Executive Director of the Ghana Centre for Democratic Development (CDD-Ghana) Professor H. Kwesi Prempeh has said one does not necessarily need to be an investment banker to be able to effectively debate the Agyapa Royalties deal.
His comment comes after a Deputy Minister of Finance, Charles Adu-Boahen, said on Saturday, August, 29, 2020, that some of the critics of the deal, particularly Honorary Vice President of IMANI Africa Bright Simons, do not have ideas in investment banking, ideas that, in his view, would have enabled them to do a proper debate on the deal.
Mr Adu-Boahen noted that investment banking principles went into the decision in finalising the agreement.
But reacting to his comment in a Facebook post, Prof Prempeh stated: “In any case, one does not need to be an investment banker or be interested in investment banking in order to form or express an intelligent opinion on a transaction involving our sovereign assets.
“The debate here is not about investment banking. It is about how best to extract and maximize value from our sovereign mineral resources and receipts. It is a debate for Main Street, first and foremost, not one to be outsourced to Wall Street.”
Below is his full post…
In the lead-up to the 2016 elections, a certain presidential candidate, responding to incessant attacks from his rivals about his competence on the job, suggested that because his rivals had never once held the office of president or vice president, they were without standing to question his handling of his job. That logic was roundly and appropriately shot down. Today, the same logic is back in different guises; this time those who successfully shot it down in 2016 are its loudest promoters.
In this matter of Agyapa Royalties, they say Bright Simons is not an investment banker. So what? Why is that even part of the discussion?
Investment banking is a career or a job some people choose to do for a living. It is not some exclusive, impenetrable field that persons who do not make a living in it cannot understand or master. Investment bankers come from all manner of backgrounds: engineering, law, accounting, medicine, math, other hard sciences, economics, the liberal arts, music, humanities, you name it. Moreover, the clients for whom investment bankers work are rarely ever themselves masters of investment banking. In fact, investment banking is not even a profession one typically masters or qualifies to enter through formal training or education. In my own experience, I got to understand a great deal more about the intricacies of corporate and capital market transactions as a corporate lawyer than I ever got to understand in graduate business school. Any suggestion, therefore, that a man of Bright Simons’ learning and experience, an investor and entrepreneur to boot, cannot or does not understand this fairly simple Agyapa deal enough to debate its promoters is just ludicrous.
In any case, one does not need to be an investment banker or be interested in investment banking in order to form or express an intelligent opinion on a transaction involving our sovereign assets. The debate here is not about investment banking. It is about how best to extract and maximize value from our sovereign mineral resources and receipts. It is a debate for Main Street, first and foremost, not one to be outsourced to Wall Street.
In a different place or time, this would be an opportunity for a serious national conversation about why the country has gotten so little, relatively speaking, from the natural resource that once gave it its name. It would be an occasion to discuss and understand the nature of the mining (gold) sector and why many other players in the sector, including foreign companies and third countries, profit far more from the resource than we do. Elsewhere, this would be an opportunity for our economic managers to account for how we have used the mining royalties that accrue to the State from the sector. And it would be a good time to discuss how leakages from the sector, including from galamsey, underreporting or other gimmicks, depress the returns to the nation from our nominal ownership of gold. It would be an occasion to debate why we are back in the vicinity of debt distress and how best, beyond recourse to episodic, transaction-driven financial innovation, we can get a handle on our debt overhang.
In this debate, the opinions and suggestions of investment banking types matter, no doubt. But they cannot be ranked as necessarily superior to the informed opinion of other professionals or citizens interested in the matter. Certainly not when it comes to raising legitimate questions about the deal. The reason is simple. First, as already indicated, this is not just a debate about a particular capital market transaction; it is, first and foremost, a policy debate. It is a debate about how best to extract value and maximize returns from our mining sector and receipts. Focusing on the transaction to the exclusion of other a priori considerations is putting the cart before the horse. Second, we are dealing here with a sovereign client and sovereign assets, not some private client. Thus, investment bankers and transaction advisors cannot be left to dictate the terms of the debate, let alone of the transaction. In this instance, Wall Street must be seen to be serving the interest of Main Street; no more, no less.
Finally, it matters, at least to me, that Bright’s opinion in this matter, while not sacrosant or incontrovertible, is free of any apparent or actual conflict of interests, a big and recurring problem in the investment banking industry. (In the corporate law classes I taught in my former life, we studied cases upon cases of this problem). Bright does not seek or stand to profit, either personally or through related third parties, from the proposed transaction or from his opinion on its merits. That, the integrity of his opinion, should count for a whole lot, especially in a matter such as this, where the risk of a conflict of interests, in relation to the proper utilization and management of our sovereign assets, is an ever present danger.
No need to run down or try to silence independent-minded citizens who are interested to see that those to whom state assets have been entrusted do the right thing by the people of this country, including future generations. Indeed our history as a country, notably in how our successive political, economic and bureaucratic managers have mismanaged our resources, shows that we need a good deal more, not fewer, Bright Simonses to ask the unpleasant but necessary questions.
By Laud Nartey|3news.com|Ghana