don’t then registration cannot proceed because someone has proclaimed a harebrain edict barring people from registering to vote if they don’t have a Ghana Card. THIS IS TOTAL MADNESS. A national ID card project should never become a massive profit making gig that starts to dictate how critical institutions of national life behave. No country in the world has set up an arbitrary, illogical, $1.2 billion dollar revenue target plus cost-recovery plus 17% guaranteed return for private investors all tied to what should be a basic national identity card!

• The fact that Rwanda took $40 million from the World Bank, at a near-zero interest rate to set up a state-controlled national identification system and is now in a position to run an international competitive tender to select the most optimal vendor to supply services such as card production and data capture is precisely the kind of unbundling this author and others are demanding be done in the case of the Ghana Card. Ghana refused to accept World Bank money, as part of the e-Transform initiative, to finance a solution that will be non-profit based, exclusively public interest focused, and with the core data registry and authentication software controlled by the state, precisely because this tottering scheme sucking millions of dollars out of state coffers through different agencies suit some political nabobs better. So, instead, the country is today paying Margins large sums of money using expensive treasury bills at nearly 30% interest rate per annum. And, on top of that, buying cards at ridiculous prices for infants.

• Large swathes of the article purporting to respond to our essay are incoherent and thus best left to the reader’s own assessment. They do not really address anything from the original essay to which it is purportedly a response. For example, this gem of insight from the article: “[Margins] will not make excess revenue beyond what is agreed in the contract except in a situation where the government recovers all the amount paid in the form of revenue guarantees and recovers the cost of running NIA and all its offices nationwide.” Nowhere in the original essay is any attention paid to any “excess revenue”. The point canvassed in the essay, which cannot be controverted, is that five years into the PPP, the purported “revenues” that were meant to accrue to the government for covering the inflated costs of running the system have failed to materialise because these sham revenues are supposed to come from government agencies that are not profit-making by orientation. Essentially, round-tripping of the most cartoonish kind. So, effectively, the government will likely be in deficit for the remainder of the term of the PPP even as Margins laughs all the way to the bank.

The risk of responding to our antagonist was always in the possibility of further distracting the Ghanaian public from what is essential. Which is three-fold:

• There are good PPPs and there are bad PPPs. Ghana Card, as currently designed, is a bad PPP. Its subject matter, a national identification system, cannot be setup as a massive profit-making gig so much so that policies are made with the primary intent of generating revenues to enrich some business guru. That whole arrangement needs a complete and total rethink. It leads down the path of absurdity.

• A national identification system cannot be operated on the whims of powerful business interests, who own the core assets in such a closely held fashion that the country is denied value for money. The SIM card registration process became a mess because the private operator of the national identification system initially presented charges so ridiculous that it offered cover for other politically connected business interests to push through a bypass, seriously inconveniencing citizens who had to join long queues to provide biometric data all over again to murky custodians. India has provided the world with spectacular examples of how Digital Public Benefit Infrastructure should be set up in how it approached the Aadhaar and the whole India Stack technology suite. There are today more than 100,000 subcontractors of the Aadhaar system regulated in a robust and transparent way by UIDAI, the national operator. There are none of the crazy integration costs that have seen state agencies in Ghana saddled with millions of dollars in bills when they attempt to harness the power of the Ghana Card. India has, contrary to Ghana’s profit-gouging model, activated more than 650 regional government agency programs and about 350 national-level ones by focusing on public benefits.

• Lastly, the NIA as currently governed lacks the incentive structure to focus on maximasing the benefits of the national identity ecosystem. It does not appear to be focused on how to work across the range of legacy systems that exist and make life easier for citizens. Instead of working with other agencies to facilitate identification of citizens, the NIA’s primary task in the last few years have been to exclude citizens who do not have Ghana Cards due to its single-minded devotion to the cause of Margins Group and its glorious profits. Despite the remarkable success of Aadhaar in reaching ~95% of India’s population, the Indian equivalent of NIA, the UIDAI, has not been rampaging all across the land to block voting rights to citizens who do not have the Aadhaar. Thus, India’s current posture towards voter identification continues to remain facilitatory rather then exclusionary.

A government agency that exists primarily to enrich a private corporation has lost its functional purpose and must be completely overhauled.

Nothing that our swashbuckling antagonist, with his chain of PPP credentials from King’s Cross to Kasoa, wrote will take this country forward in coming to terms with the albatross that the Ghana Card, as currently designed, is becoming. While a pampered and highly favoured Margins strides akimbo across the public sector asking for even more elaborate schemes to be set up to give it deeper control over all aspects of Ghanaian civic life, our only plea to the Ghanaian people is: shine your eyes.

This is a fairly long essay, so here is the quick take for those too busy to read.

• Ghana Card’s main technology asset base belongs to Margins Group, not the government of Ghana.
• This makes it impossible for the government to save cost by using smart procurement to obtain the printed cards, biometric devices, and system integrations. It must get everything from Margins alone.
• Ghana Card, as a system, cannot be operated without Margins, so the idea that the government “owns” the data is meaningless.
• The government agency in the Ghana Card PPP, NIA, has become a “zombie”; it lacks the capacity to develop specifications and to exercise serious oversight. Some senior parliamentarians are also mere praise-singers of Margins.
• Due to the stranglehold Margins has over the Ghana Card, each unit costs Ghana nearly 20 times what a similar smartcard costs Rwanda.
• The Ghana Card PPP was supposed to be cost neutral to the government. It was to pay a startup contribution of $124 million and then recoup over time as revenues come in. However, the “revenues” are a sham since they come from the same government.
• Government of Ghana is therefore going to end up paying up all the $1.44 billion revenues the system is designed to generate by 2033, and Margins will get virtually all of the money.

Now, let us get into the meat.

Some senior MPs are making it hard to take Ghana’s Parliament seriously

A few weeks ago, members of the “subsidiary legislation” committee of Ghana’s Parliament visited one of the factories of Margins Group, the company that owns Ghana’s National Identification System, the so-called “Ghana Card”. The powerful committee makes virtually all the administrative and regulatory laws that govern many day-to-day functions of the administrative state and its government.

Even though concerns about Ghana Card are a matter of periodic inquiries before the Parliament, the Chair of the Committee, the Member for Bolgatanga East, could not contain his enthusiasm to declare the Opposition Party’s unrestrained support for anything Ghana Card. Given his premature and prejudicial excitement, one wonders how anyone can expect the Parliament, as presently constituted, to exercise any serious oversight in the matter.

The MP’s behaviour is reminiscent of another visit to another company, whose business relationship with Ghana has come under severe scrutiny, SML. Even whilst the matter was under investigation by Parliament, and concurrently by the Presidency, the Chair of a powerful parliamentary committee rushed to the premises of the company to pass very prejudicial comments about the ongoing investigations. He insisted that he had observed “world class monitoring” activity on the premises, the very issue being probed. This was curious since the President of Ghana had announced a suspension of the company’s activities whilst investigations continued.

How then was the MP, the Honourable Member for Akim Abuakwa South, able to observe “world class monitoring” in an operation halted by no mean person than the President of the Republic? How?

State Enchantment

It has become clear for some time now that the institutions set up to safeguard the public interest in Ghana have been performing below par. In some cases, the results suggest that they may even have become compromised.

Even more concerning is a trend best described by this term: “state enchantment”, a process by which projects primarily intended to enrich private actors are wrapped up in spectacular clothes of national glory, so radiant that the public is perpetually blinded as to the underlying commercial motives. The “haze of glory” surrounding these projects makes any call for scrutiny easily dismissible as bizarre negativity.

Such state enchantment programs benefit massively in an environment such as Ghana, where the official watchdogs like Parliament and the anti-graft institutions have powerful actors within who compromise these institutions’ oversight functions in relation to these same programs.

This author recently had the opportunity to talk about this at an event organized by some respected institutions. One of the case studies highlighted in the talk was, unsurprisingly, Ghana Card.

Ghana Card, for reasons to be offered shortly, is one of the most brazenly potent examples of state enchantment ever conceived.

What is Ghana Card?

Creating a general-purpose ID card for Ghanaians is a national dream of old. The military regime after the Second Republic acted on this and distributed some cards starting with areas around Ghana’s land borders. Not much progress was made thereafter.

After various fits and starts, the National Identity Authority was set up in 2003 and its enabling legislation passed in 2006 (Act 707). A strategy was taken to issue cards to both Ghanaians at home and abroad.

In the perennial confusion and amidst the jostling for rents by elites that attend every public project in Ghana, the project got stuck. Even though loans sourced from France for French contractor, Sagem Morpho, and “counterpart funding” from the Ghanaian government, led to a $60 million budget being put together by 2008, time was too short; the government of the day lost elections at the end of that year and the new government, as is customarily, decided to restructure the entire project. Margins was a subcontractor to Sagem in that initial run.

After 8 years, some progress had been made, but significant challenges remained. Activist organisations like IMANI pointed out a wide range of defects in the prevailing regime which unchecked would undermine outcomes over time. Before the sitting government could get a grip on the project, they also lost power.

Wastefulness

When the new government arrived on the scene in 2017, 15 million Ghanaians were already captured in the national database, and the entire infrastructure (except the foreigners segment) was primarily controlled by the State.

What remained was the development of value-adding authentication modules on top of the national database, the perfection of a higher-spec physical card production process, and a distribution system to ensure that printed cards could get to their owners. So weak was the initial logistics solution that even though 2.7 million cards had already been produced by 2013, only 900,000 had been distributed by then. By the end of 2016, 50% of the 3 million printed cards remained uncollected. A new biometric data collection system held data for 4.5 million Ghanaians (less than 30% target penetration).

Fixing project challenges, the Ghana Way

When the new government took the reins of power in 2017, the usual review of programs occurred. Having identified the problem as being one of inadequate resources, all that was necessary was to determine the right level of government financial commitment, prioritise efficient procurement, and cut out waste due to poor logistics planning.

Instead, the government decided to start all over again, discard the old databases on grounds of forward-incompatibility of the technology stack, and enter into a new public-private partnership (PPP) contract with the Margins group. This is the precise moment when the state enchantment effort began.

What had been a routine bureaucratic program of identifying citizens, something that many Francophone countries have been doing for decades without fanfare, suddenly became a messianic affair of Marian proportions. All of a sudden, every problem in Ghana was only solvable by “Ghana Card”.

Many have been swayed by these antics, and the more hard-nosed among the population merely dismiss the hype as the usual dross of PR-centric Ghanaian political showboating. In this essay, however, the intent is to show how the PPP model by its very design requires such high levels of state enchantment to operate. It also explains why all levers of state power has been brought to bear to force the Ghana Card on the population in order to artificially inflate its importance.

How did Margins get in? (Nice contract if you can get it)

The subsidiary of the Margins group that entered into the PPP with the NIA to roll out the Ghana Card solution is Identity Management Services (IMS). IMS got its muscle from a joint venture it initiated with American and Danish investors to print cards for the first incarnation of the Ghana Card in 2003 when the design was based on State control of the system, with contractors just producing the cards and selling equipment. IMS had the local relationships, the Danes and Americans had the technology and fund-raising capacity.

With both local and international connections in place, the Margins Group would benefit from a million-dollar grant from the Danish government to cover its part of the joint investment. In total, $3.5 million in Danish funding went to the partners in a nice blend of grant funding and commercial credit. The Danish development finance institution, IFU, doubled down on the project with additional credit of $5 million by 2015.

With financial muscle comes influence, and so Margins was able to convince the NIA to enter into a PPP in 2013 to handle just the registration of foreigners in Ghana. The template was thus set for the current wide-ranging relationship consummated with the 2018 PPP agreement.

Why PPPs can unblock resources in Ghana

The impression created that somehow the PPP for the national ID card program in Ghana unlocked fresh private sector resources and saved the government money is of course abject nonsense. regardless of the precise model, in the end, the money would have come from the government.

What is true however is that crafting the program as a PPP did make the government more willing to release money. Somehow, just having a big private beneficiary driving outcomes propels government institutions to unlock large amounts of money they would never otherwise had released if a government agency was the one driving the project. Furthermore, entrusting the asset base of the project to a private businessman appeared to have created the necessary motivation across all levels for the project to succeed. This is the only reason why Ghana Card issuance has successfully been boosted to ~17 million Ghanaians.

Who owns the Ghana Card Assets

There are a number of key systems that make the Ghana Card work:

• A datacenter to store the data, including the biometrics.
• Database software to organize the data effectively for retrieval, validation and updating.
• A special memory chip to contain the identification information stored on the physical smartcard.
• Unique cryptographic and encryption solutions, plus the accompanying cybersecurity techniques, to prevent manipulation of the data and enable authentication of the individual.
• A stack of security features to prevent unauthorized issuance, alteration and duplication of cards.
• Biometric capturing, de-duplication, and validation systems.

As mentioned previously, the data collected is meaningless unless organized and deployed by such assets. That is why the 15 million citizen data points collected by 2016 did not translate into much; the asset base was not adequate.

When Margins Group says that “government of Ghana” owns the Ghana Card data, it is not being candid. It owns the assets and infrastructure that makes the data usable.

The best way to emphasise the reality of things as currently pertains in Ghana is to say that WITHOUT MARGINS, GOVERNMENT OF GHANA CANNOT OPERATE THE GHANA CARD.

The licenses covering the critical technologies and the service contracts for their maintenance are all owned and controlled by the Margins Group and not the government of Ghana. The government can easily put minds at ease by publishing the inventory of technologies with a map of ownership.

Ghana’s fingers are in Margins’ mouth

To underscore the point about ownership, let us ask a simple question: could the government of Ghana ask another contractor to print Ghana Cards or to supply biometric authentication devices for any purpose related to national identification, such as a mass registration campaign, service center setup (offices where one can go to replace their Ghana Cards or seek technical assistance), or integration into the information system of another government agency without the Margins Group? The answer is an emphatic, NO. It cannot.

And the issue is not just about requiring the expertise of to provide technical support. We are talking here about the actual provision of goods and services related to national identification. No other company can produce the physical cards for the government, supply biometric devices, or handle data integration activities for any national identification purpose in Ghana EXCEPT Margins group. No matter how cheaper any other company can print ID cards (which, by the way, is a commodity business today), procure and supply biometric devices, or handle integration between another agency and the National Identity Register, the government of Ghana is bound to use Margins.

This is absolutely not the kind of PPP most have in mind when they hear about the Ghana Card project, and yet that is what the country is saddled with.

Of course, a rational strategist designing a Ghana Card system purely in the public interest would have unbundled the architecture such that the underlying registry containing the biometric data would have been entirely government controlled.

They would then have ensured that assets purchased and configured by the private contractor for authentication and validation would have been transferred to the government.

And, no doubt, they would have ensured that the peripherals such as the physical ID cards and biometric devices are uncoupled from the core infrastructure such that anytime the government or any of its agencies want to acquire some cards or biometric terminals, they would simply issue a tender and award the contract to the most cost-effective and technologically advanced vendor. This is how it is done in Malaysia. This is how it is done in Indonesia. And this is how it is done in South Africa. And, in fact, this is how it is done in every serious jurisdiction concerned about fiscal prudence and fairplay. Even Rwanda’s card production (even though it was coupled with data collection) was subject to open tender. Of course, tenders can be rigged, but without even the option to tender, a country is essentially locked in a pattern of poor procurement.

Pretend Nationalisation

Constant complaints by a few activists like this author about the way the National Identification System was set up finally convinced the authorities to act. In 2022, they began the process of migrating the Ghana Card database to the national datacenter and transferring the Public Key Infrastructure (PKI) associated with the project to the National Information Technology Agency (NITA).

However, this effort has been cosmetic because the essential design and structure of the database system makes it very difficult for the government to pursue a flexible vendor strategy: letting anyone other than Margins print cards remains a practical impossibility. As for the PKI model, it has never been fully implemented, except for the deposit of Ghana’s public keys in Montreal, with ICAO, as part of the comical e-Passport fiasco. This year, the Ministry of Communications is requesting yet more money to build this mysterious PKI thing. Ghana Card’s encryption and cryptographic domains remain the exclusive province of Margins.

In fact, Margins simply used the half-hearted nationalisation process to secure more lucrative contracts. They billed the government more than 55 million GHS to establish the Disaster Recovery System that they claimed the transfer required to be successful.

Furthermore, the authentication software is still closely-coupled with the data system (with related licenses, such as those covering the Entrust technology and its durashield module, remaining with Margins). The net effect of all these is that any vendor brought in to compete for jobs like cards production, biometric device supply, and API integrations for government agencies, will be entirely reliant on Margins. In fact, they will be redundant.

This pretense of a transfer continues unchallenged because of the extreme opacity of the entire architecture and process.

Some readers may still be unconvinced at this point about whether these serious institutional defects are having any tangible adverse effects. And the answer is, yes. Plenty.

Ghana Card has become a MASSIVE rip-off

The big justification for the PPP model used in rolling out the National identification System is that it unlocked private resources and thus overcame the old “no money” syndrome bedeviling so many public sector initiatives. But this is a big lie. It merely UNLOCKED GOVERNMENT MONEY.

As part of the April 2018 Agreement signed between Margins and the government of Ghana, which was never published for the benefit of the general public, the government of Ghana agreed to make guaranteed payments every month to Margins. These payments are due if the fantastic revenue amounts anticipated under the agreement do not materialise.

Since the agreement was based on agencies like SSNIT (the public pensions fund), Ghana Revenue Authority, the National Health Insurance Authority (NHIA), the Drivers & Vehicles Licensing Authority (DVLA) and others paying Margins hundreds of millions of Ghana Cedis over the 15-year lifecycle of the project, it was always a foregone conclusion that the burden would ultimately be transferred to the central government. NHIA, GRA, CAGD and the likes are not primarily profit-making institutions. To buttress the point, note NIA’s projected revenue from Ghana Card operations of barely 8 million GHS in 2024.

The projected 2024 figures are based on a recognition that the premium services forced down the throats of Ghanaians in the last few years at 250 GHS per person, and the integrations forced on some state institutions, leading to revenues of nearly 78 million GHS in 2023, have ceased having attraction, with premium service centers now lying mostly empty.

It was thus a ruse to pretend that there was something financially innovative about how the PPP was set up. Government was always going to have to pay for the system, except that in the specific type of PPP model selected, the cost burden on the government was heavily inflated just so that a private company can make fantastic returns that other private companies struggle to make in any industry.

It is mind-boggling reflecting on the whole financial design of the Ghana Card

The April 2018 agreement was based on the premise of the setup of the card costing a little less than $300 million, and operations and maintenance costing another $900 million over the 15-year period (i.e. 780 million Ghana Cedis a year). The private partner was guaranteed a minimum 17% return.

For the numbers to work out, the system must generate income of at least $93 million a year (far more than that, actually, if one considers the time value of money, which we are ignoring to keep things simple). If the system doesn’t, then the government is indebted to Margins since the “profits” and “losses” are shared in a way whereby Margins is guaranteed a profit only. Essentially, the government bears all the risks, and Margins has none of the downside. On top of all these, Margins has already been granted tax exemptions of at least ~$177 million.

It was thus highly deceitful when the impression was earlier created that the government’s liability was limited to the $124 million it had to contribute to setting up NIA’s offices, buying vehicles, and hiring people. The approval of the PPP by Cabinet and the Ministry of Finance (and later by Parliament) was based on this erroneous impression of a one-off cost and self-sustenance thereafter.

In the end, the government of Ghana had to hire roughly 1400 more people to provide the NIA with the manpower needed for national operations. Actually, the NIA wanted to hire 3265 people, but the Ministry of Finance refused. The total personnel cost of running the government side of the system was barely 5.2 million GHS in 2017. Total admin costs in 2019 were 3.3 million Ghana Cedis in 2019. Today, the goods and services budget alone is over 165 million GHS per annum and compensation has gone up by more than ten times.

The idea of a one-time cost has now been thrown out of the window and government contributions both to the NIA and Margins keep ballooning even as arrears pile up.

The government’s maximal exposure could well exceed $1 billion if the evasive revenues don’t show up. Remember, however, that the revenues are mostly supposed to come from government agencies that often struggle to balance their books, and whose liabilities always end up being transferred to the government anyway. Like the NHIA policy that was supposed to find innovative financing through “insurance” but is today 98% tax-funded, the Ghana Card project is today predominantly tax-financed.

One-half of the Ghana Card PPP, the portion focused on the Ghanaian diaspora, had already racked up losses of nearly $300 million by 2021. Losses that the government of Ghana is expected to make whole for Margins.

How then can one attribute the successful issuance of 17 million cards as an outcome of some innovative PPP, except for the fact that the mere existence of private incentives has made the government more willing to spend money that in the past it was not willing to spend?

Squeezing every drop from Ghanaians

Margins, with the strong support of the NIA and various other elite enablers, constantly find ways to squeeze more money from Ghanaians. It’s justification is that it invested massively to set the system up and as a private investor, it is entitled to recoup. But this claim is dubious in a number of respects.

It is true that the PPP strategy envisaged an upfront investment of $169 million by Margins. But no one has ever audited the actual expenses made. Even though Margins was supposed to be totally responsible for the entire technical infrastructure setup, including all equipment etc., the situation right now is that government agencies are buying the equipment and paying for activities that per the April 2018 agreement Margins was expected to fund.

Heavily incentivized to make the most money possible, Margins constantly induces the NIA to shift strategy towards approaches that cost more money.

For example, an earlier decision was made to produce 2D barcoded cards (instead of cards with chips) for children under 15 years since their risk of impersonation and identity fraud in general is so low. A plastic card without a smart chip can cost about one-tenth of the price of one that has a chip. Imagine the surprise of analysts then when it was recently announced that NHIA will procure smartcards from Margins for children.

It stopped being surprising, however, when the cost was revealed. Just for the physical cards, NHIA will pay 81.9 Ghana Cedis per unit, that is nearly $9 at the time the procurement decision was made. Just for the cards. Adding ancillary costs like equipment and data capture, which are also being billed to the NHIA, take the cost to nearly $20, about the same price Margins and NIA charges for those who want to acquire the Ghana Card outside the government’s poorly organized mass registration campaigns. Rwanda, because it could use open tender to obtain smartcards and data capture services spends just $0.9 per card.

The unconscionable unit costs reflect in the total NHIA budget for the Ghana Card for Children project.

NHIA’s Parliament-approved allocation model for the NHIF levies all Ghanaians pay when they buy VAT-rated products for 2023 shows that the 4^th largest budget item, at 405 million GHS, was for spending on Ghana Card. Thus, every time anyone in Ghana pays NHIL on any item, a massive amount is pumped through schemes like this into Margins’ ever-ready pocket.

In the end, instead of the 6.87 billion GHS spending plan, the total budget for 2023 came down to 4.53 billion GHS, of which 4.37 billion GHS was actually spent. The allocation to Ghana Card thus reduced to 180 million GHS, but it still remained the 4^th largest budget item. Consider that the entire call center operation of the NHIA, so essential to customer service, was allocated just 1 million GHS. NHIA’s entire sensitization budget was just 3 million GHS. Only 42 million GHS was spent on emergency medical care. Public education, social marketing and sensitization was lucky to get 9 million GHS.

In 2024, the NHIA intends to spend more than 300 million GHS on Ghana Cards.

Why on Earth would a health insurance service prioritise ID cards to such a great extent when everyone knows that its anti-fraud concerns are not about people impersonating other people (no point in doing that as packages are virtually identical) but about service providers inflating costs? In most countries, ID cards don’t even merit their own line item in the budgets of public health insurance bodies. Why couldn’t Parliament push back when confronted with these mind-boggling figures? Simple answer: State Enchantment.

The NHIA is of course not the only organisation being squeezed to ensure that the $1.2 billion revenue target (plus extra return) is reached at all cost by 2033 so that Margins can make its guaranteed returns. Organisations like SSNIT, GRA and others have large bills outstanding for so-called integration services. As at 2022, GRA alone owed Margins at least $12 million. And, of course, citizens must bear the inconvenience of being denied services like banking and drivers’ licenses if they can’t show a Ghana Card in order to induce them to part with nearly $20 for the privilege.

Somehow, someone has been able to hypnotise the whole country into believing that Ghana Card is actually saving government entities money. That somehow GRA needed to pay tens of millions of dollars just to integrate into a national identity system. And that impersonation is such a big problem that instead of a cheap plastic card with a 2D barcode costing about 20 cents ($0.2), NHIA instead needs a $9 smartcard.

When the previous government secured a loan promise from China of $115 million in 2013 to rollout a truly national system, many were those who criticized the government for profligacy. Yet, in the name of an innovative PPP, the government is on course to spend a billion dollars for an identical system.

The NIA is a zombie partner

It is not entirely clear how much the NIA sees its role as simply facilitating the profit margins of Margins Group versus defending the public interest.

One thing, however, is for sure, the NIA is quite clueless in serving as some kind of technical bulwark to Margins in the defence of the national interest. It is clear that it is simply out of its depth and cannot shadow the shrewd Margins operators in this fairly complex domain.

How do we know? In attempting to shed a bit of light on the notoriously opaque Ghana Card system, NIA simply went over to the websites of various government agencies in the United Arab Emirates and copied everything verbatim, a clear sign that they had no hand in designing the specifications. Because of a history of webpages disappearing in the heat of national debates, we have ensured that the screenshots below have the exact web addresses so that readers can make their own screenshots (here, for example).

We have NOTHING against Margins Group

No one is disrespectful of the entrepreneurial acumen of the people behind Margins Group. In fact, many of us with an exposure to entrepreneurship in Africa admire their tenacity and shrewdness. Most businesspeople who get the chance to milk an unserious client, who seems all too happy to be milked, will do so. The founders of Margins are in business to make money.

The people who deserves our ire are the politicians in Parliament and elsewhere who are busily working to throw wool in the eyes of the citizens, even as the hypnotic effect of state enchantment works to siphon off hundreds of millions of dollars into private pockets.

Everyone on my Twitter timeline knows by this time that in response to a tweet I posted asking ECG to confirm and explain a USD – GHS rate they indicated in submissions to the PURC, Fidelity Bank has decided to sue for libel.

Here is the tweet:

Fidelity alleges that my tweet libels them because it suggests that they have obtained benefits through a “sweetheart” arrangement with the Electricity Corporation of Ghana (ECG).

Fidelity is represented by Dominic Akuritinga Ayine, the Member of Parliament for Bolgatanga East, who doubles as the Chairperson of the Committee in Parliament that examines and approves most species of regulatory and administrative law in Ghana. He is also a member of the powerful House Committee, which is responsible, in an advisory capacity, for the welfare of parliamentarians and the parliamentary staff, as well as of the Trade, Industry and Tourism committee. Some might recall that he was the Deputy Attorney General in the previous government who signed the Ameri deal and, for that reason, was locked in a long tussle with me on social media about the merits of that agreement.

As I have already said on Twitter, I intend to vigorously defend against this suit in the law courts. For that reason, I will not say too much about the specifics of the case or about my defense. As the saying goes, I will have my day in court.

However, because this is not a private matter (I was sued in the line of duty of seeking public accountability from ECG), and there is a broader context to all of this, it is important to be transparent about a number of issues.

As a member of a network of extremely activist Civil Society Organisations (CSOs) in Ghana (eg. IMANI and ACEP), I can say that we do view this insertion of Fidelity into what is essentially a tussle for accountability between us and ECG as serendipitous.

For a while now, it is becoming apparent that we cannot hold public institutions to account without, at least occasionally, demanding cooperation and answers from private businesses and institutions.

Much too often, the actions of public institutions that lose this country large amounts of money involve private businesses to an extent. Of course, in many instances, private businesses are just pursuing their legitimate enterprise. But it is also true that their involvements have sometimes, more often than we would like, served to enable financial loss to the country. We must not shy away from confronting private businesses if we believe that their actions in anyway, intentionally or inadvertently, are causing problems for Ghana’s already beleaguered governance.

In this ECG-Fidelity-CSOs triangular situation, dumsor is the context.

For far too long, the country has underplayed the financial mismanagement that leads to debts piling, fuel shortages, poor maintenance, and generation and distribution shortfalls. If transformers are overloaded, it is because there aren’t enough resources to increase their density. If gas quantities have fallen, but the country can’t buy crude to substitute, it is because resources are insufficient. If too many plants are going out of action, it is because maintenance activities are being serially postponed due to financial constraints. In such a context, this country cannot afford to lose money due to any lack of diligence or, worse, sheer recklessness.

As anyone who has followed the judgment debt saga in this country realized, private businesses were always in the mix. Everyone who has followed procurement shenanigans in this country could not have missed the role of private businesses. We cannot hold public sector actors accountable, if we are afraid to ask hard questions of private sector actors for fear of being sued.

Their profits are not more important than our public losses.

All the above said, and in the spirit of transparency, I would like to confirm that Fidelity’s lawsuit will not stop myself or the CSOs with which I am affiliated from continuing to demand accountability from the Bank in situations where they are entangled with public sector financial matters.

I would therefore like to publicise that on March 4^th, 2024, I asked my lawyers to inquire of Fidelity about their exact role and involvement in a number of Ghana’s energy finance value chain issues. So far, they have not deemed it necessary to respond to these inquiries.

However, we will persist.

Here are a few of the issues where we would like to see Fidelity actively assisting the public accountability and public financial governance interests of the Ghanaian people. These are matters in respect of which the people demand clear and unambiguous answers from Fidelity.

1. The governance issues manifesting at ECG, and attracting serious regulatory censure, belong properly at the Board of ECG. ECG is accused by its primary regulator of stonewalling auditors, hiding data, misrepresenting financials, and generally being shifty and dodgy.
2. When ECG was asked by Cabinet of Ghana to consolidate its bank accounts, it chose Fidelity Bank as the primary custodian of this new single account. Fidelity thus became ECG’s principal banker, with Fidelity bank account number 1070006628289 becoming the primary treasury node.
3. ECG thus has extensive commercial and financial dealings with Fidelity Bank.
4. Today, Fidelity’s Group Head of Legal and Company Secretary is Maataa Opare, a member of the board of directors of ECG.
5. Ms. Opare has extensive oversight over Fidelity Bank’s compliance with regulations, policies, ethics, and laws.
6. It seems to us that this represents a major entanglement between her fiduciary responsibilities at ECG to ensure that the organisation is procuring competitively, demanding high performance from vendors and bankers, and ensuring strict standards and compliance in all business relationships, on the one hand, and her role at Fidelity to negotiate the most favourable contracts and commercial arrangements. It is not possible to see how this conflict is manageable on an ongoing basis. Ms. Opare will be drafting contracts at Fidelity to extract maximum commercial advantage from ECG on Monday, and then on Tuesday, she will go to ECG and approve them?
7. Recusal is not an effective remedy when the business relationship is now so strategic and all-encompassing.
8. On top of all this, Ms. Opare is believed to be politically exposed. Our sources say that she is a “close associate or relative” of Ms. Frema Opare, the all-powerful Chief of Staff of the Ghanaian Presidency.
9. Since coming to ECG, Ms. Opare has used her close relations with the Chief of Staff to secure her patronage for her initiatives at ECG such as the ECG Power Ladies and fempower corporate activity.
10. What we have now then is a powerful, politically exposed, business executive at Fidelity strategically positioned on the board of ECG, an organisation that has become noted for flouting regulatory directives and thwarting government policy.
11. Our honest and objective assessment is that this complicated arrangement heightens the level of scrutiny that must be applied to ECG-Fidelity dealings, generally. There must be a rebuttable presumption that dealings between ECG and Fidelity are fundamentally high-risk, on a governance level.

Our past RTI request to Fidelity Bank and the upcoming ones transcend this specific matter. We have raised, and shall continue to raise, questions about Fidelity’s reported flouting of regulations related to the national FX platform managed on behalf of the Bank of Ghana by Bloomberg and Thomson Reuters; Fidelity’s role in the Gold for Oil program; and a host of others.

For now, however, we would prefer not to overload the reader. These investigations are at an early stage. The effort to enhance scrutiny of the role of private businesses in Ghana’s public sector financial issues and challenges is a marathon rather than a sprint.

In time, the people will have their answers.

Broken subsea cables and poor internet notwithstanding, Ghana’s social media space has been set ablaze these last few days by rumours of politically exposed persons moving large amounts of money to the United Kingdom and elsewhere, and setting off some red flags in the process.

It seems that I have found myself right in the eye of the storm by tweeting about a situation that everyone in the country’s vibrant “public affairs” community has heard being discussed in the grapevine. Even though my tweet was emphatic about the need for corroboration by trusted sources, some ruling party activists seem to think that merely by mentioning “politically exposed persons”, I am somehow putting important party-affiliated big bosses in a tight bind.

I did not tweet to provoke needless controversy. Nor was my interest in the grapevine banter merely for thrills or to sate an appetite for salacious gossip. My interest in the speculations does indeed stem from a serious policy context about politically exposed persons moving funds from Ghana overseas, not always for justifiable reasons.

The FATF Bogey

Some might recall how Ghana’s Finance Ministry celebrated when on 25^th June 2021, the country was removed from the FATF grey-list, an international watchlist of countries failing in their duty to check money laundering and terrorism financing.

Ghana was placed on that list in 2019 because of failures to address, among others, recommendation 8 of the FATF checklist, which deals with how a jurisdiction regulates services-delivering Non-Governmental Organizations (NGOs) and the risk they can pose as conduits for shady money. The NGOs being referred here are those that offer social services like health, education and economic development, rather than those classed as “expressive” (such as think tanks or advocacy institutions).

To quote from the relevant FATF document:

Upon showing substantial progress during site visits in 2016 and 2018 by GIABA, an ECOWAS-affiliated body that conducts FATF audits in West Africa, Ghana was declared “partially compliant” with Recommendation 8, largely compliant with several other recommendations, and was subsequently removed from the grey-list. Another site visit was scheduled for May 2023, but no information is publicly available about the country’s latest performance on the FATF scorecard.

This is not the full account of Ghana’s FATF story, anyway.

The Politically Exposed

On 22^nd June 2012, Ghana was first placed on the FATF grey list. GIABA’s initial assessment in 2009 had shown extensive failings in managing the risks of Anti-Money Laundering/Counter-Terrorism Financing (AML/CTF) as a jurisdiction. One of the country’s principal weaknesses was in the area of managing the risks posed by Politically Exposed Persons (PEPs).

The FATF system draws on Article 52 of the UN Convention Against Corruption (UNCAC) to define PEPs as:

“Individuals who are or have been entrusted with prominent public functions both in [Ghana] or in foreign countries and people or entities associated with them. PEPs also include person who are or have been trusted with a prominent functions by international organization.”

PEPs include:

i. Heads of State or government; ii. Ministers of State; iii. Politicians; iv. High ranking political party officials; and v. An artificial politically exposed person (an unnatural legal entity. belonging to a PEP); vi. Senior public officials; vii. Senior Judicial officials viii. Senior military officials; ix. Chief executives of state owned companies/corporations; x. Family members or close associates of PEPs. xi. Traditional Rulers

Because such powerful individuals easily find fronts for their nefarious activities, the term is also officially understood to cover their “relatives and close associates”.

When in February 2012, Ghana was first placed on the FATF list, as one of just 12 countries in the world to receive this dubious honour, very little by way of policies, laws, and guidelines had been put in place to regulate the risks that PEPs pose to governance of the country’s financial system. Some of the key gaps identified in the original 2009 GIABA site visit were as follows:

• Securities, insurance and stock exchange regulated entities are not subject to requirements to assess the political status of their clients.
• Requirements to put additional risk management systems in place to determine whether a potential customer or a customer or the beneficial owner of a customer is PEP.
• There is no requirement to obtain senior management approval prior to opening an account for a PEP;
• No sectors are subject to a requirement to obtain senior management approval to continue a relationship when an existing customer is discovered to have been or to have become PEP.
• Insurance, Securities and Stock Exchange regulated firms are not subject to a requirement to establish the source of funds of a PEP;
• No sectors are subject to a requirement to conduct enhanced due diligence should they decide to provide services to a PEP.

A 2010 follow-up report said that these problems still persisted. Following the grey-listing action in 2012, Ghana began taking steps to correct this, eventually leading to the country’s removal from the FATF grey-list on 22nd February 2013.

By 2017, the FATF was reporting progress made in developing a bunch of regulations and policies to tackle the risks posed by PEPs, as well as other critical shortcomings identified in the 2009 initial site visit. A list of some of the actions taken by Ghana to impress the GIABA FATF auditors is below.

If the reader has been paying attention so far, he would have noticed that 6 years later, on 22^nd February 2019, the country was back on the list. Since, these international ratings are dynamic, Ghana could find itself back on the list should the authorities slack in complying with the spirit and letter of the 40 recommendations.

At the time that I posted the tweet, I was in the middle of reviewing a number of critical shortcomings in Ghana’s PEP management regime. I had been having conversations with a variety of people. It is in that light that when someone passed information from compliance professionals in the UK suggesting that Ghanaian PEPs have been flagged in the UK and that in some instances their transactions have been defended on the grounds of Ghanaian government interest and/or national security, I started to take the grapevine speculation more seriously. Because our work involves the cultivation of sources, it is sometimes necessary to alert the public about ongoing work, even at an early stage, so that other “whistleblowers” and “tippers” will be motivated to get in touch. In the circumstances, this difficult, careful, and skill-intensive work continues unabated, but we are under no illusions that we can obtain results easily or overnight. We persist because we must.

Ghana’s broken Politically Exposed Persons (PEPs) financial Risk Management System

Since posting that tweet, I have noticed a serious lack of understanding of the basic facts of AML/CFT and cross-border financial controls.

Some commentary assume that all suspected AML/CFT incidents automatically lead to criminal action or law enforcement investigations. Whilst others mistakenly assume that every PEP-related cash transfer incident must automatically be dealt with by law enforcement agencies as a matter of suspected crime. Problematic PEP-related AML/CFT activity however span a wide spectrum, and many are dealt with at the level of the financial institutions involved.

In my ongoing review, I have noticed that the Ghanaian authorities have made massive, commendable, improvement on the ECOWAS-managed FATF assessments in the last ten years (with periodic slippages, such as in 2018 – 2020) by creating a plethora of policies, guidelines, and new institutions. Actual compliance with certain key recommendations, particularly the ones dealing with PEPs (such as recommendations 12 and 22), however, remains severely lacking.

For example, the Bank of Ghana – Financial intelligence Center guidelines on the subject (December 2022) for instance requires as follows:

“Financial institutions shall take reasonable measures to establish the source of wealth and the sources of funds of customers and beneficial-owners identified as PEPs and report all anomalies immediately to the FIC and other relevant authorities.”

FATF’s expectations of compliance with such measures rest on this assumption:

“Many countries with asset disclosure systems have provisions in place on public access to the information in the disclosures, and make disclosures available on-line. While in many cases only a summary of the information filed by officials is made publicly available, the information that can be accessed sometimes includes categories such as values of income, real estate, stock holdings sources of income, positions on boards of companies, etcetera. Often, financial institutions and DNFBPs must primarily rely on a declaration by the (potential) customer.”

The truth is that in Ghana, this arrangement is a bit of a charade. The asset disclosure regime is widely regarded as ineffective. It is neither transparent nor easy to draw upon to hold any PEP accountable for their wealth.

The exhortations to financial institutions such as the one immediately following are thus quite naïve.

“If the PEP‟s net worth has grown substantially in a short amount of time, do you have a clear explanation for the sudden growth? Check source of wealth and source of funds.”

Every Ghanaian knows many PEPs who have become wealthy overnight and freely utilises the financial system without any hard questions being asked of them by anyone. The requirement that all transactions by PEPs should be reported to the Financial Intelligence Center (FIC) is also widely known to be regularly flouted because the mechanisms for identifying “relatives and close associates” are lax and poorly maintained. The FIC itself has not published its annual reports for nearly 5 years now, in contravention of the hallowed transparency regime of the FATF. But in its last publicly available report, issued in 2019, there is nothing whatsoever to show that even Suspicious Transaction Reports (the highest-risk category for reporting) relating to PEPs are receiving priority attention.

No information is provided whatsoever about any investigations involving PEPs, creating the impression as if all has been calm on the front. But that is far from the reality. In fact, despite expert opinion that things have been worsening, the volume of Suspicious Transactions Reports actually fell consistently until Ghana was shoved back onto the FATF grey-list again in 2019.

This is NOT just some theory

The whole country was seriously embarrassed when it was revealed that Ghana International Bank (GIB), a Bank of Ghana owned entity based in London, was seriously lax in enforcing standard anti-money laundering provisions involving its corresponding banking partners, most of whom are Ghanaian banks. GIB was fined nearly £6 million for these infractions by the UK’s Financial Conduct Authority (FCA), and only because it essentially “pled guilty” and was thus graced with a discount. Virtually none of these AML infractions became the subject of law enforcement action in the UK, but that does not mean that they were not grave.

A few years before GIB’s fine, evidence came to light in an employment tribunal hearing that a PEP had flown to London with his suitcases stuffed with nearly £200,000 and a further ~$200,000. The PEP had no trouble getting a senior GIB banker to pick up the cash, deposit some in his London account, and transfer the rest to FCA. This matter did not attract an FCA sanction, much less the attention of the UK law enforcement authorities. Yet, the GIB banker was fired for AML-related misconduct.

The point here being that Ghanaian PEP abuse of AML safeguards is rampant but most incidents remain under the radar of regulatory and law enforcement, both in Ghana and the UK, because they are dealt with by Bank Compliance officials, who then submit such information in routine reports. The sheer volume of such reports make it highly unlikely that every such incident will attract formal law enforcement investigations and penalties.

Even when the authorities are involved in investigating a PEP-related AML incident, poor transparency and arbitrary decision-making makes it quite difficult to understand the motivations behind enforcement.

Take this case recorded by GIABA:

The identity of this PEP that shipped $11.4 million to Sierra Leone was never disclosed. No public prosecution records can be found on the incident. Nobody has accounted about anything to anyone. Had GIABA not captured it, it would have remained only in the grapevine. But even GIABA does not dare name names without the sanction of the authorities.

Similar reports of how PEPs have discovered the sports-betting and casino industries sprouting up all over the region as ripe for their money carting activities occasionally show up in GIABA monitoring, corroborating widespread grapevine speculation. But little actual transparent law enforcement activity occurs in response.

As western governments succumb to industry pressure to loosen strict AML rules, source countries like Ghana for AML and PEP-related money flows into Europe will certainly intensify. The problem is that our economies will suffer for it. And the resulting laxity will create more conditions for Ghana to return to the grey-list.

Fighting PEP Financial Abuses is challenging but critical

The reader might consider all this grey-list business esoteric compared to the much more obvious harm of monies being sucked out of economies like Ghana which are desperate for cash to address basic problems like electricity generation and distribution. But the truth is that FATF grey-listing does matter. IMF studies have shown that grey-listing can shave as much as 7.6% off GDP, curtail foreign direct investment by an average of 3% and crash other inbound investment flows by up to 3.6% of GDP.

Ghanaians may be justifiably impatient about uncovering PEPs involved in suspicious financial transactions, and even bringing them to book. But it is important to recognise the intricate complexity of these matters, especially the cultivation of sources and the fightback of powerful individuals, and to realise that concerted, and consistent, work by many of us is, and will be, required to effectively bring issues to light and address the risks posed to Ghana’s economic well-being by PEP financial misconduct. And, of course, we must always bear in mind that a PEP can’t be judged guilty simply because he or she is a PEP.

For the occasional Ghana watcher, the story probably began in February 2022 with Moody’s decision to slash Ghana’s credit rating from B3 to Caa1, indicative of “very high credit risk”. The country’s authorities went berserk and accused Moody’s of incompetence, and effective sabotage. Yields on Ghana’s international bonds shot up by 300 basis points almost overnight and difficulties accessing the international capital markets congealed to a shutout. Interest in Ghana peaked around the world. Domestic actors who had been shouting themselves hoarse for more than a year about alarming rates of debt accumulation and fiscal looseness watched bewilderedly as the international charade of surprise gathered steam.

Two years on, much has happened. After “homegrown” revenue boosting measures, like a highly unpopular tax on mobile money and digital payments (panned by analysts but doggedly pursued by the government), and feeble attempts at cutting government expenses (so-called “fiscal consolidation” efforts) failed, the country dashed off to the IMF. Given the severity of the fiscal burden, it was required to freeze servicing on international, and most domestic, debts before unlocking a $3 billion bailout package.

The debt restructuring exercise was highly dramatic. The aloof finance ministry was forced to acknowledge the power of social forces as it locked horns with unions, pensioners, and former Chief Justices. Eventually, though, Ghana did enough to get the IMF to release upfront a first tranche of $600 million. The money came along with several ringing endorsements that have continued as the program enters its ninth month.

The first review was recently completed after a major prerequisite was met: progress with restructuring the country’s bilateral debt. Ghana came out with flying colours. Another $600 million was airdropped into government’s vaults. The government and the IMF have been hard at work trying to get a new tune of recovery, of a magical “turnaround” in economic fortunes, to resonate loud and clear at home and abroad. Truth be told, they are struggling.

As already recounted elsewhere, the talk of “turning the corner” has so far not been able to register. The ruling party recently forced the President to remove his beloved Finance Minister in hopes that a new man with stronger sensitivity to local politics could contribute better to saving the party from a looming defeat at the polls in December 2024.

To the chagrin of the IMF and the government, a drop in inflation from a crisis-peak of 54% to 23.2% last month, and in the domestic currency’s depreciation rate from a cumulative 55% between January and October 2022 (over 30% by year-end) to about 15.5% in 2023, have not had the political and public opinion effects that the IMF and the authorities had hoped for.

What more sophisticated observers are interested in, however, is whether the current improvements are sustainable and if so, whether the mood in the country can eventually be salvaged ahead of the elections scheduled for December 2024. The IMF seems rather confident. They see more data than most analysts and they have some pretty solid technical whizzes. Some leading analysts have aligned with such forecasts. The African Development Bank expects 2024 to end with inflation at 20.4% (higher than the Bank of Ghana’s own projection of 13.5%). Fitch says it will average 18.6% for 2024 and end the year at 13.1%. The Economist Intelligence Unit concurs: 18%, they say.

Such broad-based technical consensus cannot be treated lightly, yet one cannot shake off the feeling that all these macroeconomic and econometric modelling types are not looking much beyond their rose-tinged crystal balls to factor in mass behavioural patterns in the Ghanaian economy. A particular pattern comes to mind, something best described as, “uncertainty apathy”. It is very likely that this phenomenon is present in other African countries besides Ghana. In Ghana’s present circumstances, its principal effect is likely to be a prolongation of the secondary effects of the 2022 crisis throughout 2024.

The easiest way to explain “uncertainty apathy” is to narrow its manifestation to a specific economic context: business confidence. If one were to examine any business confidence survey graphs from markets such as the United States, the United Kingdom, or South Korea, over any significant period of time, one would immediately notice considerable bumpiness.

Economic actors process information about future events in decisive ways in an attempt to minimise the impacts of uncertainty. This sometimes lead to massive overreactions, self-fulfilling doom sentiments, and sharp corrections. But all that volatility, stressful as it is, often means that, in general, a solid recovery is often very clear due to the decisiveness of prior proactive business measures.

My stylised observation is that, in Ghana, and very likely some other major African economies too, such decisive proactiveness tends to rarer. Economic actors and decision-makers appear to be somewhat apathetic about the future significance of uncertainty and are more willing to wait and see, and to adapt with the times. Any business confidence survey graph in Ghana or Nigeria, therefore, typically shows a remarkable smoothness of the curve, with the occasional deep bend when a truly epic black swan event like COVID-19 turns up.

Economic actors’ uncertainty apathy accounts for an interesting array of poorly studied phenomena in the Ghanaian and, very probably, African context.

For example, despite Africa having been in the commodities exchange game for quite sometime, at least since the mid-90s when a couple were launched in Zambia and Zimbabwe, and despite the praise some of these exchanges, like the venerable one launched in Ethiopia in 2008, have received, there have so far been no serious efforts to introduce uncertainty-driven derivatives like futures and other complex synthetics.

Contrast the pattern with, say, Bangladesh, where the first major commodities exchange was launched in 2022 and yet plans are already underway to incorporate futures by leveraging Indian technology. In Latin America, derivatives powerhouses like Grupo Matba Rofex are exploring regional dissemination of such products in markets with only a recent exposure to commodity bourses.

Even classical stock markets in Ghana frequently startle analysts because of their sheer stolidness. In situations where significantly impactful information is circulating, share price movements generally remain frigid and viscous. Many analysts just blame low liquidity without realising that the low liquidity is simply a product of low reactivity. As one researcher, after reviewing dynamics in a number of African stock exchanges, put it, “”However, expected growth does not generate a positive premium, meaning that the Q model is equivalent to the Q5 model for explaining African stock returns.” Not surprising then that insider trading in sub-Saharan Africa (outside South Africa) has never even caused a ripple.

Across broader trading markets, beyond the stock exchange, hedging practices are extremely rare and policy-making almost never incorporate scenario-modelling as a tool of uncertainty-suppression.

Since noticing this pattern, this author has been reinterpreting some long-standing policy debates in Ghana. Inflation management has for decades pitched a group of eminent market practitioners against the central bank. The market gurus lament the central bank’s habit of setting interest rates with a rearview mirror instead of doing so on a forward-looking basis. The central bank actually does have a more nuanced system based on a model (called QPM) it developed in partnership with the IMF. The simple truth, however, is that, from the perspective of market observers, the process comes across as if they are constantly in near-term reactivity mode.

The relative rarity of actual bank runs is another mystery given how often central banks have had to step in and shut down banks, whose weak ratios have long been in the public view (cf: Silicon Valley Bank). There is also the sheer durability of real estate bubbles in Africa’s biggest cities and the stickiness of insurance models, among many other patterns.

The relevance of the uncertainty apathy trope to the Ghanaian situation, as hinted, is to be found in the “stretching out” of reactions to likely future developments due to a kind of indecisiveness more akin to apathy. For example, all the indicators in the second half of 2023 showed an escalating trend in demand contraction. Yet, Purchasing Managers Indices, have still not reflected the full magnitude of what real sector feedback has been unpacking to date.

Retail demand in Ghana fell from $350 million in the third quarter of 2021 to barely $250 million in the third quarter of 2023. Cement sales dropped from more than 803,000 tonnes in the third quarter of 2022 to roughly 583,000 tonnes in the third quarter of 2023. Vehicle registrations (a proxy for new purchases) dropped nearly 20% in the third quarter of 2023 compared with the third quarter in 2022. Secured bank loans to the formal sector dropped a whopping 54.9% at the end of 2023 compared with year-end 2022. A clear shift to sub-prime borrowing was underway as business actors resorted to the grimier parts of the credit markets, where rates easily top 60% per annum. Indeed, the average lending rates among the mid-tier “finance houses” in Ghana topped 60% in the last quarter of 2023. Unsurprisingly, the share of secured loans provided by banks dropped by a mind-boggling 32 percentage points and still hovers around 2%.

In the midst of all this craziness, the Bank of Ghana was still reporting an uptick in the composite index of the real sector by 10% in the last quarter of the 2023, in continuation of an upward trend. Only for 2024 to open to a reversal of business confidence (even if at a lower rate than warranted) as measured by the, clearly lagging, S&P Global Purchasing Managers Index, and the first-ever drop in business confidence in the month of January since records began.

Port data show continued plummeting of import levels, with a strong bearing on intermediate goods inventory levels in the country, a precursor of supply side constriction. Hotel occupancy rates and activity in the hospitality sector generally have also seen severe cuts. Data from the fixed income bourse also show a virtual desertion of the restructured bond market by foreign and domestic investors.

All this is reminiscent of the early days of the crisis in January 2022. The S&P Global Ghana PMI was at 49.6. The indicator stayed at an average of 48 until August 2022 until the full effects of the crisis had played out before the indicator tumbled to 45.9, and eventually bottomed out at 44 in October 2022.

The IMF and the government’s bold expectations of jacking up government revenue outturn to more than 17% of GDP because of the “signs of stabilisation” witnessed in the leadup to the program review in January now looks fanciful given the fragility of both demand and supply conditions. At any rate, the total expected take from specified new tax measures amounted to about 1% of GDP. With the government now in retreat from unpopular taxes in order not to further rile the electorate, as exemplified by the abandonment of a new VAT on electricity measure, the revenue number seems likely to be stuck around 13% of GDP.

Clearly, the country will not be ready for the next IMF review in the Spring of 2024, with analysts now hinting at a June or even mid-Summer timeframe, at least for the next tranche disbursement. Nonetheless, given that this is also the timing market observers are working with for a completion of the Eurobond debt restructuring exercise, it would seem as if a confluence of good news around this time should vindicate the rosy forecasts of a continuing economic rebound into December. Still, the reader may recall the downside risks posed by the concept of uncertainty apathy.

These likely positive developments involving the progression of the agreement in principle with the country’s bilateral creditors to a full closure and the possible resolution of current impasses (such as the Ghanaian demand for an extended debt service moratorium and investors’ preference for a contingent instrument, through which their recovery rates will track Ghana’s economic performance) stalling a quick deal with Eurobond investors are not being factored into domestic economic sentiment in a decisive manner. So, as the ongoing domestic-side demand crunch and supply side gloom prevent an alleviation of the cost of living crisis, the government’s international focus will slacken. The ruling party’s push for the government to ditch even the half-hearted push for real austerity will intensify.

The new finance minister will be under unbearable ruling party pressure to undo some of the patchwork of measures the previous minister set up to pile arrears and defer government obligations in order to release long overdue payments across the economy. Such fiscal backtracking may prematurely unwind a massive arbitrage circuit involving the overvaluation of the domestic currency that has led to a doubling of “transactions in liabilities to non-residents” between the first half of 2022 and the first half of 2023, a possible proxy for borrowing in forex by speculators to buy high-yielding local debt. The effect would, naturally, be felt in renewed pressure on the exchange rate, now at 13.20 units to the Dollar in the open market window. Should the arbitrage unwind quickly, a slide past 15.00 will materialise within three months.

The central bank’s unprecedented commitments to open market operations to defend the monetary policy rate, now at 29%, and sterilise accumulating reserves in order to evenhandedly offset the effects of a continuing expansion of broad money, will keep straining its balance sheet to a point of incontinence. The central bank, having already hiked the reserve requirements for banks, has precious few tools left in the box. It is in a classic stagnation trap.

There is thus a very real chance of significant slippages in the IMF program.

Recent rolling blackouts have served as a reminder of uncleared arrears across the energy value chain. Whilst the government claims that “reconciliation” has brought energy sector debt to just $1.2 billion, industry insiders continue to insist that taking the full span of liabilities into account, the amount exceeds $2 billion. In a recent speech to Parliament, the President cooed about how by sticking strictly to a deal to pay power producers a flat amount of $43 million a month, the woes in the sector are receding. Only for data in January to debunk this claim: the country has been struggling to pay even $9.5 million a month, and half of the companies got nothing that month. The state-owned electricity distributor says that it has not created any more arrears since July 2023, yet the country’s biggest private power producer adduced evidence in a recent standoff with the government to show that about 80% of its invoiced bills are not cleared in some months.

We have also been witnessed to heightened risks of insolvency across the cocoa value chain, a situation that is partly responsible for a reduction in volumes by more than 40% in Ghana’s cocoa output from recent peaks. Both the state-controlled cocoa aggregator and downstream processor are effectively bankrupt. A few weeks ago, creditors had to resort to auctioning off the assets of the former.

In light of these facts, it was incredibly baffling to see the likes of Fitch and EIU projecting 2024 year-end inflation at ~18% taking their cue from the Bank of Ghana, which projects a 13.5% figure. Due, once again, to the slow pricing-in of weak rainfall trends, food inflation has been dragging out as the effects build up over time. Long-delayed transport fare adjustments, and clear signs that without a tariff adjustment the water and electricity utilities will crumble, should all have fed into inflation anticipation in any other setting. But in Ghana, these obvious forward developments have only been steadily infusing into inflation numbers. The reality will keep dawning on economic actors as the year progresses, pushing year-end inflation closer to the 30% mark.

In an economic environment exhibiting greater aversion to uncertainty, many of these adverse information points would, in fact, have been “priced in” from the last quarter of 2023. The alluring imagery of recovery would not have emerged, and the government would have been forced to make greater efforts to deal with structural problems much earlier in the IMF program. Because this was not done, and decisive actions keep being postponed, it is very likely that rather than the sharp turnaround and steady upswing towards much better times expected by the IMF and the authorities, we must brace for a long drawn-out adjustment to subdued economic activity, stubbornly persistent inflation, extended pressure on the currency, and even timeline distensions for key IMF and debt restructuring milestones.

Whilst Ghana offers some compelling examples, Nigeria is the living spectacle of the uncertainty apathy effect writ large. Decisions taken by the previous government failed to exert their full effects in time to spur sufficient crisis-reaction. Nearly a year into the tenure of a new administration, the prolonged impacts are only now being fully felt. Multinationals that should have adjusted more sharply two years ago are now declaring massive financial losses, the currency is in free fall, and hunger and despair is threatening to crush the spirit of an indomitable people. The new government’s rush into liberal market reforms without adequate institutional foundations happened because the extended playout of economic disaster deceived them about the sheer extent of the macroeconomic rot. Now they know. Ghana, sadly, is underestimating similar lagging, snowballing, phenomena.

Slow-motion economic info-signalling paradoxically requires decision makers, planners and analysts to develop extra keen senses to buck the usual trend on decisiveness. Else, like frogs in boiling water, by the time the heat gets under the skin, an explosion would already be underway.

On the 22nd of June, 2023, the Ministry of Finance initiated moves to massively expand the scope of a revenue assurance contract between the Ghana Revenue Authority (GRA) and a company founded by a timber merchant and his relative.

Two activist think tanks in Ghana, IMANI and ACEP, have extensively reviewed this contract, following a documentary by one of Ghana’s leading investigative journalists, and concluded that the beneficiary of this contract, SML, stands to earn up to a billion dollars over the life of the contract.

Such a large sum of money must correspond to serious value creation. Unfortunately, this is not the case in this situation because the design of the program for which SML is to be paid these large sums of money is extremely flawed. It guarantees SML a percentage of Ghana’s earnings from its scarce natural resources, including petroleum and gold, without any well-defined process of determining how SML’s work contributed to increasing the revenues, and thus taxes, from these resources.

The underlying logic of SML having instruments to prevent the likes of Newmont, Tullow and Goil from lying to the government about how much oil, gold or diesel they produce or sell has never been subjected to any serious, independent, evaluation. At any rate, as far as production of gold and oil are concerned, it is not volume underdeclaration that poses the greatest risks but profit understatement, which is not within the scope of SML’s services.

There is simply no sound technical basis to award SML or any company a billion-dollar contract on the back of such poor revenue assurance logic.

In fact, work done by IMANI and ACEP shows that SML’s current contract to monitor gasoline (popularly called “petrol”) and diesel sales in retail outlets has no discernible impact on fluctuations in total volumes consumed, and thus tax collected. It can be shown that the volumes consumed and taxes paid before the SML contract was signed in 2019 and thereafter exhibit no clear pattern from which can be deduced positive effects due to SML’s skills and technology. And, yet, SML is mechanically paid a proportion of the taxes collected on these products based on volumes consumed, as if their mere existence is what causes people to buy petrol and diesel for their cars in Ghana.

Serious questions have also been raised about the procurement processes leading to the award of the contract to SML. There are many companies with the technical capacity and track record to offer monitoring software and auditing services related to revenue assurance in Ghana. Neither SML nor its founder is in that league. How did the government find them and why was it deemed necessary to award them such contracts without competitive tender? How did the government conclude that only this entity possess the necessary skills and technology to execute such a critical assignment?

As a direct consequence of the uproar, the President of Ghana tasked KPMG, one of the Big Four professional services firms to undertake a special audit of the SML’s ongoing and upcoming engagement with the Ghana Revenue Authority (GRA). IMANI, ACEP, and the Fourth Estate, an investigative journalism initiative backed by the Media Foundation for West Africa (MFWA), have expressed grave doubts about the independence of KPMG given its multiple entanglements via public sector consulting in Ghana.

The terms of reference and timeline (just two weeks) given to KPMG by the President suggested limited interest in a serious, thorough, probe. It seemed as if the government wanted a perfunctory assessment and a quick whitewash. In the circumstances, KPMG pushed back a bit and the President extended the deadline for the delivery of their report to today, the 23rd of February, 2024.

There are many aspects of the SML contracts that are incurably bad. Several independent analysts have pointed out the fundamental absurdity of a contracting method that pays the contractor a percentage of revenue generated from an outcome that is influenced by so many factors independent of whatever the contractor does. How much gasoline/petrol is consumed in Ghana (and the resultant taxes paid) and how much gold is produced in the country (and the resultant royalties paid) are determined by such a wide range of factors that isolating the contribution of any contractor requires highly sophisticated models to tease out and price appropriately in a value-for-money engagement.

The public is extremely keen to evaluate the precise mechanism that will be proposed by KPMG to handle this challenge.

Then there is the issue of investment, based on which a “fair return” can be computed for the contractor on the assumption that the service is value-adding. Here too, analysts have reviewed the claims made by SML and accepted by the government as key assumptions in the expanded and consolidated contract. SML says it will be spending nearly $74 million on software and hardware on this assignment.

Of course, objective reviewers doubt the very economic logic behind the proposed arrangement, but KPMG must still show evidence of thorough evaluation.

For those of us in the activist think tank space, the SML proposals are fundamentally misconceived and even incompetent.

How to prevent Anglogold Ashanti from cheating Ghana according to a certain timber merchant.

For the solid minerals leg of the work, SML proposes to apply “blockchain tags” on gold bars in the “cooling room” where the bars are moulded. “Sample drilling” will then be performed and the resulting data added to the “blockchain database”. Thereafter, the bars will be placed in boxes on and in which secondary tags and sensors have been embossed and inserted. The boxes will then be tracked in real-time all the way through the export terminals, complemented by x-ray data in as yet indeterminate fashion.

The entire concept is riddled with signs of fundamental ignorance about how gold supply chain security is currently handled. For example, no “sample drilling” is relevant at the point of cooling or moulding. All the testing, assaying, and property measurement work that is currently done in the presence of GRA personnel generates data that is of as much importance to the mining company as it is to the government. That is to say, the bosses of the mining companies are as worried about gold being stolen/under-declared as the government, and they already invest in the most hardened technologies available in the market to prevent theft and diversion. Gold room auditing has, for that matter, always been a heavily regulated affair.

It is said that in the early days of diamond mining, workers would be compelled to take laxatives and visit special loos before they leave the premises.

That is the level of paranoia in this industry. Thus, there is no need to create a parallel tracking and security system at a cost to be passed on to Ghana.

What is needed is GRA’s complete and unrestrained access to the same stream of data used by the mining company for their own internal assurance. As well as enhanced management and personnel integrity training, incentive plans, and rotation mechanisms to prevent the corruption of the GRA personnel assigned to gold rooms.

How to prevent Tullow Oil from cheating Ghana according to a certain timber merchant.

Regarding the proposed petroleum upstream auditing solution, the same misconceptions and misguided notions are present. SML does not have the capacity to go to the well-head on the seafloor and install their own monitoring instruments. And indeed their design doesn’t claim any such capacity. Instead they intend to install Remote Terminal Units (RTUs) on the FPSO and other observation decks of the oil companies. So, invariably, they will be relying on the critical data flows generated by the instruments of the same oil companies.

At any rate, even a rudimentary understanding of the petroleum production ecosystem would have told the folks who approved the contract that besides the operator of the field (such as Eni or Tullow), there are other companies who have financial stakes in production but are not directly involved in operating the infrastructure (such as Ghana’s own GNPC, Vitol, Kosmos and Occidental).

All these companies have an equal interest in making sure that only the most accurate data is churned out for reconciliation purposes. None of these parties have installed their own RTUs on the FPSO to create parallel auditing workstreams. Simply because that would be ridiculous. Tullow’s bosses in Chiswick High Road, London, overseeing the company in its capacity as the unit operator of some of the country’s major oil fields, are equally in need of the most accurate data on production as the GRA from their faraway perches. For this reason, what is important is the GRA ensuring that they have similar levels of configured access to the monitoring suites and conducting regular system audits to detect and prevent any tampering. It does not require investment to create their own parallel stream of data.

Otherwise, GRA might as well visit all manufacturing companies in Ghana and implement parallel ERP software and product unit counters on their production lines to prevent them from lying about their production output, and any other thing that has implications for revenue and thus for government’s tax take.

At a very minimum, attentive publics in Ghana expects to see thorough analysis of these factors in KPMG’s report.

But even if we were to relax professional scepticism and swallow the SML model hook and sinker, even though it is hard to make sense of it, we still have to grapple with the actual project budgeting and process design, which in the form accepted for the contract betrays shocking standards.

There is “software for digital metering” that is supposed to cost more than $25 million. No idea what software specifically or how anyone on the government of Ghana side saw that line item and immediately felt informed enough to sign away hundreds of millions of dollars.

There is a “Simplex RTU2020”, which is just as poorly specified. Whilst there are many remote terminal platforms with various configurations, this mere description maps to no precise system on the market. For example, there are Honeywell RTU-2020s, which can be customised in a thousand ways with various ancillaries and auxiliaries into a turnkey platform.

Honeywell, if approached directly or through a reseller, will set up something like this for a client.

A single RTU SCADA assembly would cost the client, assuming standard configuration, less than $15,000 and the architecture (if it can even be called that) deducible from the SML specification should, in a proper costing environment, not exceed $250,000. SML claims its mysterious RTU2020 setup would cost $5.5 million and the cost of ancillary instruments alone will exceed $12.2 million. Incredible!

So, today, all eyes are on KPMG.

Independent analysts who have given serious time and thought to this whole affair are keen to see how, from whichever angle they come, such costs, and derivative fees/returns, are justified.

It is being suggested by some insiders that one of KPMG’s methodologies in this assignment is benchmarking against other revenue assurance programs in Ghana. It is important to put on record that such an exercise would be pointless unless it is to underline the useless duplication of these schemes and to probe each one of them with the same level of diligence demonstrated above for SML. Any suggestion that because companies like Rock Africa are charging for similar services there is thus precedence in the industry would be shallow reasoning. The fact that some poorly designed policies slip through every now and then is never a good basis to cut any specific policy any slack.

As IMANI and ACEP have repeatedly argue, KPMG has a sterling opportunity to dispel the strong suspicions of lack of independence given its wide-ranging entanglements with GRA and in the broader public sector. It is entirely up to its Partners in Ghana to seize this opportunity or sacrifice its reputation for fees.

The world of central banking is surprisingly replete with accusations of plagiarism.

The governor of Turkey’s central bank between 2019 and 2020 (and vice governor before then), Murat Uysal, was pilloried by local academics for plagiarising large portions of his Master’s thesis and two published works. He did not get fired for it. After the Turkish Lira lost 30% of its value, however, he was shown the door, and replaced with Naci Agbal. Four months later, Naci was summarily dismissed and the job given to Şahap Kavcıoğlu. No sooner had Sahap settled in than his Alma Mater confirmed an investigation into his PhD thesis. The verdict: large tracts of the text had been lifted from Turkish central bank annual reports. He survived the scandal and stayed in office until the Turkish President tired of him last year.

Around the same time that Sahap was defending his academic integrity, accusations started to fly that the Icelandic central bank governor, Ásgeir Jónsson, was guilty of a similar sin. A Norse Philologist, Bergsveinn Birgisson, with a deep expertise in mythical fiction, was the accuser. The strange intersection of their interests was on the subject of the first settlement of Iceland, on which both had published books. Birgisson says Jonsson stole important hypotheses from his work without attribution. Jónsson denied. Not much came of the dispute.

Much closer to home is the better known case of the United States – based academic, Victor Dike, and his campaign to bring then governor of the Central Bank of Nigeria (CBN), Lamido Sanusi, to justice for copying from three pages of Dike’s academic paper without given him the slightest bit of credit. The CBN responded with the most uproarious of excuses: the governor didn’t write the speech, didn’t deliver it on his own behalf, and was merely a ventriloquist for the CBN itself in his public speaking appearances! Professor Dike insisted that he will see the governor in Court, and the CBN could follow him there if they so wished. The matter seems lost in the maze that is the Nigerian justice system.

This is the somewhat checkered background against which Ghanaian entrepreneur and development finance specialist, Kofi Arkaah, brings his own charge against the Bank of Ghana. Except, perhaps luckily, he is not accusing any official there of lifting verbatim from his published work for their own speeches, theses or academic papers. In some ways, though, his allegation is just as concerning. He is accusing the Bank of Ghana of basing a major policy initiative on a technical model he developed and shared with one of their most senior officials, but doing so in a sneaky and dishonest way in order to avoid acknowledging his contributions.

Mr. Arkaah has shown a trail of correspondence to this author which establishes clearly that he did share with a very senior official at the central bank a draft model, and underlying data, of how to develop an optimal gold reserves policy for Ghana. One that would complement the country’s inflation-targeting regime and bolster the national currency by carefully managing the ratio between gold reserves and overall gross international reserves. The trail of correspondence shows the senior official initially expressing a willingness to help Arkaah refine the model before abruptly terminating the engagement.

Arkaah’s need for research support to benchmark the model with data from the Eurozone and WAEMU is what had initially driven the aborted collaboration in 2017. Not much happened in the ensuing years.

It would seem, however, that some time after the senior Bank of Ghana official terminated the engagement, an army of research assistants were detailed to dig into Arkaah’s data and initial model. In 2021, the Bank of Ghana announced the Gold Purchase Program.

In his speech heralding the start of the program, the governor gave credit for the idea of developing a gold-backed reserves optimisation policy solely to the sitting Vice President:

“Ladies and Gentlemen, before I conclude, let me acknowledge the support of His Excellency the Vice President, Dr. Mahamudu Bawumia who got this programme started.”

Attentive observers would have noted similar content in the recent UPSA speech of the Vice President. To be clear, Arkaah does not accuse the Vice President of any complicity in these matters.

It is generally the case that intellectual property (IP) infringement cases brought against central banks usually involve technology applications, and are rarely successful. Examples being the lawsuit brought against the European Central Bank by Rochester-based Document Security Systems and Technocrat Consult & IT Limited’s legal action against the Central Bank of Nigeria. But such technology-related IP disputes normally involve patents, not copyright, and not all disputes are meant for the courts. Reputational consequences also matter.

Indeed, many of the lawsuits currently underway against Artificial Intelligence (AI) companies worldwide involve the uncredited incorporation of copyrighted work into complex, dynamic, models, and the reputational blowback against tech companies for being perceived as ripping off poor creatives. IP lawsuits involving financial models and research are, actually, also not all that unheard of, case in point being the famous Barclays Capital vs theflyonthewall.com litigation (where the American courts did make a finding of copyright violation).

In bringing this matter to the public’s attention, Arkaah says he is not looking for cheap fame or monetary compensation. To his mind, the policy ecosystem of any serious country is a community of practice. In such a community, it is critical that ideas are properly sourced and attributed to encourage innovative thinking, a sound competition of ideas, and professional integrity.

He does not mind at all that the technical mechanics of aligning central bank gold purchases with other macroeconomic variables were, to his mind, clearly extracted from his model by the Bank of Ghana. He wants many African countries looking to back their currency with gold to do similar statistical heavy-lifting and not fall into the same trap that the likes of Zimbabwe did when they went down that road without a well-calibrated model.

He is peeved however that rather than seeing an opportunity to engender dialogue with the policy community so that the model could be refined for Ghana’s benefit, the Bank of Ghana stealthily appropriated his ideas, and that its officials are busily making unnecessary partisan-political capital out of it. To Arkaah’s mind, that kind of conduct does not become a technical organisation that must stay above politics, guard its institutional independence jealously, and nurture the sharpest technocratic thinking and practice. Moreover, the documented allegations of appropriation of intellectual property, without even the basic trivial courtesy of acknowledgement, reinforces a pattern of impunity, which the Ghanaian central bank has been oft accused of perpetrating.

Readers will note that, to date, the Bank of Ghana (BoG) has failed to publish any serious position papers on either the so-called Gold for Oil program or the program referenced in this essay, the Gold Purchase Program. Consequently, the policy and academic communities have been unable to provide robust feedback and subject the BoG’s thinking to the necessary intellectual scrutiny. And, now, we see clear evidence in this Arkaah affair of the BoG’s undue wariness in engaging with professionals desirous of contributing ideas to enhance monetary policymaking in Ghana.

This author’s consistent complaints about the shifty conduct of central banking in the current dispensation finds at least partial vindication in the Arkaah claims. Whether it is in relation to the contentious recapitalisation program, the botched bailout funds recovery effort, or the BoG’s very murky approach to procurement, the usual style has been one weighed down by a total lack of candour, transparency, openness to scrutiny, and good-faith dealings with public stakeholders.

Mr. Kofi Arkaah tells this author that his intellectual campaign about optimal gold reserves and ideal ratio will not be curtailed by this setback. It is an idea, he says, destined for continental relevance. And he is only getting started.

Last November, Ghana’s Ministry of Communications & Digitalisation announced with flourish that it has “facilitated” a “joint venture” between state-owned AT (formerly, AirtelTigo) and “Hannam Investments”, which will result in a transformation of the Ghanaian telecom operator into a world-class operator.

The Ministry was at pains to educate Ghanaians about what a big catch Ian Hannam, the Founder of Hannam Investments, is. The press release informed readers that:

“During Ian Hannam’s career at JP Morgan, he worked on over 300 transactions in 40 countries. Many of those were transformational and led to Ian Hannam being recognised as the leading banker in a particular sector at a particular time.”

The hype was unnecessary. Ian Hannam’s story needs no garnishing. A former reservist in the UK army, he is widely reputed to have been trained by the deadly UK special forces unit, the SAS. His official biography does indeed confirm a background in the 21 SAS Regiment. Upon entering the investment banking space, he quickly earned his stripes as a tough-as-nails, take no prisoners, swashbuckling dealmaker across multiple sectors. He has been called a buccaneer (pirate), the “King of Metals”, and an “unguided missile”. Feisty, charismatic, and tenacious, Hannam is said to love operating in challenging business environments like those of Afghanistan, Kurdistan, and Nigeria.

It is a feature of the daredevil instinct that it has been known to occasionally drive overachievers over the limits of conventional propriety. Not too surprising then that having climbed to the very apogee of City (of London) significance in his mid-50s, by driving mega-deals like the BHP merger and Xstrata listing, Hannam slipped and found himself entangled in an insider trading scandal involving oil fields in Uganda and powerful politicians in Iraqi Kurdistan. He was fined by UK financial regulators in 2012, and his dogged efforts at appeal came to nought.

Now 63, and forced to step down from his lofty JP Morgan perch, Hannam could have slunk off to an early retirement of yachting, golfing and sneak-parachuting into the Andes with former SAS buddies. But he wasn’t done. He set up a private office called Elgin Partners in 2012, and went to work as a private investor. (It is not known if he named “Elgin” after the famous 19th Century, ex-soldier, Scottish diplomat who pulled off that massive heist of Athenian marble treasures for eventual sale to the British Museum.) Hannam’s Elgin Partners bought a boutique advisory firm, Strand Partners, and renamed it “Hannam & Partners”. Voila, a colourfully named niche investment bank!

Under the Hannam brand, he quickly tapped networks from his banking days and cut a deal for a copper fabrication plant with a former JP Morgan client, Kazakhmys. Thus began a new phase in the life of our former banking wizard.

In this new guise, he has tried to shepherd Turkish conglomerates around the complex regulatory landscape of UK dealmaking, smoothed the way for Indonesia bargain hunters, and utilised connections to private defence contractors like the dreaded Blackwater to make a move on Venezuela’s sanctions-battered gold industry, without triggering American ire. This approach of mixing high-powered political, military, and business-strategic levers to unlock highly risky business opportunities has become his hallmark.

For example, he pursued Afghanistan’s vast copper and other mineral deposits for more than a decade, evolving his geopolitical technique as the country’s checkered fate unfolded. During the Trump era, he finally hit the jackpot. The US president was desperate to commercialise Afghanistan’s untapped, trillion-dollar, minerals bonanza, partly to offset some of the large amounts of money America had expended during its military occupation. Leveraging links to General David Petraeus and expensive strategy consulting from Cherie Blair’s own boutique advisory firm, Hannam eventually succeeded between 2018 and 2020 in securing Afghan government mining permits. All was set for a great extractive feast. Then he run out of money.

So, what is a storied City (of London) grandee, former British commando, distressed asset turnaround specialist, and shrewd warzone treasure hunter doing with a struggling Ghanaian telecom company? It isn’t too difficult to guess: he is looking to make a killing.

Despite his reputation for competitive ferocity, the South London – born dealmaker is also very good at turning on the charm when useful. He has been known, for instance, to lavish Tory grandees like David Davis with expensive skiing trips to Austria when he needs to replenish his political arsenal. Getting the famously standoffish head honcho of the Ghanaian Ministry of Communications eating out of his hand is a clear testament to this chummier side of his personality.

If the reported asset valuation underlying the AirtelTigo/AT – Hannam joint venture of ~$176 million is accurate (and the numbers have been reported by credible sources), and Hannam has indeed cut a deal with the Ghanaian government for an 85% controlling stake in the joint venture in exchange for $150 million of turnaround investments (no reason to doubt the reports), then the deal bears all the marks of the signature Hannam style. And it would be a deservingly juicy steal indeed. But to explain why, we need to recap AT’s history briefly.

Struggling to survive in a market heavily dominated by telecom behemoth, MTN, Ghana’s third and fourth-ranked telecom companies, Airtel and Tigo (Millicom), merged in 2017. At that time, the combined entity had more than 10 million subscribers, overtaking the country’s number two operator, Vodafone. Unfortunately, despite the touted synergy play, and the government’s efforts to rein in MTN using antitrust instruments, AirtelTigo, the merged entity, continued to bleed subscribers, burn through shareholder loans, pile debt, and make losses. It now ranks well below Vodafone.

So, in 2020, Millicom, already retreating from the whole of Africa, wanted out of Ghana. Airtel’s global boss, Sunnil Mittal, whose personal fortune had been invested alongside India-based Bharti Airtel in the acquisition of the Zain assets that were rebranded into Airtel Africa, was keen on fully taking over AirtelTigo (as he had done in Rwanda, when he took over Millicom’s Tigo assets in 2017). Consequently, Airtel moved aggressively to engage the Ghanaian government in 2020. The Ministry of Communications, however, had a Web of partners managing various technology assets, like the so-called Common Platform, who were loathed to allow an Airtel – Milicom offshore deal to dictate the fate of the Ghanaian AirtelTigo asset. They craved being in the thick of things. So, the Ministry demurred. In the end, Airtel and Millicom wrote off the value of equity invested in AirtelTigo over the years, impaired shareholder loans, and allowed the government to acquire the company for $1. Upon the acquisition, the entity was rebranded to AT.

The government side then had a long-drawn out negotiation with the two multinational telecom giants about the non-shareholder related liabilities of AirtelTigo, such as various local loans. In the end, the Government assumed a portion of these liabilities, and the multinationals finally walked away in 2021. To date, the Ministry has never published a detailed account of the transaction. It has also so far refused to make AirtelTigo/AT’s audited statements public. What is widely known however is that those liabilities have continued to grow.

As has become customary in Accra nowadays, even the pretense of a competitive bidding process was dispensed with, so it is anyone’s guess why Hannam’s offer found favour, whilst other expressions of interest, such as Airtel’s, didn’t. His reported planned investment of $150 million is destined for the cleaned up AT, stripped of the aforementioned historical baggage of AirtelTigo liabilities. The question that governance watchdogs and analysts have is: who will be left holding the can? Is it the Ghanaian taxpayer?

Second, and more egregiously, the valuation implied in the joint venture (JV) transaction would suggest that each AirtelTigo/AT subscriber is being valued at a paltry ~$26. That would be a scandalous number of historic proportions.

In 2006, when MTN entered Ghana through the regional Investcom/Areeba transaction and bought Scancom, the implied price-per-subscriber was a whopping $745. Notably, MTN was also required to pay $67.5 million to upgrade its licenses, which is not factored into the preceding valuation.

In 2008, Celtel will value its entry into Ghana at $160 million by way of a 75% acquisition of state-owned Westel. (By the way, Ghana’s 25% stake held through the national oil company, GNPC, would be whittled down to zero by March 2017 due to failures to respond to capital calls.) The implied subscriber unit value would have been ~$53,000, but Westel was such a puny operator that the deal was understood, primarily, in terms of an operational license acquisition. (Note: Celtel was eventually acquired by Zain, which in turn was bought by Airtel.)

A more comparable deal would be the Vodafone entry into Ghana in 2009, during which the British giant acquired state-owned fixed wireless and mobile assets, customers, licenses and accompanying infrastructure. The implied subscriber value was ~$710 a pop.

IN 2010, Bharti Airtel, through its African vehicle, acquired Zain’s subscribers in Ghana at an implied unit valuation of ~$267.

Granted that all these transactions occurred in those halcyon days of telecom glory in Africa when investors had red-hot fantasies about surging ARPUs (average revenue per user) and massive subscriber growth. Granted also that this was the era when the African consumer boom supposed to propel mobile internet usage, and shoot lip-smacking operating margins through the roof, was perceived by most analysts as just around the corner. And, yes, we can concede that the situation in the African telco space has turned out to be far less rosy. Nonetheless, there are much more recent transactions, including one in Ghana, that can provide a benchmark for the Hannam takeaway.

The Telecel acquisition of Vodafone Ghana’s assets in 2022, for instance, impliedly priced subscribers at roughly $67 each. In 2019, the Axian acquisition of a majority stake in TogoCom, an operator in next door Togo, valued each subscriber at ~$100. Etisalat’s recent investment to bump up its equity in Maroc Telecom into a controlling stake placed a price premium on each subscriber of ~$297.

Even Millicom’s fire sale of its telecom assets in Africa to focus on Latin America never saw the kind of rock-bottom pricing witnessed in the reported sale of AT to Hannam. Furthermore, Millicom’s sales were for pure cash consideration, whereas in the case of AT the government of Ghana (and by extension, Ghanaian taxpayers) is merely getting shares in an entity through which Hannam will control the investment of his $150 million cash injection for operational turnaround. Having invested in Revolut and, more recently, in Turkey’s Colendi, he has negotiated hard to be at a vantage point where he can leverage AT’s mobile money license for the ultimate fintech heist. Firms allied to the Ministry in the Kelni GVG and Common Platform endeavours who sought out Hannam in the first place are are arrayed around the deal, eyeing juicy product-alliances. Furthermore, accrued liabilities are being transferred out to be borne by the public.

There may yet be an avenue to subject the deal to additional scrutiny. Because Hannam Investments is domiciled overseas, the transaction, even if masked through a locally incorporated special purpose vehicle (SPV), would be subject to Parliamentary ratification under a Ghanaian law that requires the government to seek parliamentary approval for “major international business transactions”.

Should the Ghanaian Parliament choose to exercise stringent oversight, as contemplated by the constitution, Hannam will need all his SAS tact to manoeuvre through the minefield of committee enquiries aiming to get to the bottom of this sweetheart deal. And, perhaps, thrice the dose of charm he has used so far in ministerial chambers.

Over the holidays into the new year, this author had some lively and intense exchanges with some highly knowledgeable mining gurus about Ghana’s ongoing lithium foray.

While these engagements assuaged some of the concerns raised by civil society actors, other serious anxieties remained, some of which have been exacerbated by recent developments.

Last week, the MIIF invested $5m into Atlantic Lithium, the parent company of the country’s first lithium mining leaseholder, without any special sovereign interest protections, except an escrow arrangement of unclear structure. This author and others had warned that Ghana’s current equity stake of ~3% in Atlantic is exposed to massive dilution given the company’s very small market cap (currently about $163 million). As it proves its business model, it would be able to, and will need to, raise very large amounts of capital. Ghana’s financial constraints are such that its ability to participate in future equity rounds are heavily constrained. Anyway, the cash has been wired. At least, this time around, the country’s sovereign minerals fund, MIIF, did not try to pamper Ghanaians with any strange tales as to how the purchase price represents a capital gain, seeing as the company’s share price has more than halved since MIIF committed to buy.

Be that as it may, Ghana is now in bed with Atlantic lithium, which makes heightened scrutiny of the company even more critical. Parliament will soon commence deliberations over the mining lease issued by the government to the company. Before sealing the deal, the nation’s representatives will do well to look at some of the still thorny issues surrounding Atlantic’s plans for Ghana very closely indeed. For now, let us only look at the issue of local value addition, one of the strategic redlines for Ghanaian civil society, as well as for the official political opposition.

As this author has said repeatedly, Atlantic’s struggling finances are clearly dictating some of its operating choices, with serious implications for the nation’s agenda to become a major electric vehicle (EV) value chain player by riding on lithium. If Ghana’s stated goal of refining lithium into value-added products is to be realised, then Atlantic must have the wherewithal to navigate alongside the nation’s strategists towards that objective, given its imminent control of large tracts of the country’s richest lithium deposits.

Even before it received its mining lease, that prospect was somewhat threatened because to raise money to fund further development, Atlantic had sold forward 50% of the output of the mine covered by its mining lease, Ewoyaa, to US-based Piedmont Lithium, itself another small mining company (market cap: ~$291 million). Still, about 50% of the material remained unpledged to support local refining into value-added products like lithium hydroxide and lithium carbonate provided the government was determined to see this happen. Except that things are not that simple.

Atlantic Lithium was expected to raise about half of the roughly $200 million (with Piedmont having committed to the other half) it needs to bring the Ewoyaa mine fully to life. Ghana had pledged about $28 million for 6% of Atlantic’s local subsidiary but these funds will only be released upon certain operational milestones being met. So, Atlantic went back to the market just before the holidays to raise another $5.21 million. Naturally, this doesn’t make enough of a dent. Atlantic needs more money. Its market cap does not allow it to raise enough on the capital markets without diluting current shareholders to thin gruel. Its largest shareholders are two South African billionaires who want to take over the company, but the Atlantic board has demurred. The company is loath to raise debt because the resulting capital structure will add more layers of risk to its already elevated risk profile as a frontier mining junior with zero cashflows. Atlantic, faced with these daunting choices, hired Macquarie Bank to sell-forward the remaining 50% of the lithium concentrate output upcoming from Ewoyaa to raise money.

Having received some offers from potential off-takers for the unpledged 50% of the yet-to-be produced lithium concentrate, Atlantic and its advisors are weighing options regarding whom to partner. Obviously, it would be best if the partner was less hungry for cash than its current off-taker, and strategic financing partner, Piedmont. The question is: how involved is Ghana’s Minerals Commission in all these machinations?

Piedmont recently sold a nice chunk of its strategic equity stake in Atlantic to Assore, the company owned by the aforementioned South African billionaires, for about $7.8 million in cash to fund its own ventures elsewhere in the lithium world. Whilst this sale will not affect the 50% of Ewoyaa’s output that Piedmont is entitled to get when it pays up its share of the mine’s development cost, there are other signs that the company is deprioritising Atlantic and Ewoyaa.

A few days ago, Piedmont’s Chief Operating Officer (COO), Patrick Brindle, who had joined the Atlantic board to support the effort of commercialising the Ewoyaa prospect, and of course to secure Piedmont’s interest by so doing, resigned from Atlantic. Coming on the back of Stuart Crow’s resignation from the Atlantic board, this loss of talent is somewhat significant, but the crucial fact is that Brindle left Atlantic to focus on Vinland Lithium, which Piedmont already owns a much larger share in, compared to Atlantic, and whose Killick project is in geoeconomically familiar Newfoundland, in Canada’s easternmost corner. There are now serious concerns about whether Piedmont is fully committed to the Atlantic asset in Ghana.

From a Ghanaian public interest point of view, however, the real issue is how the government can continue to insist with a straight face that local refining is still on the cards when all the lithium is being sold forward in the form of concentrate because its strategic partner is financially constrained. In fact, Atlantic insists that it will operate the Ewoyaa mine for nine months using a very basic “dense media separation” setup before adding more sophisticated floatation and magnetic separation components in a modular component downstream when it has made enough money. The simple rule of thumb in lithium economics is that the higher the lithium oxide content of whatever mine output is being sold, the higher the value contribution. Increasing the lithium oxide content often involves investment in more sophisticated separation equipment.

By making these project decisions to conserve scarce cash, Atlantic is denying Ghana the opportunity to earn higher returns from lithium for as long as such interim arrangements persist. And by selling forward all the lithium concentrate to companies that have refineries elsewhere, it is more or less preempting any outcome of the “scoping study” (not feasibility study) it has pledged to undertake to determine if local refining would be feasible.

There are of course other concerns about the pricing transparency of these off-take agreements and the commercially incestuous arrangements they engender, but for now it is crucial that the government updates the nation about its latest plans for lithium value chain optimisation in Ghana in the wake of these developments.

Yesterday, this author contrasted Rwanda’s more strategic approach to cultivating its lithium and EV value chain potential by quickly establishing a direct relationship with Rio Tinto (market cap: $119 billion), which had entered the Rwandan terrain initially through an earn-in arrangement with a company called Alterian. Alterian’s trajectory in Rwanda mirrors important aspects of Atlantic’s in Ghana. The Rwandan government has however determined that its national green-tech prospects will not be dictated solely by Alterian’s material constraints and is now hatching a broad engagement with cashflow-rich Rio Tinto to more strategically flesh out how a mine to battery roadmap should look like. There is, of course, absolutely no guarantee that Rwanda will succeed in this quest. But it is trying. Its President prioritised working sessions with Rio Tinto in Davos to advance previous engagements in Kigali, and secured important long-term commitments. That is what striving strategically looks like, whatever the eventual outcomes.

Ghana’s strategists would do well to approach the green energy value chain opportunity represented by the recent lithium funds with similar, nay superior, savvy and energy.