STX: Another View

ARTICLE BY: KWADWO NSIAH
I have heard and read several clarifications and articles about the almighty STX which is now a “done deal” and even at implementation stage.
The presentations have been couched in complex technicalities and legalities and politicians, commentators and the public seem to be so excited about the touted benefits, for instance, in terms of employment generation such that the STX’s real practical impact on Ghana’s future oil economy is yet to be fully appreciated.
It is a wonder why some people want others to accept the deal and its conditions just by shouting emotionally that—“But we need the houses—we need to reduce our housing stock.”
I have been a technocrat all along and want to approach the subject from a point of view which will bring home readers some pertinent issues on the STX deal in pragmatic, ordinary, simple layman’s terms.
First of all, I wish to point out that, it is a great idea for any government to want to solve substantially all housing problems, like Professor Mills’ government seeks to do with the STX deal.
In the same way, I think readers will agree with me that, it will ALSO be a great idea for Professor Mills’ government or any government to want to solve substantially all problems about railways, roads, education, water, electricity, health, defence, sanitation etc. (The list is endless).
The competing needs of the people are so many, so important and so complex that any government wishing to succeed to alleviate the plight of the people should assess critically, provisions which will tactically strike a balance between them.
For emphasis, the citizens including the military, police and other security forces need houses—but at the same time, they also need a lot of things; (check the list mentioned earlier).
Secondly, we should all recall the adage, “it is imprudent to put all your eggs in one basket” which holds true today as it was true many years ago. Now the total expected revenue from Ghana’s oil is not clear-cut.
From initial estimates, however, our yearly expected revenue is known to be about $1b. Therefore, if we are to get the oil, for 20 years, 30 years, 40 years or 50 years, then we should be expecting to get $20b, $30b $40b respectively.
Dear reader, the point has been made that we are not sure of the real revenues. But in this environment of doubt and uncertainty, people, politicians and intellectuals argue that, we need houses, which when implemented will in turn generate employment.
So they urge on government to sink $10b of our oil money, the natural resource we have not even exploited, in this STX deal in 5 years. The implication is that, if we are to get $20b in 20 years, then a whopping 50% of our oil revenue expectation is to go into housing alone.
If we are to get $30b in 30 years then 33% of the revenue is to go into housing. Similarly, considering $40b in 40 years means we are talking of 25% proportion for housing.
Finally, for $50b in 50 years, then we are in the region of 20%. No Economic student will be happy with these percentages.
From the above, we have to ask ourselves where will we get funds to prosecute our other essential requirement provisions for education, hospitals, defence, roads, railways, water, other infrastructures, welfare of the Ghanaian generally etc.?
Thirdly, let us consider a specific ministry, say, Ministry of Roads and Highways, whereby Road Agencies, namely, Ghana Highway Authority, Department of Feeder Roads and Department of Urban Roads, together need several billions of dollars to develop, rehabilitate and maintain a total of about 80,000km of Ghana’s road network. So, imagine Professor Mills’ government applying a big chunk of the oil money for road development and sustenance and leaving the other sectors to compete with the remaining minor fraction—because we need to reduce our stock of road development deficit. Is such an approach balanced and tenable? We shall surely be entering into the realm of absurdities with such a scheme.
In other words, I am putting out that, in Ghana’s public financial economic management scheme, it will be unrealistic and suicidal to sink $10b of unknown quantum of oil money into the STX deal alone in 5 years (just because we need the houses).
Fourthly, it is observed that, in addition to the STX deal, the Ghana Real Estates Developers Association (GREDA) has aggressively presented proposals to be considered to build 300,000 housing units over the same period of 5 years, at another cost of $7b. Another housing budget from where?
Is it therefore that Professor Mills government is considering Ghana housing budget of $17b in 5 years? Also will there not be any further budgetary allocation for housing after the 5 years.
Fifthly, are we saying with this STX/GREDA arrangements, there would be no more budgetary support for government institutions engaged in housing units for the 5-year operating period? Specifically, what will be the fate of State Housing Corporation (SHC)? Will SHC activities be frozen? Or, SHC will still compete with other sectors for funds? Then it is “housing, housing, housing” all the way.
Sixthly, readers will agree with me that, the constitutional mandate of every Ghana government is 4 years and that the present Professor John Evans Atta Mills NDC government has barely 2 years to go in 2012.
Then, the question is—is it fair for Professor Mills government to sink a staggering $17b into a housing programme covering 5 years to commit the next government, especially not in a consensus manner but in controversial circumstances?
The undesirable implication is that the next government—(which may or may not be Professor Mills’ government)—and which may have other priorities, will be rendered impotent because the chunk of the money will have been committed to housing.
Imagine such a succeeding government desirous of making a political/social impact, then decides to sink a greater part of the remaining oil funds into developing and expanding network of railways in a 10-year agreement, on the simplistic but unscientific basis that ‘we need railways.’
Shall we be building a nation with such absurdities? Where then will be our sense of comprehensive national strategic planning?
Finally, readers will agree with me that the name of the political game is “prioritise, balance and manage the needs and requirements of society over short, medium and long terms.”
Readers should note the following facts:
a. Reports indicate that the Central Africa Country of Gabon has woken up to the fact that their oil reserves have dwindled considerably and their future is very bleak—with the background that, they did not do strategic planning with their initial investments from their oil revenues, in critical sectors of the economy.
b. In Japan, a public investment venture of such a magnitude of $17b will take at least 5 years of objective discussions, planning, evaluation and preparation with clear-cut targets and default remedies at all stages of implementation.
Don’t let it be said by posterity that we, as a generation of people did not do well at all with our oil money.
CONCLUSION
It seems to me that the STX policy agreement as it stands has the tendency to stagnate and decimate society. I would rather suggest we start the STX deal with a modest 3,000 to 5,000 units over a 2-year period alongside GREDA and assess and evaluate progress of the deals vis-à-vis investments in other critical sectors to serve as basis for renegotiation further terms.
Professor Atta Mills’ government is being challenged with this proposition.