The IAC is intended to promote dialogue between the government and senior executives of local and international companies on ways to improve the investment climate. Kufuor stressed that his administration was committed to fiscal discipline and the rule of law and would ensure that investments in Ghana were safe.
Investment trumps aid
“The success of countries that have... gone from third world to developed country status in one generation clearly shows that it is not aid or donor generosity that makes the difference: it is more the inflow of investment capital,” Kufuor said. His political party had long expressed the belief that the private sector was the best instrument for moving the economy forward. To ensure that the private sector did not encounter bottlenecks that impaired its performance, the Ministry for Private Sector Development had been set up “to ease the path of business.” The new ministry would instill a new culture in Ghana whereby public servants would act to promote, rather than obstruct, investment.
Shared billing for public, private sectors
Köhler, who also delivered a statement at the start of the IAC meeting, said that, while good governance was the top priority for establishing a favorable investment climate in a country, the provision of effective infrastructure for the private sector ranked a close second. A generation ago, he said, “it was fashionable to debate whether the state or the private sector should lead the way for economic development,” but it is now accepted that development requires both an honest, well-functioning state and a dynamic private sector. The promotion of favorable conditions for the private sector was where the IMF would base its cooperation with Ghana. Köhler was encouraged that Ghana—the first sub-Saharan African country to achieve independence in the postwar period—has become a leader in trying to build a “golden age for business.” The IMF’s vision, he emphasized, was not of new IMF-supported programs and loans for Ghana, but of the country’s economic “graduation” into a future as a nation with processing industries selling into developed-country markets.
Köhler recalled that he, with the World Bank, had been instrumental in formulating the concept of the IAC. The idea arose from his experience as the head of the European Bank for Reconstruction and Development— before his appointment to head the IMF—in supervising the establishment of similar bodies in Eastern Europe and the former Soviet Union. Although the results of these efforts had been mixed, one promising outcome was that, after about 18 months, governments began to realize that they needed to listen to business leaders.
Urging the IAC’s members to hold open and candid discussions, Köhler observed that, whereas diplomatic language might be appropriate in other forums, it risked blurring the council’s message. The council would be successful only if the government was willing to follow through on its commitments.
Köhler said staff of the IMF and the World Bank would attend Ghana’s IAC meetings as observers and offer assistance and support where needed. The two institutions’ resident offices in Accra also stand ready to cooperate with the council’s working groups and to provide information. The institutions would also consider any technical assistance requests related to the work of the council, especially for follow-up implementation needs and capacity building, in their respective areas of expertise. He urged the council’s members to consider the IMF and the World Bank as partners in their endeavors. The establishment of the IAC, Kufuor added, marks a fundamental shift in the IMF’s traditional role of policing fiscal and economic management and promoting capital investment.