Interviews

A SUPPORTIVE DEVELOPMENT PARTNER    

Long before the spate of debt cancellations. Ghana became the first country to have some of her debts cancelled by Germany, which also supports the 2005 Gleneagles G8 decisions on debt and aid. German Ambassador to Ghana, H.E. Peter Linder, discusses these and German-Ghana relations. 

THE WORLD DIPLOMAT: In 1957 Germany was one of the first countries to establish diplomatic relations with the newly independent state of Ghana.  How do you rate this relationship?

Peter Linder: German-Ghana relations have always been friendly and cordial. Our relations have grown into a wide-ranging network of political, economic and cultural cooperation. Ghana's successful policy of stabilising her own democracy and promoting peace and security in the West Africa sub-region makes her a very important partner for Germany in tackling global political and security questions, such as the reform of the United Nations, proliferation of weapons of mass destruction and terrorism.

Another aspect of our cooperation is German support for African and regional integration within G8-NEPAD initiatives, support for the integration of West African countries within ECOWAS and Ghana's important role in this process. Germany facilitated the construction, and continues to support the first phase of, the Kofi Annan Peacekeeping Training Centre, being well aware that  this is an unique institution for the training of peacekeepers, election observers and military and police personnel in West Africa.

Ghana is a priority partner for German development cooperation worldwide. A new two-year bilateral agree-ment on German-Ghana development cooperation in agriculture, food security, good governance and private sector promotion was signed in Bonn in May 2004. 

T.W.D.:  Ghana-German trade relations go back to long before Ghana's independence.  What is the level of trade between the two countries today?

P. Linder: In 2004, German exports to Ghana amounted to €142.5m, while Ghanaian exports to Germany amounted to €90.8m. Germany is Ghana's third most important supplier and the 8th most important export destination. Compared to 2003, trade figures declined in 2004 by about 10%, a development which is not yet a real warning, but decidedly a sign to become more aware of the potential of Ghana-German trade and of business opportunities in the partner country - and to create the best conditions for this exchange. The current figures show clearly that there is potential for further development, for an increase in trade and for more German investment in Ghana. Therefore, on May 26th 2005 the German African Business Association (Afrika-Verein) organised a Ghana Information Day in Cologne which attracted more than 80 visitors.

The Minister of Finance and Economic Planning, Hon. Kwadwo Baah-Wiredu, and the Minister of Trade and Industry, Hon. Alan Kyerematen, as well as the Ghanaian Ambassador to Germany, HE Roland Alhassan, gave a full overview of the economic situation in Ghana and outlined business opportunities. German companies in Ghana, as well as Ghanaian companies doing business with Germany, have been brought together in the Ghana-German Economic Association (GGEA) which offers a wide range of services, information and match-making facilities to its members. The GGEA aims at expanding its services in the near future. 

T.W.D.: What is the level of German investment in Ghana? What significant new investments have there been in the past five years?

P. Linder: Ghana-German economic, business and trade relations have developed steadily over the last 10 years. More than 90 German-Ghanaian companies have invested in the industrial, trade and service sectors. Total investment since 1994 is US$13m in 114 projects (35% in Services, 25% in Manufacturing, 11% in Agriculture, 10% in Tourism).

The legal framework of business relations is spelt out in the Bilateral Agreement on Encouragement and Reciprocal Protection of Investments (signed 24th Feb, 1995, enacted Dec 1997) and will be based on the Bilateral Agreement on the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income, on Capital and on Capital Gains (signed 12th, August, 2004 and coming into effect after ratification, in 2006). 

T.W.D.: African countries such as Ghana have been complaining about EU farm subsidies that have serious repercussions for African farmers. What is Germany's stand on the call for the removal of heavy farm subsidies?

P. Linder: Originally established to ensure food security in Europe after severe food shortages in the post-war period, the EU Agricultural Policy is constantly changing. EU Agricultural Policy is a long-term process and new measures have to be taken by all member states. Rapid changes are difficult. But with recent agricultural reforms, direct farm subsidies have been cut to finance structural adjustment programmes and the protection of the environment in agricultural areas. The so called "EU Agricultural Compromise" decided to effectively cut spending in the agricultural sector in the years to come, although 10 new countries have joined the EU and the economies of some of them are heavily agriculture-oriented. 

T.W.D.: What significant part did Germany play in the landmark decision on the June 2005 G8 debt forgiveness for 18 poor countries, its endorsement at the Gleneagles G8 Summit and the decision on increased aid?

P. Linder: As a member of the G8, Germany has been supportive of all programmes to find appropriate solutions to the debt burden of Heavily Indebted Poor Countries (HIPC) and securing long-term debt sustainability in these countries. According to the burden sharing arrangement, Germany remains firmly committed to providing additional resources to compensate the International Development Association (IDA) and the African Development Fund (AfDF) for forgoing inflows and to maintain their financial capacity.   

T.W.D.: What is the total debt that Germany has forgiven Ghana under the 2005 decisions?

P. Linder: Germany has forgiven Ghana all bilateral debts amounting to €493.54m. €260.69m was forgiven under the HIPC Initiative. 

T.W.D.:  It is on record that Germany was perhaps the first aid donor to cancel any debt by an aid recipient and, in fact, the first to cancel some DM400m owed by Ghana almost a decade and a half ago. How does that earlier debt forgiveness relate to the 2005 decisions?

P. Linder: 2005 G8 initiative builds on the enhanced HIPC Initiative as agreed by the G8 in Germany in 1999. This means that Germany has cancelled 100% of all bilateral debt, which goes beyond the 'Cologne Terms' that called for only 90% relief. This extraordinary commitment underscores Germany's will to promote partner countries' own efforts to improve good governance and poverty reduction. How this is carried out is spelt out by the partner countries themselves in their national Poverty Reduction Strategies, which became necessary for HIPC debt relief. The debt relief programme of the last decade was a separate initiative. 

T.W.D.: How do these G8 decisions affect Germany's future relations with Ghana?

P. Linder: The 2005 G8 decisions and the full cancellation of all bilateral debts by Germany are another clear demonstration of the excellent relations between our two countries. We trust that the Ghana government will use the resources that accrue from the new debt relief to further increase expenditure on its poverty-oriented relief programmes and focus on their full implementation and that Ghana would not find herself in another "debt trap" in the future. Germany supports Ghana's efforts in this regard, particularly one of three focal areas that have been agreed upon, which is the development of the employment-oriented private sector. 

T.W.D.: With the IMF and the World Bank recently approving the G8 decisions, are the G8 and the Breton Woods institutions likely to impose new conditions on cancelled and new aid, as is being suspected in certain quarters of late?

P. Linder: The Multilateral Debt Relief Initiative (MDRI), agreed in Gleneagles, clearly builds on HIPC progress and the national Poverty Reduction Strategies focus strongly on the ownership and accountability of partner governments. In-country processes do not require any new conditionalities. Additional debt relief is granted only to post-Completion Point countries. It is our conviction that these countries have clearly demonstrated their commitment and ability to absorb and use efficiently the resources freed up by debt relief. The MDRI, therefore, reinforces the progress of the macro-economic framework, implementation of poverty reduction strategies and the financial management of the HIPC framework.  

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