US embassy cable - 05ACCRA1435

UNCLAS SECTION 01 OF 02 ACCRA 001435 
 
SIPDIS 
 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: EAID, GH, PGOV, TBIO, EINV, UNGA, economy 
SUBJECT: GHANA ECONOMIC HIGHLIGHTS -- JUNE/JULY 2005 
 
 
1. (U) This report covers noteworthy economic events in Ghana 
for June-July 2005.  The issues covered are: 
 
-- Jeff Sachs Reiterates Call for Higher Aid flows 
-- Visit of State's Senior Advisor on Biotech 
-- Kufuor Hosts Ghana Investors Advisory Council 
 
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Jeff Sachs Reiterates Call for Higher Aid flows 
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2. (SBU) Dr. Jeffrey Sachs, well-known U.S. Economist and 
Special Adviser to the UN S/G, met with GoG officials and 
donors in separate meetings July 8 to discuss issues related 
to official development assistance (ODA).  Sachs, who is 
Director of the UN's Millennium Project, repeated his 
frequent call for dramatically increasing ODA to help 
countries like Ghana achieve the Millennium Development Goals 
(MDGs).  Sachs stated that a proper MDG strategy requires net 
ODA of $75-100 per capita, or around $1.5-2 billion for 
Ghana.  Ghana's gross grants and loans top $1 billion per 
year, but net of repayments are about $700 million.  Sachs 
stated that an additional billion dollars aid was "doable" 
given G8 discussions on doubling aid to Africa. 
 
3. (SBU) Sachs argued that priority areas should be health, 
education, and physical infrastructure, and aid money should 
not go to consultants.  His main theme was for donors to work 
on comprehensive malaria control, since Ghana is at the 
epicenter of the crisis in West Africa.  He criticized the 
concept of social marketing for treated bednets, specifically 
pointing to USAID and DfID as the main proponents of this 
strategy.  He urged donors to look at it from a public health 
perspective and told them not to worry about sustainability. 
He said the focus should be the major impact on development 
of reducing malaria by 80-90%.  Sachs said he was working 
with the Japanese government to increase production of 
long-life treated bednets, and also made a push for indoor 
spraying of DDT.  This has had a great effect in South 
Africa, Mozambique and Swaziland, but "we still need to 
explain it to environmental groups." 
 
4. (SBU) Sachs called Ghana the best potential aid recipient 
in Africa, the most likely to achieve the MDGs, and the one 
with the best absorptive capacity for higher aid flows.  He 
highlighted Ghana's strengths -- quality governance, sound 
democracy, peaceful, political and macroeconomic stability, 
local talent, and the best chance for rational allocation of 
resources through existing administrative structures  (Ghana 
Poverty Reduction Strategy and Multi Donor Budget Support 
process) -- and commented that if there is any country the 
international community can help move up to middle income 
status, that country is Ghana. 
 
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Visit Wrap-up of State's Senior Advisor on Biotech 
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5. (SBU) State Department Senior Advisor for Agricultural 
Biotechnology, Madelyn Spirnak, met June 15-17 in Accra with 
GoG officials, Parliamentarians, and private sector to 
discuss the state of biotech in Ghana.  There is some 
appreciation in Ghana for the possible benefits of biotech, 
especially among private research institutions and at the 
Environment Ministry, which has the lead on biotech and 
biosafety issues.  However, other Ministries -- particularly 
Agriculture and Trade -- and Parliamentarians expressed 
reservations or displayed sheer ignorance on the issue. 
 
6. (SBU) The GoG has drafted a biosafety law, which will 
create the regulatory structure and oversight body for 
biotech, and the Christine Churcher, the Minister of 
Environment and Science, has pledged to submit it for cabinet 
review soon.  However, from comments made in Madelyn 
Spirnak's meetings, especially with Parliamentarians, it is 
not clear that there is sufficient support to obtain 
Parliamentary approval this year.  (Note:  although many 
Parliamentarians are poorly informed on biotech and 
influenced by negative press reports, a core group with 
agriculture experience is supportive and believes the 
products are seeping into Ghana anyway, so better to have a 
strong regulatory framework in place.  End Note) 
 
7. (SBU) The Agriculture and Trade Ministries were 
particularly cautious, with Deputy Ministers from both 
emphasizing that there is insufficient awareness and has not 
been enough debate on potential benefits and risks.  Both 
questioned the safety of transgenic crops, raised concerns 
about Ghana becoming dependent on foreign (read U.S.) seed 
companies, and worried about risking their European export 
markets.  Although both acknowledged the potential benefits 
-- better quantity and quality, fewer pests, less soil 
erosion -- they argued that major education is needed before 
sending the biosafety law to Parliament, and then Ghana must 
ensure the regulatory system is strict to limit 
environmental, health, and food safety risks. 
 
8. (SBU) Representatives of local research institutes were 
more supportive and optimistic, particularly CSIR (Council 
for Scientific and Industrial Research) and BNARI (Biotech 
and Nuclear Agricultural Research Institute).  CSIR's 
renowned Chairman, Dr. Edward Ayensu, stressed the need for 
foreign assistance to help change the mindset of Ghanaians, 
and to help the GoG to "operationalize" biotech, since Ghana 
does not currently have either the institutional or human 
capacity to do so.  Ayensu appreciated Spirnak's comments 
that biotech has to be adopted to a countries' specific 
circumstances, so local research capacity and involvement is 
a critical element. 
 
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Kufuor Hosts Ghana Investors Advisory Council 
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9. (U) President Kufuor hosted the sixth annual Ghana 
Investors Advisory Council (GIAC) meeting, June 24-25.  The 
GIAC is composed Ghanaian and foreign companies, government 
representatives, and foreign and domestic observers (e.g., 
IMF, World Bank, UN).  The President invited representatives 
of diplomatic missions to attend the opening and closing 
ceremonies.  Modeled on South African President Mbeki's 
similar advisory council, the GIAC has become the best 
opportunity each year for the private sector to highlight its 
concerns about Ghana's economy and the GoG's economic 
management.  Private sector representatives are organized in 
five working groups and this year reported on progress on 
reform in these areas:  1) financial sector; 2) customs/civil 
service; 3) land; 4) agriculture/agri-business; and 5) labor. 
 
 
10. (U) The GIAC structure has resulted in identifying key 
constraints to doing business, i.e., high costs, low 
competition, excessive regulation in the financial system, 
customs delays and corruption, and difficulty in obtaining 
clear land title, and the working groups have produced and/or 
vetted important legislation, particularly for the financial 
sector.  However, while private sector reps are pleased with 
the opportunity to raise concerns and express grievances, 
this year they expressed some frustration with the slow pace 
of actual implemented reforms. 
YATES