US embassy cable - 04ACCRA1369

UNCLAS SECTION 01 OF 02 ACCRA 001369 
 
SIPDIS 
 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: ECON, EFIN, GH 
SUBJECT: GHANA: ECONOMIC HIGHLIGHTS - JUNE 2004 
 
 1. (U) This report covers noteworthy economic events and 
activities in Ghana for the period May 17 - June 25, 2004. 
The issues covered are: 
 
-- Westel/GoG Negotiations Nearing End 
-- Maryland State Trade Delegation 
-- Ghana Meeting on ECOWAS Common External Tariff 
-- Free Enterprise Marathon 
-- U.S. Inaugurates Economic Training for Media 
-- HIPC Debt Relief from France 
 
Westel/GoG Negotiations Nearing End 
----------------------------------- 
2. (SBU) Bill Taylor, the General Manager of Westel, a 
subsidiary of Western Wireless International (WWI), told Post 
that he will make one last try to reach an accord with the 
GoG that will allow Westel to stay in Ghana and avoid 
international arbitration.  The stumbling block is the GoG,s 
recent action to enforce the July 2002 decision to charge all 
mobile operators in Ghana for mobile spectrum, even though 
Westel contends it purchased spectrum as part of its original 
contract.  Westel now faces the prospect of paying USD 27.5 
million for mobile frequencies, on top of the USD 25 million 
fine it has tentatively agreed to pay over 7 years (Note: 
the fine was for failure to meet operating requirements). 
Therefore, Westel might have to pay USD 52.5 million just to 
stay in country. 
 
3. (SBU) WWI has been negotiating the sale of its Westel 
shares with several potential buyers, including South African 
mobile operator MTN.  However, MTN,s main interest is mobile 
operations in Ghana, so the new spectrum fee is a deal 
killer.  Taylor will meet a last time with GoG officials to 
try to work out a deal.  He stated that if he cannot convince 
the GoG to waive or drastically lower the spectrum fee, 
WWI,s plan to sell out of the market would be frustrated and 
its only remaining option would be to shut down and take the 
GoG to international arbitration. 
 
Maryland State Trade Delegation 
------------------------------- 
4. (U) Maryland,s Lt. Governor Michael Steele led more than 
40 public and private sector participants on a trade 
delegation to Ghana on June 17 and 18. The focus of the 
mission was to tap into commercial opportunities for Maryland 
companies created by continuing market liberalization efforts 
in Ghana and AGOA.  The group met with President Kufuor, the 
Minister of Roads and Transport, and the Minister of Trade 
and Industry. They also met with Ghana Airways officials, as 
Maryland is home to the troubled Accra-BWI route. The Embassy 
offered a country team briefing, and the Speaker of the 
Parliament hosted a working lunch for the Lt. Governor, the 
Ambassador and some delegates. 
 
Ghana Meeting on ECOWAS Common External Tariff 
--------------------------------------------- - 
5. (SBU) As part of the development of the ECOWAS Customs 
Union, slated for 2008, Ghana recently completed a report on 
the likely impact of an ECOWAS Common External Tariff (CET) 
on Ghana.  This report is also the forum to identify any 
temporary exemptions Ghana will request from the CET, such as 
preexisting bilateral free trade agreements or special export 
zones.  On June 22, The Ministry of Finance hosted a 
stakeholder workshop, attended by 20 government officials and 
one industry representative, to discuss the report, which was 
prepared by CEPA (the local Center for Policy Analysis). 
 
6. (SBU) CEPA,s data focused narrowly on existing tariff 
exceptions and the impact of the CET on government revenue, 
without offering an assessment of the CET,s effect on 
industry or key products or how Ghana,s tariffs compared to 
the rest of the West African Economic and Monetary Union 
(WAEMU).  The inadequacies of the report generated 
significant complaints and offered little opportunity for 
discussion.  Ghana,s report to ECOWAS is due June 30, so it 
is unlikely the GoG will make substantial improvements to the 
CEPA document before then.  The GoG is also unlikely to put 
forth substantive requests for exemptions from the CET, which 
would have to be phased out by 2007 anyway.  Despite 
frustrations voiced at the meeting, Ghana,s stakeholders are 
moving ahead with the process of adopting the ECOWAS CET and 
the workshop was a step toward that end. 
 
Free Enterprise Marathon 
------------------------ 
7. (U) Ambassador Yates hosted Jack Shewmaker (former 
President and COO of WalMart) and Robert Rich (President of 
Rich's Products) at a June 19 reception to support Students 
In Free Enterprise (SIFE).  SIFE is a university volunteer 
program on 1800 campuses in 40 countries that gives students 
the opportunity to learn, practice and teach the principles 
of the free enterprise system.  The Ambassador attended the 
Ghana National SIFE Championship on June 20 where the 
students presented projects that improved the lives of poor 
communities.  The winning school, University of Cape Coast, 
presented four projects that included teaching savings habits 
in a poor community, establishing a small food processing 
business, teaching bookkeeping to market women, and 
establishing a scholarship fund for poor primary school 
students.  The winners will compete in September at the SIFE 
2004 World Cup in Barcelona. 
 
U.S. Inaugurates Economic Training for Media 
-------------------------------------------- 
8. (U) USAID/Ghana and PAS Accra collaborated in a ceremony 
to mark the beginning of a USD 100,000 journalism and 
training program on economic and financial reporting.  USAID 
contributed the funding and worked with PAS to identify the 
Ghana,s Journalists, Association as the cooperating 
institution.  They designed a nine-month program for 100 
journalists in Accra and in two other regional capitals that 
will include both classroom teaching and 10-day internships 
with financial institutions. 
 
9. (U) The program also coincided with Ghana,s selection as 
one of the countries eligible for Millennium Challenge 
Account (MCA) funding.  When U.S. Treasury Under Secretary 
John Taylor spoke in Ghana recently about developing 
economies and MCA, Ghanaian leaders remarked on the need for 
the media to effectively explain complex poverty reduction 
strategies to the Ghanaian population.  The editor of 
Ghana,s most popular daily applauded the US-sponsored 
training in an op-ed and noted the US Government,s ongoing 
support for the media in Ghana. 
 
HIPC Debt Relief from France 
---------------------------- 
10. (U) France announced it would cancel 116 million Euros 
(USD 140 million) of Ghana,s debt (under HIPC) during a 
2-day visit by France,s Minister delegate for Cooperation, 
Development and Francophony in June.  Ghana and France also 
signed an agreement for a 1.5 million Euro (USD 1.82 million) 
grant to fund feasibility studies on potential priority 
projects in Ghana,s urban and rural development.  The grant, 
provided through France,s development agency, AFD, would 
also be used to finance sector specific studies that 
contribute to institutional reforms.  Since 1985, AFD has 
provided 400 million Euros to finance some 70 projects under 
a series of bilateral cooperation frameworks with Ghana. 
Yates