Date: April 9, 2010, 9:34 am


DR. STEVE MANTEAW IN TIME WITH DAVID


DR. STEVE MANTEAW IN TIME WITH DAVID

 

This is an edited transcript of Dr.  Steve Manteaw’s discussions on Ghana’s oil find in the TV programme Time with David showed on the 27th March, 2010

 

David’s Introduction: As we enter the last quarter of 2010, we are going to begin to see the production of oil and gas in this country. There are many organizations which are concerned and who want to be sure that the people of this country will benefit; that we will see social development. One of those organizations is the Integrated Social Development Centre (ISODEC). It is a Non – governmental organization that we are all quite familiar with. We will be looking to find out exactly where they fit into all of this. Do they have a role? Are they on track, and what is their view on oil and gas?

David: Steve, you are the Campaigns Coordinator for ISODEC. What do you do as a Campaigns Coordinator?

Steve Manteaw: The Integrated Social Development Centre (ISODEC) is a rights-based policy research and advocacy organization. We aim at influencing policy to the benefit of marginalized social groups.

David: So your job is to promote that course?

Steve Manteaw: Exactly. I coordinate all those social advocacy campaigns.

David: Are you successful?

Steve Manteaw: Well, we’ve made some inroads into influencing policy to favour the constituencies that we represent.

David: These are?

Steve Manteaw: Particularly in the area of water privatization.
David: That’s a pet project for ISODEC?

Steve Manteaw: Well, perhaps yes, but we came from somewhere. ISODEC in the 1980s through the 1990s was providing rural water in this country, and so we did not really jump into the fray from nowhere. We have some background in water provisioning.

David: Why did you stop that?

Steve Manteaw: We stopped because after a while, we felt there was the need to really engage with policy, because that was direct service delivery. This way, we could begin to ask questions relating to why people did not have access to water.

David: You do the talking and forget the action?

Steve Manteaw: Really, the experience from the action influences the talk.

David: But you could have done both? That’s what they call put-your-money-where-your-mouth-is.

Steve Manteaw: Exactly. But you see, resources are quite limited, and you need to determine for yourself where you can make the greatest impact, and that’s really where you put your money.  If we are able to influence policy, we can change things in this country for the better.

David: Every time I talk to people from organizations like yours, I get curious about something. Sometimes, people think you are just there to “oppose�?, just for its sake; and so there are times when certain matters really do not require a certain attitude, but you take that on. What do you say to that?

Steve Manteaw: That is far from the fact. I pride myself in the fact that I represented the Ministry of Finance at one of the board meetings of the Extractive Industry Transparency Initiative (EITI). I’m working with civil society, and if I could be asked to represent the Government of Ghana…
David: The Government asked that you represent them?

Steve Manteaw: Exactly.

David: So you are on the board of the Extractive Industry Transparency Initiative (EITI)?

Steve Manteaw: Actually, I represent civil society on the steering committee of the Extractive Industry Transparency Initiative (EITI). I am talking about the International Governing Board for EITI globally. Ghana actually sits on that Board and on one occasion, I was asked by the Government of Ghana to represent Ghana on that board. It actually speaks volumes about the government’s ability to recognize the positive contributions that we make to shaping policy in this country.

David: When you speak to government concerning how they are going to fight corruption, they always say they will subscribe to EITI, as if subscribing to EITI by itself solves the problem. What do you say to that?

Steve Manteaw: It does, to a very large extent.

David: How?

Steve Manteaw: Let me tell you one very useful lesson from EITI implementation in Ghana. Over the period we did the EITI audit, it was determined that companies were not paying Capital Gains Tax. There is a law in this country which requires companies to pay tax on profits they make when they sell their concessions to third parties. However, over the period, companies where not paying…

David: What companies are these?

Steve Manteaw: Mining companies.

David: And that’s another area of your specialization?

Steve Manteaw: Exactly; the extractive sector in general. …The reason for this is that the Internal Revenue Service, which is responsible for collecting the taxes, was not exchanging information with the regulatory body, which is the Minerals Commission. Thus, whenever a tax opportunity was created because companies had been sold to third parties, the Internal Revenue Service was in no position to appraise itself of this fact. Consequently, these taxes were not collected. This came to light as a result of the EITI audit. So there is a way in which EITI has helped us identify system weaknesses in an important way.

David: If the oil and gas industry were to subscribe to EITI, do you agree that once that move is made, we are on the path to controlling corruption?

Steve Manteaw: Certainly, and it’s not a matter of Ghana deciding to subscribe to EITI in the oil sector; Ghana has to. Because EITI as a voluntary initiative, was actually launched in Johannesburg in 2002, and Ghana was one of the first countries that acceded to the EITI. We have been implementing EITI in the mining sector since then. The EITI principles and criteria require that all substantive sectors of the national economy, that is, the extractive sectors, are subjected to EITI. EITI is about transparency and accountability in the way our natural resource revenues are generated and managed.

David: In this country, it is obvious that they have a lot of criticism for the mining sector, and I’m sure that sector has subscribed to the EITI for years. It didn’t make any difference, did it? Can you tell me how EITI has been helpful to the gold mining industry?

Steve Manteaw: In the 2010 budget, government announced increases in mineral royalties from 3% to a fixed rate of 6%. This is the result of EITI findings. We discovered in the EITI audit that over the period, companies stuck to paying the base rate which was 3%, whereas the royalty range was between 3%-6%, and a company moved up the ladder on the basis of its profitability. In an era where gold prices have risen to about $1,118 per ounce, from some $400 per ounce about five years ago, companies persisted in paying 3%.

David: Whose fault?

Steve Manteaw: It’s the fault of the system.

David: Absolutely. Wouldn’t it be wonderful for these changes to occur even without EITI?

Steve Manteaw: Things don’t change automatically, David. Because all 22 million Ghanaians cannot all be in Parliament, we elect people to make decisions on our behalf. But, in doing so, we do not resign ourselves to sit back and watch them helplessly. We need to play the role of a watchdog and to ensure that our interest is advanced in the scheme of things.  Therein lies the role of ISODEC - to ensure that citizens do not get short-changed by the political decision-makers.  

David:  What path should we tread with oil and gas, so that we can truly impact our communities, and improve their quality of life?

Steve Manteaw: David, you see, we don’t need to look very far. Right here in Ghana, we have rich experiences and lessons to learn from the mining sector. I think that if we are guided by those lessons, there is a way we can get things right in the oil sector.

David: Sometimes, I think there is a bit of a problem there also; it’s a bit unfair for oil and gas. Oil and gas is under suspicion because of our poor image of the gold industry. So we ought to be careful so that we just don’t assume that this is another exploitative zone.

Steve Manteaw: Well, two things to note here: First of all, the manner in which we have managed the mineral sector has created an enclave economy out of our gold sector, such that, it is not linked to the rest of the national economy. We produce gold in this country, but our jewelry makers actually depend on scrap gold. If we have a policy that articulates a vision of an integrated gold sector, such that sometimes, royalty is taken in kind rather than in cash, we can feed the gold into the jewelry industry, and therefore create jobs and tax opportunities for national development. But then, we export everything and so the jobs are not created in Ghana, but in those countries that have an integrated gold sector. Going by this lesson, we need to ensure that in the oil sector, for instance, we have an integrated industry where we can add value to the oil.   

David: But these things take time, and they occur in stages; it’s okay if you are talking about the ultimate vision. The real challenge is that we all know what we want, but really, how to get there is the problem. You talk about an integrated oil and gas industry, and I’m thinking we’ve been doing gold in this country for over 100 years, but we have not developed an integrated gold industry. There has to be something more.

Steve Manteaw: I agree with you, and there is a reason for this. To enable us toget there, we need a policy. For me, it’s an aberration from what ought to be, to have a minerals law before contemplating a minerals policy in this country. The previous government started the processes of developing a national mineral policy, the work was inconclusive at the time they left office, and yet we have a minerals law.

David: Is this newly passed?

Steve Manteaw: That was passed under the previous government. But the point I’m making here is that, the proper sequencing of things is that you have a policy first, then a law. Now what is the role of a policy? It articulates your vision in line with what you want gold to do for you in this country.

David: Do you think they’ve done that for oil?

Steve Manteaw: We haven’t done that for oil. We are in the process of developing that, but I have a problem with the approach. Currently, we are developing the policy, the legal and the regulatory frame work in tandem. They must be sequenced because, first, you have your policy which articulates your vision, then your law operationalizes your vision (the policy), and the regulations apply the law.

David: But you could do that simultaneously. 

Steve Manteaw: You could do that, but there needs to be consistency; one should flow into the other. For example, you have a situation where government says it has a local content policy. What we need to do is to determine what kinds of laws are required to make this local content policy workable, because you know that Ghana is a signatory to World Trade Organisation (WTO) conventions, which actually regulate the way procurements are done. So this invariably will affect government’s commitment to ensuring indigenization. Therefore, what kinds of laws are required to ensure that this thing that government says it’s going to do, which is that we have 90% ownership of the oil and gas sector by 2020, is actually done.

David: But that’s not even realistic!

Steve Manteaw:  Whether or not it will be realistic will be determined by the approaches to getting there. The policy document does not really tell us how we get there, stage by stage.

David: We always talk about where we are going to go but we never talk about how we are going to get there?

Steve Manteaw: This is the problem. It is a problem also because a lot of the time there has not been consultation and participation of citizens.

David: And it’s more work. To say how you are going to get there requires more work…

Steve Manteaw: …and modeling because you need to create scenarios, and know what it will really take to get there. And we don’t do that.

David: Speaking of oil and gas, the policy framework is for local content participation, so I presume the laws then emanate from there.

Steve Manteaw: Exactly, That’s the way it ought to be.

David: Have you seen the policy?

Steve Manteaw: I have seen the policy.

David: What do you think of the Local Content Policy for the oil and gas industry?

Steve Manteaw: One would say a lot of it can be described as wishful thinking because we don’t have practical steps for getting there; a clear case in point is the recent news about Tullow Oil dropping CityLink from providing air freight services.

David: This is a challenging area isn’t it? We want Ghanaians to have opportunities, and so we have laws governing that. But if those services are not properly provided, why should people be obliged to stick to the poor services you provide?

Steve Manteaw: This raises questions about the capacity-building programmes we put in place to make the Ghanaian companies competitive.

David: We should also talk about skills transfer, appreciating people who know, working with them to enable them to pass on knowledge to us, instead of pretending we know everything and can do it ourselves.

Steve Manteaw: Precisely. One of the problems I have with this whole concept of indigenization is that the people who ought to take advantage of these provisions have not been sensitized enough. There are people in the Central Region who don’t even know the essence of invoicing in business transactions.

David: They have no invoices, yet they want to sell goods and services. 
 
Steve Manteaw: Certainly. If you look at the gold sector, a huge chunk of the budget of mining companies goes into the procurement of services.  So if we can position ourselves such that we are able to take advantage of this alone, it is a way in which Ghana can maximize benefits from the oil sector.

David: So the policy must, of necessity, indicate the steps it would take in terms of preparation of human resources in order for Ghanaians to take over that function, so that the benefits remain here.

Steve Manteaw: Exactly. And so for that human resource to take advantage of the opportunities, that resource must be part of the processes of the development of that policy.

David: So the whole Ministry of Education by now should have been busy preparing people?

Steve Manteaw: Exactly. The Ministry should start training people through our educational system.

David: Or is it the companies that should send people out to pursue courses?

Steve Manteaw: It is not the case. We should also understand that the companies are not really charitable organizations. They are actually here to make profit.

David: So we must not always be too suspicious of them?

Steve Manteaw: Well, we are not suspicious. And I don’t think it is wrong for a company to want to maximize profit.

David: But that’s not what we must rely on.

Steve Manteaw: As a country, we must be looking out for ways by which we can maximize our benefits. And that means that we put in place the laws that will enable Ghana to maximize the benefits from the sector. But we need an approach that is not partisan. I was part of the first forum in Ghana to develop the policy document to guide activities in the oil sector, and I happened to chair that panel in the forum. I can tell you that I was quite disappointed at the level of civil society participation in that process. It was just a gathering of politicians, some chiefs, and that was it. There was no proper engagement in terms of civil society groups. We developed a communiqué and we registered this protest, and the government assured us that they were going to have meaningful consultation at the community level and open it up more.   

David: The politicians are the superstars in our society.

Steve Manteaw: That is what tends to be the situation. But if we can have a common front even among the politicians, then national agenda can be championed. That is, if we have NDC, NPP, CPP etc, all coming together to commonly look at the issue. But then, we have the winner-takes-all approach, so the NPP actually did the previous oil policy almost exclusively. It might be a good document, but because the NDC was not involved, they come into power and they want to throw it into the garbage, and do their own thing.

David: That happens now also?

Steve Manteaw: Yes, and that’s the reason there is all this delay. It is this kind of dynamic that really draws us back as a country. Again, whenever we have consultation over policy legislation documents and other things, that consultation must be meaningful. To enable consultation to be meaningful, it means people must have prior access to the documentation. Currently, I know the Ministry of Finance is engaged in some consultations on the National Petroleum Revenue Management Bill and yet people do not have access to the document.

David:  You haven’t seen this bill?

Steve Manteaw: I haven’t

David: Have they published it?

Steve Manteaw: They haven’t. What they have published is the time-table for the consultations. So I attend the consultation without the opportunity of reading the document in advance. What kind of meaningful consultations can you have in this circumstance?

David:  That’s part of the reason the companies had difficulty with the communities when they went to conduct the Environmental Impact Assessment. Again, the people said they thought it was not done properly.

Steve Manteaw: And I agree with them, it was not done properly. In fact I am one of those who raised red flags over International Finance Corporation’s (IFC) approval of the $250 million loan for Kosmos Energy and Tullow Oil. Because we thought that loan was being approved in contravention of the IFC’s own rules, which require an Environment Impact Assessment to be conducted prior to the approval of the loan.

David: But that has been done?

Steve Manteaw: Yes, that has been done.  But one needs to interrogate the quality of that process because the consultations were not very meaningful. Moreover, we have questions about the quality of the Impact Assessment itself.

David: Why didn’t you offer your ideas to them earlier? That’s perhaps part of the problem too?

Steve Manteaw: David, I was in Washington personally to meet with the IFC directors and Ghana’s representative on the IFC board, and I had the opportunity to register these concerns. And so it is not like we haven’t told them. Every now and then, we make our concerns known. It is just that people sometimes want to disregard your concerns and they will only take them when they think their political capital is at stake.

David: We need the extractive industry and we can benefit from it. Can’t we, Steve?

Steve Manteaw: I believe we can, because even here in Africa, there are countries that have been able to use the extractive industry to turn their economies around. Botswana is one of them. Botswana has a huge stake in Debswana, which is the holding company, the main diamond producer in Botswana.   So if we ensure that our interests are well protected in the scheme of things, we can actually maximize our benefits.

David: Like the Cocoa Marketing Board institution, is that what you mean?

Steve Manteaw: Well, not exactly. We should have a stake not only in the marketing of the commodity, but in production itself.

David: With the cocoa, the production is by Ghanaians. But with gold, the production is mainly by foreigners?

Steve Manteaw: Exactly. The reason South Africa is often touted as one country that has demonstrated the benefits of mining is because its gold sector is dominated by South African mining companies and therefore whatever profit they make remains in the country for development. We must ensure that the way we perceive the natural resource sector changes fundamentally, and we must see our natural resource as an opportunity for asset transformation.

David: But we have to be competitive, educated, and able. I think about it as you describe Johannesburg. There is no question about the big investment they made in people to ensure that the expertise is there. Maybe, if we devoted some time focusing on the expertise, and ensured that we had people trained in this business, then we could be sure about XYZ. Don’t you think so?

Steve Manteaw: I think so, and I agree with you that we need to be active in both the production of the resource and in the management of that revenue. We must ensure that the revenue is turned around to the benefit of the larger masses.

David: One of the big things you’ve mentioned is about policy. If you look at what happened with mining, as you have said, there is no real secondary industry developed. Is it also partly because the government never required the companies to do that? Would you say that?  Because, if you want it to happen, you fashion out laws, you provide incentives and so on…

Steve Manteaw: We decided as a country to be rent collectors in the mining sector and that’s what we do. We are just happy enough to collect the taxes and the royalties, and leave the mining for them to do.

David: And maybe that’s even not a bad idea. But the point is we don’t even collect the taxes.

Steve Manteaw: No, it’s a bad idea, but it is worse when we don’t collect the taxes.

David: What I mean is that we could also make them pay super tax and make a good case for it.

Steve Manteaw: David, have your super tax, but how do you create jobs for your people?

David: By using those resources.

Steve Manteaw: That’s okay. So I am saying we must have a policy that actually articulates value addition.

David: What I’m saying is that, maybe, the jobs don’t really need to be there in the mining sector. The sector could generate the money we need to create the jobs elsewhere. So then, it becomes the catalyst to still achieve our objective.

Steve Manteaw: You see, you are producing a fundamental raw material that can feed its industry. Don’t lose the opportunity, after collecting the taxes, to ensure that there is value addition. When you have value addition, the price of the export commodity goes up.

David: Value addition is private sector investment?

Steve Manteaw: It is; and the private sector exists in Ghana. I have problems with the fact that our gold jewelers actually depend on scrap gold. Secondly, going into the oil sector, we have an FPSO which is virtually going to be the production platform and ships are going to berth along it, be loaded with oil and off they go, because we do not have any facility that is going to bring the oil on shore. But it is when we are able to bring the oil onshore, and refine the product, that we can create jobs, and create tax opportunities in the system.

David:  So you must do that, but that takes some doing, and it’s not going to happen overnight. So long as the plan is there, we should do it right. Because there is a beginning, a middle and an end. If we don’t get that right, we will be confused and fighting where we shouldn’t fight.

Steve Manteaw:  Which is the reason why we place a lot of emphasis on the policy framework.  Let me draw your attention to this; we’ve had two policies, one led by the previous government and the other that has just been finalized. You will find that there is a shift in the policy goal from the NDC policy document and NPP policy document. The NPP’s policy goal was to become a net exporter of oil. There is a problem with that; when you want to become a net exporter of oil then you want to maximize revenue.

David: Maybe they should take inspiration from the Directive Principles of State Policy in our Constitution, and stop speaking about manifestos. We are not running a political campaign. And you are right, this is part of the difficulties we have. Sometimes you hear people say “our manifesto says�?; this is not about the political manifesto.

Steve Manteaw: But the good thing about the new policy goal is that, it places a lot emphasis on value addition and indigenization, but it does not state how we are going to achieve that. So it becomes more like wishful thinking really, because practically, I don’t think we are in a position, from where we stand now, to actually get to the 90% indigenization as we have in the policy document.

David: You are going to be very busy, I can see.

Steve Manteaw: Well, we are trying to advance in the national interest.

David: Thank you for coming.  

 



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