Political Finance in Developing States

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Citation Luna, Joseph P. 2016. Political Finance in Developing States. Doctoral dissertation, Harvard University, Graduate School of Arts & Sciences.

Citable link http://nrs.harvard.edu/urn-3:HUL.InstRepos:33493275

Terms of Use This article was downloaded from Harvard University’s DASH repository, and is made available under the terms and conditions applicable to Other Posted Material, as set forth at http:// nrs.harvard.edu/urn-3:HUL.InstRepos:dash.current.terms-of- use#LAA Political Finance in Developing States

A dissertation presented by Joseph P. Luna to The Department of Government

in partial fulﬁllment of the requirements for the degree of Doctor of Philosophy in the subject of Political Science

Harvard University Cambridge, Massachusetts

Political Finance in Developing States

Abstract

In developing countries, political activities are expensive. During campaigns, candidates and parties incur the costs of hiring staff, advertising, traveling and potentially buying votes. Between elections, citizens exert pressure to receive private benefits. Little is known, however, about how candidates and parties actually raise funds. These candidates often campaign on development platforms, promising citizens that they will deliver quality public goods. It is not clear, though, that the delivery of public goods is improving. To examine these problems, I investigate the case of Ghana. Devoting one year to field research, I observed the actions of political actors in 11 districts. I interviewed over 200 local elites, including politicians, bureaucrats, private business owners and traditional chiefs. I administered surveys to bureaucrats and gathered data on local development projects. Political financing and the quality of public–goods delivery are intertwined. Ghana- ian politics is financed by an “iron square” of politicians, bureaucrats, construction contractors and party officials who covertly extract funds from public procurement. Their actions reduce the funds available to build development projects, hinder the ability of citizens to monitor project quality and drive honest contractors out of the market. This system of political financing is ultimately sustained by the kinship obligations that each player must satisfy.

iii Contents

Abstract iii

Acknowledgements x

1 Introduction 1 1.1 Research Questions ...... 1 1.2 Signiﬁcance ...... 3 1.3 Context & Methods ...... 5 1.4 Plan of the Dissertation ...... 10

2 Inside Motivations 11 2.1 Introduction ...... 11 2.2 The Players ...... 18 2.2.1 The Politician ...... 18 2.2.2 The Bureaucrat ...... 24 2.2.3 The Contractor ...... 30 2.2.4 The Party Chair ...... 35

iv 2.3 Synthesis ...... 37 2.3.1 The Public Procurement Act ...... 39 2.3.2 District X Bid Opening ...... 43

3 A Theory of Political Finance 48 3.1 Introduction ...... 48 3.2 Financing Politics ...... 49 3.2.1 Preferences ...... 50 3.2.2 Actions ...... 56 3.2.3 Enforcement ...... 60 3.2.4 Continuity ...... 66 3.3 Reshaping Accountability ...... 69 3.4 Conclusion ...... 72

4 Empirical Findings on Procurement 74 4.1 Introduction ...... 74 4.2 Survey Results ...... 75 4.2.1 Elite Bureaucrats’ Survey ...... 75 4.2.2 Conjoint Experiment ...... 79 4.3 Archival Results ...... 89 4.3.1 Tender Reports ...... 89 4.3.2 Contractor Registration ...... 96 4.3.3 Media Accounts ...... 100 4.4 Conclusion ...... 103

v 5 Uncertainty, Kinship and Contractors 105 5.1 Introduction ...... 105 5.2 Firm Investment and Kinship ...... 107 5.3 Suboptimal Contract Allocation ...... 113 5.4 Discussion ...... 123 5.4.1 Construction Quality ...... 123 5.4.2 Firm Mergers ...... 125 5.4.3 Party Chairs ...... 126 5.5 Conclusion ...... 127

6 Conclusion 130

Bibliography 136

Appendix A 145

Appendix B 149

vi List of Figures

1.1 Map of Ghana...... 6

2.1 Sample Tender Advertisement from National Newspaper...... 41 2.2 Sample Bid Evaluation Document...... 45

3.1 Districts in Which DCEs Contested Parliamentary Seats, 2012. . . . . 51 3.2 A DCE Shares Projects With Bureaucrats ...... 58 3.3 Regional Chairs, Foot Soldiers and Politicians...... 63 3.4 The Iron Square of Political Finance...... 65 3.5 Subcontracting Across Party Lines...... 67

4.1 Changing Wrong Practices ...... 78 4.2 Political Transfer of Bureaucrats ...... 79 4.3 Sample Bid–Opening Report from a District Tender Committee . . . 80 4.4 Two Sample Conjoint Evaluations ...... 82 4.5 Conjoint Experiment Results ...... 88 4.6 Contractors and Projects, Northern District...... 90 4.7 Contractors and Projects, Southern District...... 92

vii 4.8 Project Bidders Data, Southern District ...... 94 4.9 Project Bidders Data, Southern District ...... 95 4.10 Sample Contractor Registration Certificate ...... 97 4.11 Selected Data on Contractor Registrations ...... 98 4.12 Sample from a District 2012 Annual Progress Report ...... 99 4.13 Proportions of Certified and Uncertified Contractors, 2012...... 100

5.1 Party Chair’s Dictator Game...... 117 5.2 Foot Soldier’s Dictator Game...... 120

viii List of Tables

2.1 District Assembly Common Fund Allocations (2012), By Region . . . 39

4.1 Descriptive Statistics of Bureaucrat Sample ...... 76 4.2 Education and Pay of Bureaucrats ...... 76 4.3 Conjoint Experiment Results ...... 87

ix Acknowledgements

I am indebted to the kindness of so many. I first visited Ghana in 2008, and the warmth, hospitality and humor of the Ghanaian people have always made me feel at home. I thank Siisi Ocran and Eric Tetteh at the Ministry of Transport for their continued support and hospitality. Two of the first people I met in Ghana, I count them amongst my closest friends. I am honored to have learned from them and watched their families grow. At ISSER, I have gained so much from my conversations with Isaac Osei–Akoto. I also thank my good friend Ebenezer Offei–Ansah, whom I first met in 2009. I am inspired by his tireless work ethic, and I know he will contribute so much to the betterment of the world. At the Centre for Democratic Development Ghana, I have enjoyed numerous academic discussions with Kojo Asante and E. Gyimah–Boadi. I am also grateful for the friendship and encouragement of Kakra Adu, Isaac Asare, Maxwell Ashon, and Mohammed Awal. There are many members of the Government of Ghana that have graciously do- nated their time and support. Elionai Adu–Labi has been an indefatigable source of knowledge. Alhaji Ishaq and Coffie Agama have shared so much of their on– the–ground experiences. I thank Joseph Dasanah at the Local Government Service Secretariat for welcoming me and facilitating my research. I am also grateful to the six Cabinet Ministers who allowed me the once–in–a–lifetime research opportunity of observing them up close. I express my deepest appreciation to the hundreds of public servants I have encountered over the years. I am humbled by their compelling stories and dedication to public service. Listening to them tell their stories has been one of the most rewarding experiences of my life. This research would not have been possible without the support of Ghana’s two main political parties. From the New Patriotic Party, I am immensely grateful to

x the ever–patient Kwadwo Antwi Adjei. I have taken in so much about Ghanaian politics and history just by sitting in his office. From the National Democratic Congress, I thank Karl Arhin and Akuamoah Ofosu–Boateng for their support and lively conversations. I also appreciate the encouragement of many junior staffers of the NDC. Outside of research, I am indebted to many friends in Ghana for the encouragement that sustained me during fieldwork. In particular, I thank Abednego Ma- jisi, Alhaji Massoud, Hosseini, Bruce, Randy, Clement, Martin, Mensah Armah and Thomas Akoensi. There are many I wish to thank in the United States. First, I thank Blocking Group One, the best group of friends I could ask for: Adam Hallowell, Albert Chen, Allie Fixsen, Aneesh Kulkarni, Anna Shneidman, Brian Weller, Christina Li, Emily Bruemmer, Gibran Minero, Greg Poulos, Holly May, Jacob Sanders, Jenny Hsu, Katie McCabe, Lucie Guo, Meghan Purdy, Michelle Siao, Ryan Jamiolkowski, Stella Lee, Travis May, Vera Mucaj and Xianlin Li. I express tremendous gratitude to Jonathan Phillips, Leah Rosenzweig, Mauri- cio Fernandez Duque, Matthew Stephenson, Daniel Franklin, Anna Persson, Rachel Sigman, Staffan Lindberg, Shana Warren, Seth Soderborg and colleagues at Boston University, Northwestern, Harvard, MPSA, NYU, UCLA, the International Confer- ence on Public Policy and the African Studies Association for fruitful discussions of previous versions of this work. I am grateful for the guidance of Dan Carpenter, Arthur Spirling and Lucie White in the writing of this dissertation. I have appreciated their diverse perspectives, which has better shaped my thinking. I have also benefited from the wisdom and friendship of Michael Hiscox and Jens Hainmueller, who believed in me and helped me explore interesting research questions in rural Ghana. I first met my dissertation advisor, Robert Bates, in 2006, when I was a sophomore at Harvard College. It has been an honor to learn from him. The thing I appreciate most about him is that, no matter how poorly formed or ambitious my ideas, he has never made me feel inferior. Bob has been a supportive, patient advisor, and he has always had my back. I am awed by the breadth of his knowledge, and his example has inspired me to be creative and holistic in my research. From him, I have learned the importance of fieldwork and distilling the underlying motivations of complex behavior. Michelle Storch has brought boundless happiness to my life. She has supported me during the arduous process of dissertation writing, and her love brightens my days. There is no one else I enjoy seeing the world with more, and I cannot wait to see what our future holds.

xi I would not have gotten to where I am without the love and support of my mother, Victoria Luna. She has always believed in me, and she worked tirelessly to ensure that I would have access to the best opportunities possible. I am humbled when I think of how much she has endured, from growing up in the poor town of Paluan, Mindoro in the Philippines to emigrating to an unknown New York City and Port Charlotte, FL. She has overcome many obstacles. I am immeasurably proud of her. I dedicate this dissertation to the memory of my father, JoséLuna, who I lost to leukemia during my first year of graduate school. He was the bravest, most selfless person I have ever known. Born in the Philippines shortly after World War II, he was the oldest son of 12 children. Growing up, my father helped raise his siblings, and as a young engineer he devoted his salary to getting them through school. One of the first in his family to emigrate to the United States, he worked many jobs to send money to his family. Despite the challenges and setbacks of life, my dad never complained. From him I learned the values of hard work and resilience. He put others before himself. He sacrificed and saved so that I could have a better life. He loved his family and asked for nothing in return. Thanks for everything, Dad. This one’s for you.

xii Chapter 1

Introduction

The title of this dissertation, Political Finance in Developing States, conveys two meanings. It is, on its face, an examination of how political campaigns and parties finance their activities in a developing state, Ghana. More deeply, however, political financing shapes the economic and political development of a state. The money used to finance political activities, both legal and illegal, must originate from somewhere, and the allocation of that money influences the political actors who design and implement policies (Alexander 1972, Adamany 1977). While politicians may ultimately court voters, they must also satisfy those who have financed their campaigns.

1.1 Research Questions

My ﬁeld research in Ghana, starting in 2008, generated the two questions that anchor this dissertation:

• Why is the quality of public–goods provision in Ghana so poor?

1 • How do politicians and parties ﬁnance expensive political campaigns?

Scholars have addressed the first question through studies of historical institutions (Acemoglu & Robinson 2001); geography and disease burden (Sachs & Warner 1997); and ethnic diversity (Easterly & Levine 1997, Miguel & Gugerty 2005). While these factors play some role, I argue that political incentives are central to the provision of public goods. Many scholars have studied political incentives in African countries, but this dissertation addresses a key gap at the core of our knowledge: how the financing of political activities in Africa shapes incentives, actions and policy outcomes. Over the course of fieldwork, it became clear that political financing and the quality of development projects were tightly intertwined. For a politician, the process by which she campaigns impacts the promises made to supporters. Since Ghana’s adoption of a democratic constitution in 1992, elections have become competitive.1 While early elections were comparatively frugal affairs, recently, candidates and parties have spent large sums traveling the country, purchasing advertisements and delivering private goods to supporters (Lindberg 2010). In one election, these supporters may demand clothing and motorcycles, but by the next election, they will have updated their preferences and demand cars. It is not clear how these activities are actually financed, given that parties are poorly resourced, with meager contribu- tions from party members and no support from the state.

1Following the close 2012 election, the losing party litigated, alleging voting fraud perpetrated by the winning party. After nearly one year of proceedings, the winning party was declared innocent.

2 1.2 Signiﬁcance

This dissertation looks “behind the scenes” of Ghanaian politics to advance our understanding of the political economy of development. Clientelistic behavior pervades African politics, and scholars have analyzed party rent–seeking dynamics (Ichino & Nathan 2013), vote buying (Kramon 2012) and the role of political brokers (Stokes et al 2013). In Ghana, parties and candidates buy votes, and politicians are expected to address constituents’ desires for private and club goods (Lindberg 2010). Politicians have both long– and short–term interests, and the latter may lead to them engaging in patronage politics at the expense of good policy outcomes (Geddes 1996). I connect and extend these scholars’ findings by studying the sources of funds that finance these activities. Beyond clientelistic behavior, the sourcing of funds shapes political organization. In Ghana, party organizations, especially at the local levels, are cash–strapped. While parties in many countries finance their operations through member contri- butions or public financing (Casas–Zamora 2005), neither method contributes significant funds to Ghana’s parties. Most party supporters in Ghana are too poor to regularly contribute even small amounts to their favored party. As will be detailed in the forthcoming chapters, Ghanaian parties are financed clandestinely by connected political actors with access to public funds. Despite the democratic bases of Ghana’s parties, this system of political financing can expand the wealth and influence of party elites, entrenching them in their positions of leadership (Michels 1915). Along with the process of raising political funds, the structure of Ghana’s political organization shapes a politician’s ambitions. Schlesinger’s (1966) “ambition

3 model” assumes that politicians consider private motivations in assessing whether to run for higher office. In Ghana, many politicians enter politics at the lowest levels and gradually rise to national–level offices. Adhering to the informal rules of political financing improves aspiring politicians’ chances of reaching the next level—and potentially generating more funds. While politicians are critical players in financing politics, I devote significant attention to bureaucrats. Bureaucrats are the technical experts that implement policies, but they possess their own career concerns and ambitions (Downs 1967, Geddes 1996, Carpenter 2001, Alesina & Tabellini 2007, Gailmard & Patty 2007). The agencies in which bureaucrats work as well as the rules that govern their hiring and promotion shape actions and outcomes (Weber 1946, Kaufman 1960, Wilson 1989, Evans & Rauch 1999). In the course of executing their work, bureaucrats face numerous challenges, and how they cope with these challenges affects policy implementation (Lipsky 1980, Wilson 1989). Ultimately, the financing of politics molds the behavior of politicians and bureaucrats, which impacts the quality of development projects in Ghana. Under ideal circumstances, voters would recognize that public goods are being poorly provided, and they should vote the associated politicians out. However, a large proportion of Ghanaian voters live near the subsistence margin, and benefit from vote buying and other incentives. The acceptance of those benefits silences voters who might otherwise criticize such politicians (Kitschelt 2000, Finan & Schecther 2012, Leight et al 2015), enhancing our interpretation of democratic accountability (Humphreys & Bates 2005). This dissertation will illuminate how politicians finance vote–buying,

4 and I will argue that voters’ inability to punish politicians sustains the political– ﬁnance system and the poor provision of public goods.

1.3 Context & Methods

Ghana is a representative African case for many reasons. Attaining independence from the British in 1957, the country experienced coups and military rule, similar to its neighbor, Benin (Riedl 2014). However, since the adoption of a democratic constitution in 1992, Ghana has witnessed peaceful turnovers of power between its two major parties. In the 1990s, many observers viewed Ghana as an African success story, with its sustained levels of private–sector growth and poverty reduction (Arm- strong 1996, Killick 2010). On the other hand, recent scholarship notes problems Ghana shares with other African countries, namely fiscal deficits and high levels of corruption (van de Walle 1997). Further, Ghana’s political parties tend to affiliate with specific ethnic groups, similar to parties in Zambia and Benin (Riedl 2014). There are numerous entry points into politics for Ghanaians. Administratively, the country consists of 10 regions, which are subdivided into 216 districts. The lowest political offices are unit committees, which correspond to ward aldermen (Friedrich Ebert Stiftung 2010). Just above the unit committees are District Assembly members, who form the deliberative body at the district level.2 The highest office in a district is the District Chief Executive (DCE), similar to a mayor. The DCE is appointed by the President and can be removed at any time.3 As a result, the gov-

2In each district assembly, 70% of members are elected by the district’s citizens, while the rest are government appointees. 3This person is usually a member of the President’s party.

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o Yeji Bondoukou Bamboi Kintampo 8 Elavagnon ° Sampa Dumbai 8° A n BRONG-AHAFO i a Kwadjokrom Kete Krachi e B Wenchi ru Tain Techiman P Atebubu VOLTA Kadjebi Berekum Badou Atakpamé Jasikan Ejura Am Sunyani Apéyémé o Agnibilekrou u Bechem Hohoe Afra Lake 7 m Kpandu ° Mampong Volta Notsé 7° ASHANTI EASTERN Kpalimé Abengourou Agogo Goaso Kumasi Konongo Ho S i a Adriemba Nkawkaw o i L. Bosumtwi B Anyirawasi Tsévié Bibiani Bekwai A n Begoro u im Wiawso Awaso m ir Akosombo Dzodze B Dam o Obuasi n Vo a e lta Aného T Kade es Aflao nk 6 a Koforidua Sogakofe Lomé ° WESTERN Dunkwa Oda m 6 a Keta Lagoon ° Enchi s Keta Asankrangwa A Nsawam GREATER oé Foso Shai 1 m ACCRA Ada Anloga ° o Bawdia Hills K Swedru Tema Bogoso Twifu Praso Teshi National capital Aboisso CENTRAL Accra Prestea Regional capital P

r a a Town, village Lagune r Tarkwa Winneba b Aby o Airport k n Elmina Saltpond Gulf of Guinea Newtown A International boundary 5 Cape Coast ° Half Assini Esiama 5° Regional boundary Sekondi-Takoradi Axim Main road 0 25 50 75 100 km The boundaries and names shown and the designations Secondary road Cape Three used on this map do not imply official endorsement or Points acceptance by the United Nations. Railroad 0 25 3° 50 75 mi 2° 1° 0°

Map No. 4186 Rev. 3 UNITED NATIONS Department of Peacekeeping Operations February 2005 Cartographic Section

Figure 1.1: Map of Ghana.

6 erning party holds the highest office in each district, even in areas that are opposition strongholds. The DCE’s official task is to ensure that the government’s policies are implemented, and she oversees the allocation and monitoring of local projects. Ghanaian voters elect 275 Members of Parliament from single–member constituencies, who serve fixed four–year terms.4 According to the 1992 Constitution, at least half of the President’s Cabinet must be comprised of MPs, which implies that being an MP in the President’s party can be a lucrative opportunity. Presidents are elected from a single national constituency, and serve fixed four–year terms, cotermi- nous with MPs. Since 1992, Ghana has had four Presidents: all possessed political experience prior to becoming President. Similarly, most vice presidents have had political or civil-service experience.5 Two parties dominate Ghanaian politics. The social–democratic National Demo- cratic Congress (NDC) is the current ruling party, holding both the presidency and a majority in parliament. The NDC derives its electoral strength from the Volta Region, home of the Ewe ethnic group, as well as the Muslim–majority northern regions. The property–oriented New Patriotic Party (NPP) is the current opposition, and last held the presidency and parliament from 2000–2008. The NPP’s electoral strongholds are the Ashanti and Eastern Regions, which are the homelands of the Akan ethnic groups.6 Both parties have internal mechanisms for electing executives

4Most parliamentary constituencies overlap directly with district boundaries. 5One exception is that of Alhaji Aliu Mahama, vice president from 2000–2008 with the New Patriotic Party (NPP), whose members had been in opposition for decades prior to 2000. Aliu Mahama never served in any political position, but was a prominent contractor of the Northern Region and a key NPP ﬁnancier. In recent years, academics have served as Vice President (John Atta Mills, Kwesi Amissah-Arthur) and as Vice Presidential candidates (Mahumudu Bawumia). These academics all had prior policy experience. 6It is technically possible for the presidency to be held by one party and parliament, by another.

7 at the different levels of organization.7 The President of Ghana wields numerous appointment powers. In addition to appointing Cabinet ministers and deputy ministers, the president appoints all 10 Regional Ministers and all 216 District Chief Executives. However, the President chooses these officials in consultation with the ruling party’s executives, and party executives often advance their own candidates. These ministers and DCEs can be replaced at any time, so they strive to satisfy the President by ensuring that the bureaucrats they oversee implement policies according to the government’s mandate. This dissertation studies Ghana’s decentralized, district–level bureaucracy. While there is a central policy–formulating bureaucracy in Accra, each region and district contains its own policy–implementing bureaucracy.8 The District Coordinating Di- rector (DCD) is the bureaucratic head of the district. A veteran member of the public service, she oversees the activities of every bureaucratic sector in the district. The District Finance Officer manages the district’s income flows. The District Plan- ning Officer assesses the district’s development needs. The District Works Engineer oversees procurement and construction. Program areas such as education, health and agriculture have their own directors, but they tend not to work in the district’s

Recently, numerous constituencies have voted ‘skirt–and–blouse’, choosing one party’s candidate for president and the other party’s, for MP. 7Though field research for this dissertation was conducted during an NDC period of government, the findings of this dissertation should not be construed as an indictment of the NDC. Respondents from all parties indicated that similar behaviors took place when the NPP was in power. 8The centralized agencies include such groups as the Ministry of Health, Ministry of Education, etc. The decentralized bureaucratic apparatus is overseen by the Ministry of Local Government & Rural Development as well as the Local Government Service Secretariat. Some agencies, such as the Ministry of Food & Agriculture have had a decentralized presence, but those officers are currently being folded into the local–government structure of each region and district.

8 central office.9 Bureaucrats are appointed via the Local Government Service Sec- retariat in Accra. Their training is extensive, and many hold graduate degrees in various fields (see also Dresang (1975) on Zambia). I conducted fieldwork in Ghana between September 2013 and July 2014.10 This dissertation focuses on activities at the district level, particularly those executed by DCEs and district bureaucrats. Ten districts were chosen for the main study, and one pilot district was studied first to prepare for the others. These districts were chosen to ensure regional, ethnic and political balance.11 I lived in each district for up to four weeks, with most days spent embedded at the district assembly, where I became familiar to the DCE, bureaucrats and other notables. For the highest–level politicians and officers, I conducted in–depth, semi– structured interviews, devoting one to three hours per interview. My residence in each district allowed for numerous informal discussions, whether at residences, drink- ing spots or in vehicles. I participated in assembly meetings and project inspections. I directly administered a survey to senior bureaucrats—namely, planners, engineers, junior officers, etc.12 This survey included conjoint experiments that examined how bureaucrats select contractors during procurement proceedings (Hainmueller et al 2013). Beyond politicians and bureaucrats, numerous interviews and focus groups were conducted with former DCEs, party officials, contractors and chiefs.13 In to-

9For more on district assemblies, please see Friedrich Ebert Stiftung’s 2010 “A Guide to District Assemblies in Ghana.” 10This project builds oﬀ of ﬁeldwork conducted over several trips starting in 2008; in total, more than two years were spent conducting research in Ghana and cultivating relationships with politicians and various public agencies. 11See appendix for descriptions of each district and my sampling methods. 12See appendix for the survey instrument. 13A note on methods: I am frequently asked, ‘How did you get people to talk about such sensitive

9 tal, I interviewed nearly 200 elite individuals and administered surveys to 83 senior bureaucrats. I gathered public–goods and contract data from each district.14 While in Accra, I obtained additional data on construction contractors and qualiﬁcations.

1.4 Plan of the Dissertation

Chapter 2 introduces the four main groups involved in Ghanaian political financing and public–goods delivery: politicians, bureaucrats, construction contractors and political–party chairs. I draw from extensive interviews and participant–observation to detail the incentives of an actual representative of each group and the challenges he or she faces. Chapter 3 connects the actions and incentives of these four groups to construct a theory of political financing. Chapter 4 analyzes bureaucratic surveys and archival data to validate empirically the behaviors of politicians, bureaucrats and contractors. I describe evidence of procurement violations and argue that these violations suggest that money is extracted from projects to finance political and bureaucratic activities at the expense of public–goods quality. Chapter 5 discusses how the kinship–based behavior of party supporters and construction contractors sustains the political–financing system and the poor quality of public goods. Chapter 6 offers policy recommendations, proposes future research directions and concludes. issues?’ This project was enhanced by living in each district and spending significant amounts of time interacting with people. Familiarity turned to trust, and many interviewees welcomed the cathartic chance to open up without judgment. 14While each district is nominally supposed to report projects and contracts to Accra, in practice this does not happen. However, most districts did provide their 2012 Annual Action Plans, which includes basic data on contracts. The quality of the data differs significantly between districts.

10 Chapter 2

Inside Motivations

2.1 Introduction

Understanding political actors in their “natural habitats” better informs research (Fenno 1990). I aﬃrm that political actors are complex, and their private ambitions shape public–policy outcomes. In this chapter, I delineate the ambitions of four key players in Ghanaian politics—the politician, the bureaucrat, the construction contractor and the political–party chair—by illustrating actual examples of each that I encountered in the ﬁeld. I synthesize these players’ ambitions through my participant–observation of a district procurement meeting.1

1As noted in Chapter 1, interview respondents were drawn from across the country. In addition to a pilot district in the Brong Ahafo region, I sampled one district from each of Ghana’s ten regions for my main study, balancing on ethnic, political and urban/rural criteria. Within each district, I interviewed all senior politicians, bureaucrats and party oﬃcials that were available, as well as a sample of private contractors. I carried letters of introduction from the Ministry of Local Government & Rural Development, the Local Government Service Secretariat, other ministries and both of Ghana’s major political parties to facilitate interviews. I ﬁrst met with a district’s DCE to obtain permission to conduct interviews, and I provided recruitment and information letters to each interviewee.

11 Ambitions drive the actions of politicians, bureaucrats, contractors and party chairs. For politicians, many argue that their actions are motivated by a desire to win elections (Mayhew 1974, Fenno 1978). Particularly in the Ghanaian case, however, I contend that political motivations are more nuanced and embedded in other social structures (Schlesinger 1964, Fenno 1990). As Schlesinger (1964) encapsulates in the American case,

Since the politician is also always a citizen, it is never possible to abstract him as pure oﬃceseeker, in the same degree to which we can isolate the businessman or the doctor. The politician’s other interests are always involved in his decisions as politician.

A politician’s current behavior in office may be motivated by expected employment in the private sector, for example, or with other economic or political interests (Schlesinger 1964; Lessig 2011; Schneer & Palmer 2014). In Ghana, many politicians jockey to be appointed as ambassadors, board members to parastatal companies or as officers within their party, should they be defeated in a primary or general election. Political ambitions are also shaped by the structure of available offices (Schlesinger 1964). In Ghana’s districts, the lowest political offices are unit committees, similar to a low–level ward’s aldermen (FES 2010). Many of these committee members seek election to the District Assembly, which forms the deliberative body of the district. Assembly members can sit on a variety of committees and run for the office of Pre- siding Member, the district’s highest legislative official. At the center stands the District Chief Executive, similar to a mayor, the highest political official of the district. She is appointed by the President. Her term is not fixed and is conditional

12 on satisfying the President’s agenda. Though outside of district politics, Members of Parliament represent the interests of the district’s citizens at the national level. Their terms are fixed for four years, meaning that they cannot be removed by the President. While I focus on the district, as suggested by the “ambition model”, the higher offices of the political system shape the behaviors of politicians at the local levels. Schlesinger (1964) depicts three typologies of political ambition: discrete, static and progressive. With discrete ambitions, the politician focuses on her immediate term, and then chooses to withdraw from office. Any politician may choose to have discrete ambitions by personal choice; for example, a DCE appointed to an opposition district knows she is unlikely to remain in office should the opposition take power and she will likely not be elected MP. Static ambitions apply to politicians seeking to make a long career out of a particular office. In Ghana, district–assembly members and Members of Parliament fit into this category if they continually seek reelection to their current offices. Politicians with progressive ambitions are those seeking to obtain higher offices than the one currently occupied. A district–assembly member wishing to become presiding member or DCE; a DCE campaigning to be elected MP; an MP striving to be a Cabinet minister; and a Cabinet minister running for President are all politicians with progressive ambitions. At the district level, there are numerous cases of DCEs campaigning for the MP’s seat, as the latter office is held for a set term and during periods of opposition control. Many aspiring MPs are also attracted by the prospect of working in the national capital, which may facilitate networks with foreign donors and large private corporations. A DCE can be removed

13 from her office at any time by the President, and many respondents reported that jealous party members could initiate a DCE’s removal through smear campaigns. An MP, however, is entitled to serve her full four–year term, and it is much more difficult to be removed prematurely. Several outside factors influence political ambitions and these ambitions change over time (Schlesinger 1964). One’s record of past successes and failures affects future political planning. Geographical and ethnic considerations factor into one’s ambitions; in the Ghanaian case, party loyalists from particular ethnic groups have a disproportionately better chance at obtaining the highest offices as each party seeks to maintain ethnic balance. Age may also factor into a politician’s ambitions: political expectations that are reasonable for a young district–assembly member may not be reasonable for one nearing retirement. In addition to these entry points into politics, Ghanaian citizens can also seek out various opportunities in the civil service. In many countries, bureaucratic positions are respected and can be pathways to political and private success (Johnson 1981). For many African citizens, traditional and family–based demands encourage talented and educated young people to pursue a career in the civil service to ensure that they can provide benefits to these family members (Achebe 1960). Ekeh (1975) classifies official and family demands as ‘public’ and ‘primordial’, highlighting the influence of family demands on executing official duties. Price (1975), surveying potential civil servants still training at the University of Ghana, indicates that family and social pressures are high for civil servants. Focusing on the case of India, Hanna & Wang (2014) employ a laboratory experiment to analyze selection motivations of students

14 seeking entry to the India Civil Service. These authors find that students who cheat on the laboratory experiment are more likely to seek entry to the India Civil Service, implying that they will engage in corrupt acts in the future. While Ghana’s bureaucrats face many traditional and family pressures, they also tend to career concerns. Downs (1967) discusses five typologies of bureaucrats: climbers, conservers, zealots, advocates and statesmen. Climbers seek power, income and prestige, while conservers seek to maintain their holds on these attributes. Zealots, advocates and statesmen are more altruistic, showing various degrees of de- votion to issues and broader programs. Gailmard & Patty (2007) extend Downs’s (1967) contribution by emphasizing bureaucrats’ discretion and their choice to invest in costly expertise. To stay in the civil service, bureaucrats must have job tenure and influence over policy issues (Geddes 1996, Gailmard & Patty 2007). Similar to other professionals, bureaucrats devote attention to promotion, and the actions they undertake to earn promotions can impact policy outcomes (Lipsky 1980). Many agencies delineate promotion criteria, but bureaucrats often must also meet professional criteria that are determined by outside associations, particularly if they are considering careers outside the bureaucracy (Kaufman 1960, Skowronek 1982, Alesina & Tabellini 2007). In developing countries, many government bureaucrats aspire to transfer to international agencies, such as the United Nations or the World Bank, and they supplement their existing work with donor projects (van de Walle 2001, World Bank 2005). For bureaucrats, agency environment weighs heavily on actions. Principal–agent models delineate issues of moral hazard, adverse selection and informational costs

15 as reasons for bureaucrats’ deviations from principals’ expectations (Dixit 2002). Bureaucrats often serve more than one principal: their immediate boss, politicians, interest groups, etc. (Dixit 2002). A bureaucracy’s history, culture and norms can also determine how these officials approach tasks (Kaufman 1960, Wilson 1989). Kaufman (1960) and Wilson (1989) typify how managers’ backgrounds and relations between the different levels of an agency impact the outputs and outcomes of that agency. External environments, however, can allow enterprising bureaucrats to reshape an agency’s outputs. Carpenter (2001) demonstrates that mid–level bureaucrats of the United States Postal Service and the United States Forest Service coordinated support from outside their agencies to implement their preferred policies against political opposition. The traditional and professional pressures bureaucrats face shape their actions and impact policy outcomes (Lipsky 1977). Many Ghanaian bureaucrats report job stability as a chief motivation for entering the civil service. They value job security partly because it ensures that they can meet the financial obligations imposed by friends and family. As a result, bureaucrats take actions (or refuse to take actions) to ensure they do not upset their political or organizational principals who could jeopardize that security. Bureaucrats, therefore, devise methods to cope with political realities that, while satisfying technical requirements, may impede the quality of public–goods provision. Unlike politicians and bureaucrats, construction contractors are not well studied in the political economy of development.2 I contend, however, that they are critical

2However, see also Blundo & Olivier de Sardan’s (2006) ethnography of local contractors in Francophone West Africa.

16 actors in a developing country. They are the ones who actually build the development projects citizens demand. Contractors, as the recipients and executors of government–funded development projects, are the synapse across which public funds can enter private pockets. Not only that, their location in the procurement process makes them powerful. Certainly, not all contractors are thinking of political power and influence when they start in the industry, but many turn to political favor to ensure profits. There are numerous other ways, of course, to amass wealth. In Ghana, lawyers and doctors are revered professions that pay well and can bring notice from political leaders.3 However, these professions impose high barriers to entry, namely long periods of education and substantial loans, and each is governed by a professional association to ensure that practitioners adhere to ethical norms. In Ghana, there are no barriers to entry to being a contractor. One does not need a college degree, and the groups assigned to monitor contractors (engineering associations, ministries in Accra) rarely enforce regulations. Being a contractor and having the right connections can be an immediate path to wealth and influence. Party chairs connect the politicians and the masses, and they wield influence over politicians’ futures. In my observation of Ghana, party chairs are coordinators and information conduits for the three players above. Party chairs head the system that turns out the votes for political candidates, and they are also critical in running the primaries that select candidates. Riordon’s (1905) description of Tammany Hall boss, George Washington Plunkitt, depicts many characteristics of party machinery

3For instance, the New Patriotic Party, dormant for decades during PNDC and NDC rule, is stereotyped as a party of lawyers.

17 and chairs in Ghana. Such party chairs are driven by their need to have power and influence, a core desire that feeds their ego (Riordon 1905). Party loyalists in Ghana, commonly known as foot soldiers, expect jobs, which was also a key expectation of Tammany Hall’s supporters. For Ghanaian party chairs, such jobs can be found in petty civil–service positions, but they are more easily generated in the construction industry through the preferential awarding of contracts. As I will illustrate later, such preferential awarding is conducted within the letter of the law and based on insider information—a phenomenon that parallels Plunkitt’s “honest graft” (Riordon 1905). Unlike politicians, party chairs are not at the front of the stage. They operate behind the scenes, mustering and organizing the votes to ensure a political victory. Frequently, these chairs are themselves powerful contractors. Political ambition, bureaucratic coping and party organization must all be financed. I posit that each of the four players is essential to the functioning of Ghana- ian politics. Development outcomes are suboptimal, and to understand Ghana’s failure to provide public goods, one must understand political financing. I depict below a district chief executive, a senior bureaucrat, a construction contractor and a regional party chair. All names have been changed to protect respondents’ privacy.

2.2 The Players

2.2.1 The Politician

Appointed in 2012, Olivia Amadu is District Chief Executive of District J, well populated and located in Ghana’s forest belt. Agriculture and forestry are District

18 J’s main sources of income, and its topography is varied, with numerous rivers, valleys and rocky hills. Approximately half of the land in District J is dedicated to cocoa, Ghana’s major export crop. Plantains, cassava, cocoyam, livestock and fish–farming are other important agricultural sectors. Like many of its surrounding districts, District J has problems with illegal—or galamsey—miners who illegally mine gold and other valuable resources, inflicting serious harm to District J’s ecology. District J favors the NPP, though it is more politically competitive than surrounding districts. Amadu contested the NDC parliamentary primary in 2012, but did not win; instead, she was appointed DCE after the general election. Similar to its surrounding districts, District J is predominantly Akan in ethnicity, and the most widely practice religion is Pentecostalism. I am fortunate to meet DCE Amadu on my first day in the district, and she graciously grants me an interview. She strikes me as particular and demanding, and the secretaries labor to ensure that her office is maintained exactly to her specification. Amadu is professionally dressed, wearing a dark business suit. A native of District J, Amadu explains that her family has always been involved in politics. Family political involvement is a common theme for DCEs; typically, a father or an uncle had been involved with a political organization many years before. For Amadu, two brothers have been involved in politics, with one holding political office and the other being a leader within the NDC. In addition to political office, family members of Amadu have been traditional chiefs and queen mothers. She greatly admired her brothers, and her family is drawn to the social–democratic nature of the NDC, a party that she claims treats all people as equals. For Amadu, her

19 experiences as a woman further motivated her decision to enter politics; after seeing the women of her mother’s village suffer, Amadu decided to help them. Initially, she lobbied NGOs to assist these women, but later decided a political career would be more effective. Amadu is well educated. Still young, she attained her first degree from a prominent Ghanaian university in the early 2000s. Amadu later received her executive MBA. In her relatively short professional life, she has held several private and public positions. Amadu harbors progressive (in Schlesinger’s 1964 formulation) political ambitions, and many of the DCEs in my sample share this stance. Talking about elections, I find her overly boastful, implying a security of position that is actually lacking. She is a stalwart NDC politician, and is highly critical of the opposition NPP, which is not a common sentiment amongst other DCEs in my sample, most of whom respect the opposition party. She is not willing to cooperate with the NPP. For her, it is clear that the NDC is the party of the people,

“My party, we don’t talk much. We help people, ensure roads are good. We are the party for women and children—we don’t go on air just to talk. [...] At election time, people vote on performance, and others will be disappointed.”

Of the DCEs in my sample, Amadu is one of several who can talk of actual physical accomplishments in their districts rather than just big ideas. Throughout our interview, she emphasizes her accomplishments in great detail, as if ready to campaign at a moment’s notice.

20 “Since I have come, we have built 25 boreholes. And I have been here less than one year!”

In terms of campaigning, she is conﬁdent of the NDC’s fortunes in this district,

“In 2008, our candidate for Parliament had only 5,000 votes, but the NPP candidate won with 17,000. In 2012, the NPP had 15,000, while the NDC had 13,000. In 2016, we will take the seat.”

Despite losing the 2012 parliamentary primary to a party chairman, Amadu remained conﬁdent in her abilities and the NDC’s fortunes. Similar to many Ghanaian citizens, she places great faith in God’s plan,

“You know, I contested at that time against [a then-executive of the party]. We went around, and I visited all the villages twice before I had a medical issue. I believe in God, and I am not surprised that I lost. I did all possible to win. My contender knew I was going to win.”

“With the chairman, I came here, this young lady with an attractive CV. People saw me as a threat. Some people were calling others, namely the men, not to vote for me. The way this lady (me) is, she may go far.”

Even though she campaigned against a party executive, Amadu was selected as DCE, a process that would involve those very party executives. Similar to other DCEs, Amadu faces a divided party executive, and there are various coping strategies DCEs have taken to mitigate those challenges. Divided constituency executives can hamper a DCE’s agenda by delaying the procurement process or cultivating

21 opposition. For this DCE, she often turns to the outside to ensure that her district’s development needs are well served,

“I have been lobbying [international organizations] since I came here. I go out, and I market my district! I got two six–room classroom blocks! I lobby.”

Lobby is a favorite euphemism of this DCE. When I ask DCEs about pressures they face when awarding contracts, most concede signiﬁcant pressure and moral dilemma. Most DCEs highlight the need to get contractors to perform well, but I found none who were able to ensure quality work. While Amadu acknowledges such challenges, she embraces the pressure that party contractors place on her.

“Pressure from contractors? Oh, that is called lobbying! I condemn contractors who can’t perform. If we know people who perform, we can give it to them. But it is hard to know who can perform.”

Other DCEs ﬁnd pressure from contractors and community members more frustrat- ing, however,

“When there are demands from communities, you have to explain it. There is a process—don’t just have money in my purse. There is a procurement law—but people don’t want to hear it. Let people understand the limits of your power.”DCE, District F

22 “It is about the MONEY! The people keep coming to you. ‘I am bereaved, I have to pay school fees, my wife is admitted (to hospital).’ And so forth. They expect money from you. It is especially bad with party people! They think that because you are DCE that you can just open up the district budget to them. But that is not the case!”DCE, District E

Regarding her relationship with bureaucrats, Amadu is a commander. She emphasizes her superiority over the bureaucrats and that she wants to implement policies quickly.

“I always tell them, ‘I am a politician with short time.’ They are relaxed. At times, I push them. We don’t have time; we must perform now. If we want to go to tender, you must prepare the documents.”

Many bureaucrats across my sample reported being rushed by their DCEs to prepare tendering documents. DCEs, in turn, face pressure from constituents regarding the award of contracts. Amadu is a young politician with progressive ambitions for higher office (Schlesinger 1964). She is energetic, with a willingness to cater to party contractors and gain exposure. Her time as DCE builds both her credentials and her funding base. She hails from a competitive area, one that the NDC desires to ensure national victory. Further, attitudes towards women in Ghanaian politics, at least at the highest levels, are changing, meaning that she could be well placed to reach the top.4 When I asked Amadu where she envisioned herself in five years’ time she confidently assured me,

4Hanna Tetteh, for instance, was considered for the vice presidency following the death of Pres- ident John Atta Mills in 2012.

23 “Oh, my party will still be in power. And I will be a deputy minister, at least.”

The most difficult challenge Amadu faces is governing with a divided party–executive board in her district. While it is possible that she can obtain higher office without their support, she would be more likely to win primaries with their favor. Many DCEs in Ghana have been ousted from their position by jealous party executives, so Amadu must find a way to satisfy their needs.

2.2.2 The Bureaucrat

Yusuf Massoud is the District Coordinating Director of District H, which is a rural district but located near a large city in the coastal zone of Ghana. Despite its proximity to a large city, this district lacks many modern amenities that were found in rural districts further north. District H features coastal savannah, and is flat in topography. Economically, District H is involved in livestock production, but also grows traditional crops. District H is located in a politically competitive region, similar to District J, though in previous elections, it has tended to support the NDC for both president and parliament. Like several other districts, this one was subdivided within the past five years, with a portion becoming an entirely new district.5 My first full day in District H, I met the DCE. Unlike the other DCEs in my sample, this one was not initially welcoming towards me. He did not understand why I would need to visit a district in every region of the country,

5With each census, new districts are created to ensure population balance.

24 “Oh, it is the same everywhere! You have the same structures and policies!”

To him, I was wasting my time. The DCD, Massoud, however, was very diﬀerent in attitude from the DCE. Entering Massoud’s oﬃce, just across the hall, the environment was relaxed, and I greeted several senior bureaucrats while chatting with him. I explained that I wished to study the relationship between politicians and bureaucrats in Ghana’s local government.

“That is a very thorny issue you raise there. It depends very much on the personality of the politician in charge. Anyways, you will need some candid responses.”

As each senior bureaucrat heard my topic, they chuckled in a knowing fashion. Something was rotten in District H. Compared to other districts in my sample, the bureaucrats of District H were the most uniﬁed in their assessment of political ambitions and its negative eﬀect on bureaucratic decision–making. While Massoud is my focus, I will include the perspectives of other bureaucrats as well. Massoud is a native of a northern region of Ghana and is well educated, holding an MBA. Like many DCDs, he has completed coursework at the prestigious Ghana Institute of Management and Public Administration. He has been a member of the public service for over 20 years. Joining the public service so that he could “contribute to the development of rural areas”, he has worked in numerous districts and several regions. This notion of contributing to development is a common theme amongst DCDs and other bureaucrats. In my sample, most DCDs will stay in one region, but work in several districts

25 of that region; while Massoud has primarily worked within one region, he also has experience outside it. As to why he had served in so many districts, some for very short periods of time,

“That’s a part of the system. Whenever there is a change in government, the DCD is moved around. This causes friction.”

For Massoud, a politician’s perceptions of him signiﬁcantly aﬀects the work.

“In terms of engaging with the DCE, we are supposed to work in har- mony. But there are individual diﬀerences. Politicians are sometimes not administrators, and sometimes they pigeonhole you—they may perceive you as for or against them. [...] They will look at your background. I’m from one of the northern regions; I will be perceived as NDC. If I am from Ashanti Region, I will be perceived as NPP. If from Volta, they will think I am an NDC man. They will also look at your experience. For instance, in one district I was in, I worked well with the DCE at the time, who was NPP. In 2008, there was a change in government, and an NDC DCE came in. The agitations were very high, and it was perceived that I was with the NPP—even though I am a northerner in background! I am supposed to serve the government of the day.”

Massoud also highlights a politician’s level of education as being a determinant in how a bureaucrat approaches his job,

“The relationship will work well if the politician has an appreciable level of formal education. [...] You may work with a politician who doesn’t understand vision of government so he introduces personal issues into administration of the district.”

26 However, Massoud asserts that public servants also take advantage of the system to extract resources,

“DCDs sometimes go wrongly to exploit ignorance of DCE. I would not say that public servants are not corrupt.”

For Massoud, extended families and social expectations exert pressure. Many bureaucrats, including Massoud, aﬃrmed that saving for retirement was a chief concern. Bureaucrats complained of low salaries and strong social pressure to build a nice house prior to mandatory retirement at age 60. If a bureaucrat fails to complete his house by 60, he may face social ridicule and its associated stress.

“That very last question (on preparation for retirement) is the bean of corruption. [...] I am always looking for outside work to supplement my salary.” District Planning Oﬃcer, District A

Though Massoud faces numerous social and retirement pressures, he has made investments that “cushion” him, and he has his businesses on the side. Many public servants report owning their own businesses, but, given their low salaries, it is not clear how they raise the initial capital.

27 “In all my years in the public service, I have never seen a contract awarded on merit.”

On the contract–awarding process, Massoud explains how bureaucrats cope with political demands,

“Politicians have friction because they know they have a maximum term, but a public servant has until the age of 60. Politician thinks that when he comes he wants to make the best of his years. This leads to corrupt practices. Some lack an understanding of the rules and regulations—they want public servant to set aside rules, regulations and laws to do what is expedient. We have a procurement law (Act 663). Politicians would want you to initiate a development project without going through process. You must use diplomacy: let him understand that you are going through process in his interest. You will often get sympathizers for the politician who will frustrate you. Bureaucrats don’t work in their hometowns, and the politician may think you are not for development in his area.”

The phrase, “...let him understand that you are going through process in his interest...”, summarizes the bureaucratic coping that occurs when bureaucrats face corrupt practices in Ghana’s local–government system. While a district may complete a procurement process on paper, it may not be clear if that process fulfills the intent of the rules. This bureaucratic coping legitimizes the corruption that infiltrates procurement in Ghana. The bureaucrat possesses one advantage over the politician, contractor and party executive: she can apply an imprimatur of expert discretion to any project or process, which would mask corrupt actions. In choosing a contractor, discretion is necessary because one cannot choose a contractor on cost alone—quality must be considered, and quality is not easily quantifiable. The transaction costs involved in quantifying quality outweigh the benefits of such measurement. In short,

28 the bureaucrat has discretion required to award contracts. Such discretion can also allow the bureaucrat to secure private gain from projects. Without the bureaucrats’ expert discretion, the procurement process would not be believable—or would be easily prosecutable—to two important constituencies: voters and external donors. In District H, many junior officers showed disgruntlement, affirming the actions that Massoud outlined as a senior officer. For these bureaucrats, coping is a norm: they legitimize a corrupted process that ensures funds for politicians and bureaucrats. Though these bureaucrats knowingly legitimize a corrupt system, they can also use that system to handle requests for assistance from family and kin–group members. As a junior planning officer in District H informed me,

“They tell us that we can ‘be the change’. But they are using you to cut corners, cheat the system. Over time, public servants who are not inclined to be corrupt are frustrated that they will work 30–40 years and be paupers. [...] The corrupt act is carried out by a syndicate of politicians and bureaucrats—they take the money from the State to use for their families.”

“The public servants, they know how to cheat the system—a major part of our budget is from the West, and they are becoming awake. [...] They talk about local economic development—even if it comes, it goes to political cronies, the party people! At end of day, money is squandered, but because they are party people you cannot hold them accountable.”

This junior planning oﬃcer reiterates a key point: bureaucrats serve as a signaling mechanism to donors. If institutions such as the World Bank and bilateral agencies, many of whom have ﬁnanced the training of these bureaucrats, see the bureaucrats’

29 approval, they assume the procurement process was correctly implemented; further, it is simply too costly to investigate procurement in–depth. An assistant auditor in District H adds,

“We have procurement procedures—but they’ve done the thing so many times that it’s become a norm. On paper, it looks like the procedure has been followed. Recently, we had to procure new desks, but they jumped straight to the end. They’ve repeated it so many times it’s a norm. When you want to go by the rules, it becomes diﬃcult because you are just a junior oﬃcer.”

The bureaucrat’s strength is her technical expertise. Many bureaucrats in Ghana desire to serve their country and they value their job security. In addition, the bureaucracy is a prestigious institution, which often invites myriad requests for assistance from family and friends. Bureaucrats fear being politically transferred, which not only threatens their job security but also interrupts their ability to meet social obligations and ﬁnance their retirements. To cope, bureaucrats must employ their expert discretion to legitimize corrupt political actions, and such discretion can also mask bureaucrats’ own illicit activities. Further, bureaucrats must be careful to satisfy politicians of both major parties to ensure that they are not transferred when there is a party change in government.

2.2.3 The Contractor

Evans Hayford is a small–scale construction contractor operating in the Upper West region of Ghana. The Upper West is Ghana’s newest region, established in 1983, when the Upper Region was divided into Upper West and Upper East. The region is

30 the poorest per capita in Ghana, with many infrastructural needs. Upper West lies in the guinea savannah zone, and its major economic activity is agriculture, with millet and shea nut being key crops. Livestock production is also common. Ethnically, the Upper West is home to the Sissala, Wala and Dagaba ethnic groups. Religiously, Islam and Christianity (particularly Catholicism) predominate. Hayford is a young man, and I receive him and his wife at my hotel in Wa, the regional capital. Hayford completed his primary education in the early 1990s and started work in the oil sector. After a few years managing oil storage and transport, he enrolled in a polytechnic to complete a course in accounting, before returning to Upper West to oversee fuel distribution. Due to difficulties in that sector, Hayford applied for his contractor license; however, he, like many other contractors in my sample, never indicated that he trained in engineering, construction, quantity surveying, etc. For him, he was motivated by a passion for business. Besides his construction firm, Hayford also manages two other small enterprises. Similar to the vast majority of contractors, his firm is small, though certainly not the smallest in my sample,

“We have basically been operating since 2007, and we construct as demanded: schools, dams and irrigation. In terms of workers, I have seven key workers: superintendent, mason, engineers, etc. For the rest of my labor I depend on temporary staﬀ. On equipment, we lease some and own some; namely, we own a tipper (dump truck), pickup, mixer and leveler.”

It is common for construction ﬁrms in Ghana to rely on temporary labor, and most companies do not own equipment. Companies tend to be family businesses,

31 and thus they remain small, with only a handful of permanent employees. I asked several contractors why they did not merge to form larger, stronger companies, and many indicated that culturally most businesses wanted to stay family–run.6 I would further posit that the system by which contracts are awarded does not necessarily encourage small companies to merge, as there is little beneﬁt to size when having fewer workers would yield larger individual revenue shares. Many contractors assert that it is diﬃcult to win contracts through government procurement. These contracts are a contractor’s primary source of income, and not winning them presents hardship. The contractors in my sample were all trained in procurement practices by the World Bank and Ghana’s Public Procurement Author- ity, but nearly all argued that winning a bid in Ghana has become a corrupt process. Hayford explains,

“The claims processes at the District Assembly are unnecessary. Go to registry, pay something. Next office, pay something. There are about 10 stages. For district level, it is difficult. You use a lot of money seeing people even before the work starts. [...] You need a ‘godfather.’ Most of our contractors, 90% of them, are illiterate. How will they get a tax clearance, SSNIT certificate, labour clearance?”

“I felt that in the government sector ... I felt that one of the problems ... I don’t like cheating. It’s all about whom you know when you are hiring.”

Asking Hayford why he felt that contractors needed politicians and politicians needed contractors, he was very clear, 6I address this behavior in a later chapter.

32 “Politicians need money to do campaign. I am a contractor. He advertises projects. Politician gets project and his money for campaign.”

“Regional Minister will instruct you that this project is for this contractor, this one for number two ... you will not win. [...] They will print four of these documents. Minister will say to you, ‘bring your ten percent.’ I do that, and he will give me all four documents to make all as correct. You have already met all the people. There are four companies, but they all belong to you.”

Hayford aﬃrms that it is not only the politicians who beneﬁt from contractor kickbacks. Public servants also build relationships with contractors. Further, these public servants are lax about monitoring projects; many will not even go to the actual construction sites, but will just look at pictures provided by the contractor.

“They know there is money in it. Public servant wants to build mansion, acquire wife, own a big car. There is a lack of supervision, and shoddy work will come. Fifty thousand of 100,000 is for bribes.”

Hayford indicates that he faces many social pressures, just like the politician and the bureaucrat,

“I can have heart attack. Sister, laborers, steel benders, all these people are coming to you for money. Banks, too. You easily die. Your phone rings, and your heart races. Government will not pay early or at all. You sell property to go and start the work. Will contractors in future be only few? [...] My children will not be contractors.”

33 But are people who enter and stay in construction always interested in political inﬂuence? As Hayford indicates, construction has other advantages,

“[Contractors] stay here in Upper West because this region is having the largest amount of construction. This is where (construction) you can raise the largest amount of capital for other businesses. If I need to build a house, I can use the big money to buy it. [...] Construction is an area where you don’t need to be a graduate or Bill Gates to be a contractor. It’s just a certiﬁcate, and actually you don’t really need that. The industry is not bad, but government makes it bad.”

Given poor educational quality in much of Ghana, many students do not matric- ulate to the polytechnic or tertiary levels, levels which might allow them to enter various professions. Construction has a low barrier to entry, and very little is required to start a firm, which makes construction an attractive industry. In addition, many Ghanaians want to head their own business, but it is difficult to borrow starting funds when banking institutions are scarce (or charge high interest) and when one has little collateral. Construction, in which money may come from the state in the form of large contracts, provides one method of raising funds to start a business or finance someone else’s business. For contractors in a developing country, the most significant challenge is simply to win contracts. Politicians and bureaucrats control the contract–awarding process, so contractors must effectively signal their loyalty to these gatekeepers.

34 2.2.4 The Party Chair

Alhaji Yakubu is an NDC regional chairman. Interviewing regional chairs was a difficult process; frequently, I was referred to a regional secretary (still a high–ranking position) because the chair was too busy or was not conversant enough in English. It was a common theme, for both parties, for secretaries to be teachers and well educated, while chairs were often contractors by profession and less educated. Yakubu resembled Plunkitt of Tammany Hall (Riordon 1905). The interview itself was literally a bumpy experience, as it occurred in his car as he darted around his regional capital for meetings. These meetings were varied, and we stopped at the Regional Minister’s office, a local polytechnic, various consultants’ offices and other locations. Yakubu proudly states that he never went to school, and joined the NDC in the early 1990s, around the time when he started his construction firm. Yakubu rose through the party ranks quickly, and has held the regional chairmanship for many years. His firm constructs buildings, roads and dormitories, and has even constructed offices for district assemblies. On asking him about his duties as a regional party chair, Yakubu first states,

“Because my party is in power, I help my people. When I win the election, I’ll help people with funerals, weddings, etc.”

Helping one’s “people” is the most important duty for a regional party chair. Similar to politicians, there are many requests from people for ﬁnancial assistance, especially when it comes to funerals, which are major social events in Ghana. As an

35 NPP party official in Yakubu’s region informed me, “Politics starts at the funeral home.” I have even heard of constituency party officials racing to transport a dead body in their party’s pickup truck. As a party chair, Yakubu must also rely on party operatives—known in Ghana as “foot soldiers”—to campaign in rural areas for the party’s candidates. After fulfilling their service, these foot soldiers turn to party chairs for assistance.7 I ask Yakubu about the most common requests he receives,

“People want help to get government jobs, especially teaching and employment at the various assemblies and ministries. Some boys will come here asking about school fees—university, secondary, primary.”

“As for my relationship with contractors, when jobs come up here, I help them so they have something to eat.”

Yakubu emphasized his role as a social connector, and it played out as we drove around the regional capital, with him dropping oﬀ envelopes and picking others up. We were also frequently interrupted by his mobile phone, and he explained to me that contractors were calling him about various issues. He emphasized his role as a connector for politicians, contractors and other important persons,

“When the districts have problems, the DCE tells me, and I tell the Minister and the party people.”

While it would not be unexpected for a DCE to report directly to a Minister, it seems unexpected that a party chair would highlight his role as a medium between

7I document this relationship further in a later chapter.

36 a DCE and the Regional Minister. Why should a Regional Minister care about the party chair? As several party oﬃcials pointed out to me, Regional Ministers are often less powerful than their respective region’s party chair. Each Regional Minister owes his nomination and position, and maybe even the ﬁnancing of his campaign, to the regional chair. Every Regional Minister knows that he was brought in by the regional party chair—and he knows that the regional party chair can just as easily bring someone else in. As politicians rise, they need more money to win,

“With the MPs, our relationship is good. I helped many of them to win—we assisted by buying [motorcycles] and giving out cash. I would also talk to the people.”

Yakubu is in a position of great power. He is instrumental to the fortunes and ambitions of politicians and contractors. Being a rich contractor himself, he can assist many people and demand favors in return. He can help less fortunate contractors find wealth. For a regional chair to continue executing his duties, he must satisfy the myriad demands of the foot soldiers who support him and ensure the loyalty of regional politicians in his party. A regional chair’s most difficult challenge is ensuring that he has sufficient sources of income to maintain his position and prevent challengers from campaigning against him.

2.3 Synthesis

The allocation of money connects the motivations of the four players. A politician can have progressive ambitions, but she must ﬁnance her campaigns to win elec-

37 tions. However, whom a politician owes, defines how she will behave. Bureaucrats value job security and serving Ghana; however, almost all face social pressures to assist family and save for their own retirements. Contractors are driven to succeed in their industry—an industry in which government is the largest client by a significant margin. Party chairs are political power brokers: they groom and finance new candidates, but they must also reward their hard–working foot soldiers. There are many ways in which politicians, bureaucrats, contractors and party chairs can extract money from citizens and the state. These players could demand bribes from citizens. Some do, but this is a very obvious form of corruption that can lead to arrest or negative publicity. Political parties could levy higher membership dues to raise revenue, but numerous respondents informed me that citizens, many of whom are living near the subsistence margin, rarely pay dues, anyways, and there is little ability to enforce dues payment. Money could be outright stolen from citizens and businesses, but such actions are likely to incur social unrest and other costs. District assemblies are an attractive source of funds for local politicians, bureaucrats, contractors and party chairs. Districts receive funds from three sources: internal generation, central government and donors. Internally generated funds, which are raised from property taxes and small penalties imposed on citizens, are the smallest sources of revenue for most districts, typically less than 20% of a district’s budget.8 Urban districts such as Accra, however, generate higher amounts of internal funds. Central–government funds account for the largest share of district resources. As Table 2.1 demonstrates, in 2012, the Government of Ghana transferred

8http://www.mlgrdghanagov.com/default/index.php/brongahafo/ 14-sample-data-articles

38 Table 2.1: District Assembly Common Fund Allocations (2012), By Region

Region Number of Districts Amounts (Ghana Cedis) All 216 190,579,357.48 Ashanti 30 23,503,088.08 Brong Ahafo 27 20,633,051.54 Central 20 14,736,521.13 Eastern 26 18,173,010.74 Greater Accra 16 41,493,476.76 Northern 26 20,549,983.81 Upper East 13 9,273,761.26 Upper West 11 8,508,659.73 Volta 25 17,612,540.32 Western 22 16,095,264.11

over 190 million Ghana cedis (around US$100 million) to its 216 districts through the District Assemblies Common Fund (DACF).9 Similarly, foreign donors contributed almost 160 million Ghana cedis (around US$80 million) to the 216 districts through the District Development Facility (DDF). Due to Ghana’s decentralized government system, once funds from the DACF and DDF are allocated to a district, the district controls how these funds are used in procuring public construction.

2.3.1 The Public Procurement Act

To extract resources while minimizing the possibility of prosecution, the four players take advantage of district–level procurement. When a district in Ghana needs to provide public goods, they are required to adhere to the Public Procurement Act of

9Funds are dispersed through the DACF according to a formula. See also Banful 2008.

39 2003 (Act 663). I describe three critical features of Act 663:

1. Membership of Procurement Entities.

2. Procurement Regulations.

3. Procurement Procedures.

Every district in Ghana is required to have a District Tender Committee as well as a District Tender Review Board. The District Tender Committee is the body that actually facilitates procurement of public goods and works, and it is headed by the DCE. Other members include the District Finance Officer, a lawyer appointed by the District Assembly, one Member of Parliament and three Department heads, such as the District Engineer or the District Education Officer. The committee secretary is the District Coordinating Director. A District’s Tender Review Board is charged with overseeing the actions of the District Tender Committee. Its membership is drawn from the legislators of the District Assembly, and their secretary is the District Planning Officer. Act 663 details numerous procurement regulations. According to the Act, a district tender committee can award projects valued up to 50,000 Ghana cedis, approximately US$13,000 at the time of writing. However, provision 17-2(c) of the Act also specifies that the District Tender Committee can award contracts valued up to 200,000 Ghana cedis, as long as it has the approval of the Tender Review Board. The Act specifies these exact amounts, rather than percentages. Due to inflation, many districts face the challenge of awarding projects at costs below these thresholds, and there has been no vote in Parliament to correct this oversight.

40 Figure 2.1: Sample Tender Advertisement from National Newspaper.

To qualify for public contracts, contractors must possess professional and technical qualifications; financial resources; equipment; managers; and personnel. Districts typically award projects according to National Competitive Tendering, in which only Ghanaian firms that meet technical requirements are allowed to bid. To solicit bidders for projects, District Tender Committees follow a strict procedure. Districts advertise an “Invitation for Tenders” in two nationally distributed newspapers, detailing the requirements contractors must meet as well as a deadline by which contractors must submit their bidding documents. Figure 2.1 presents an advertisement for project bidders placed by the Jasikan District Assembly in the Daily Graphic, Ghana’s most widely circulated newspaper. At the appointed date, bidding documents are opened by the District Tender Committee, in the presence

41 of bidders that wish to attend. At this meeting, each bidder’s bid price will be announced, as well as whether they included the appropriate documents in their bid. The Tender Committee will determine whether bidders are “responsive”, that is, whether they meet the requirements specified in the advertisement. If they do not, the bids are thrown out. After opening the bids, technical experts (usually the District Planning Officer, District Engineer and others) will scrutinize the bids to ensure bidders are qualified, before awarding the project to the qualified bidder with the lowest price. Despite its detailed requirements, Act 663 contains numerous provisions that can be abused. For instance, if a contractor’s bid is rejected, under section 29-2, the district is not required to provide justification for the bid’s rejection. Such a provision can allow members of the tender committee to selectively enforce rules.10 While a district is supposed to ensure that contractors are qualified and that these qualifications are noted in tender advertisements, section 59-2 states that no criterion that is not included in the tender invitation can be used against a bidder. While the procurement law clearly lists criteria that must be met to ensure that bidding is fair, in practice, the process is subject to human motivations. I observed a tender opening meeting in my pilot district that was not carried out according to the Public Procurement Act, and I describe the event here.

10In interviews, numerous contractors complained about districts refusing to give reasons for rejecting their bids.

42 2.3.2 District X Bid Opening

The friendly agricultural officer of District X ushered me into the District Chief Executive’s office, showing me to the large conference table. I greeted the education officer and district planner, both of whom I had already interviewed. The education officer was affable and gregarious, as usual, but the planning officer seemed sullen. At the other side of the DCE’s office sat half a dozen men, silent and bored. Gradually, junior officers arrived to take minutes, until eight of us were present around the conference table. The DCE and District Coordinating Director arrived and took their places. The DCE appeared nervous, barely greeting us. Throughout the meeting his phone would ring, and he would step out to take the calls privately. Soon after, the District Engineer and his junior engineers arrived, struggling to carry a large wooden box—the District Tender Box. Today, District X was opening sealed bids from contractors bidding on district projects. While contractors are mandated to drop bids into the box by an appointed time, earlier that morning, I witnessed one man drop several bids into the box after the deadline. Protocol dictates that the Engineer leads the opening, taking each sealed bid out of the tender box and reading off the cost figures that sum to the total bid amount. This Engineer read the bids in halting fashion. He failed to announce certain amounts. He took too long in between each bid. It was clear he did not know what he was doing. For those of us at the table, we were given “bid evaluation forms”. Figure 2.2 presents one such bid evaluation form. On each form was a grid corresponding to

43 a particular project for which a contract was to be awarded. On that day, eight contracts were to be awarded, ranging from schools to latrines to market stalls. In each box, we filled out the appropriate number when the Engineer would read out an estimated cost figure, or we would check whether certain criteria were met, such as the official licenses being included with the bid. After each project, we passed our sheets around the table and affixed our signatures, signifying that the process had met our approval and was conducted legally. One officer noted that the Engineer was failing to read estimates for certain bids, but the DCD reassured the group,

“Oh, we forgot to include some of those criteria—bid bonds; power of attorney; and bid security—in the main advert[isement], so we cannot hold the bidders to those criteria. We will be sure to include those things later.”

As more and more project bids were opened, the planning oﬃcer’s demeanor trans- formed from nonchalant to concerned to agitated. Finally, reaching his limit, he exclaimed,

“What are we doing?! Why are there always only three bidders? Why are these project amounts all above 50,000 cedis? The law limits us to 50,000 cedis! This is not right.”

The room went silent. Everyone stared the planning oﬃcer down. The procurement oﬃcer smirked at me, rolling her eyes. Breaking the silence, the DCE exclaims,

“No! The limit is 200,000! Or is it 100,000?”

44 Figure 2.2: Sample Bid Evaluation Document.

It is not promising to question one’s own statement about the procurement law, though this exchange highlights the law’s ambiguity about contract thresholds for District Tender Committees and District Tender Review Boards. The Engineer suggested his own figure (still wrong), and the DCD rushed to calm everyone down as other bureaucrats concurred with the planning officer. Several officers even brought out the actual procurement law. The tender meeting almost came to a halt. After a few minutes, the education officer calmly states,

“As long as the auditors see that we have all signed the documents, they won’t mind.”

With that, the remaining bureaucrats fell in to line, though the planning oﬃcer

45 still seemed upset. Essentially, the education oﬃcer described the imprimatur of bureaucratic expertise. As long as bureaucrats signed their evaluation sheets, the auditors would believe that they supervised the procurement process with integrity. Throughout the meeting, the silent men on the other side of the room sat entirely unperturbed. Following the tender–board meeting, I returned to my guesthouse to type notes. I received a call from a junior oﬃcer who attended the meeting, asking to meet over drinks. I asked his opinion of the day’s meeting,

“We have thieves in this country who steal by the roadside. But the public servants, they steal with their pens.”

It was still unclear to me why the bureaucrats assented so easily after the education oﬃcer commented about their signatures. This junior oﬃcer had a ready explanation,

“Once you are a director, you can be having your own companies, awarding contracts to yourself. You are both judge and jury.”

In other words, each of these bureaucrats may have had a financial interest in the outcome of the day’s tender opening, despite personal, moral objections to the process. For bureaucrats, wages are low, and they must find ways to supplement their income to meet social demands and save for retirement. The junior officer also explained why the planning officer was treated so harshly by the DCE and other bureaucrats,

“But if you criticize someone, they will take it as a personal attack! If you keep making noise, they will insult you—maybe not to your face, but

46 behind your back. One day you may travel away from the town and ﬁnd yourself transferred.”

Many respondents expressed a fear of being insulted by their colleagues, which greatly hampered eﬀorts to correct corrupt behavior. However, I was still puzzled about the presence of the other men in the room. The junior oﬃcer answered,

“Those men there, they were contractors and party boys. But they already knew the outcome.”

This comment was enlightening. Politicians, bureaucrats, contractors and party chairs were all represented at the tender opening and they were all connected. The process was rigged, and it benefited all of them. In Ghana, politicians, bureaucrats, contractors and party chairs are critical figures in providing public goods. While it is clear that these players are interested in the outcomes of district–level procurement, how do they actually extract funds? How does the system sustain itself? In the following chapter, I turn to these questions, and devise a theory of political financing.

47 Chapter 3

A Theory of Political Finance

3.1 Introduction

Political ﬁnance is understudied in developing countries, but it lies at the core of the political economy of development. Clientelism, and the voter behavior that is tied to it, cannot be fully understood without knowing its source of funds. Political parties, incubators of aspiring politicians, can be constrained by the wishes of its ﬁnanciers. Business owners, struggling to survive, know whom to call when help is needed. Behind the politicians and private citizens that engage with a developing country’s political system are inside transactions of promises and money. How that political money is raised and exchanged determines the implicit structure of politics and its ultimate outcomes. In Ghana, political life starts at the village. For decades, local political parties have been central to Ghanaians’ lives (Apter 1955, Hodgkin 1961). When citizens

48 need food, payment of hospital bills or sympathy for a deceased loved one, they turn to their local party leaders—and, because of intermarriage and family ties, it often does not matter which party. These party leaders are villagers, themselves, and are attuned to the needs of their fellow citizens. Party leaders emphasize the importance of these social obligations, and the village–level camaraderie that exists across party lines. These local parties are providers for many. Meeting the needs of fellow villagers is a burdensome task. Many local party leaders are farmers or teachers, with low incomes. They stretch meager funds to meet requests, but ultimately the requests become too burdensome, such as demands to build a new school. At this point, winning political office, and accessing the funds of central government, becomes paramount. In Ghana, politicians arise from the local levels and there are numerous offices to fill, which would allow them to contribute to their communities (Weber 1946, Schlesinger 1966). These politicians can channel the funds needed to build a new school. However, political campaigns can be expensive, requiring significant travel, advertisements and a support staff. How does a candidate find the means to campaign and win office? The answer to that question is the spark that ignites a political machine (Scott 1969).

3.2 Financing Politics

As detailed in the prior chapter, politicians, bureaucrats, contractors and political– party chairs are the four key groups involved in the ﬁnancing of Ghanaian politics. I detail below the preferences and actions of these groups, as well as how the political–

49 ﬁnance system is enforced and sustained.

3.2.1 Preferences

Politician Preferences

There are numerous motivations for politicians’ actions, ranging from the reelection incentive, desire for ﬁnancial gain and aspirations to help one’s community (Mayhew 1974; Fenno 1978; Lessig 2011). Further, a politician’s political actions cannot be divorced from her extra–political interests (Schlesinger 1966). In interviews, many politicians asserted that they entered politics to serve the people.

“I didn’t regret serving the people. I served from my heart. Those of us in the ﬁrst Kufuor term—we served from our hearts. I’m not only serving my own people.” Former DCE, New Patriotic Party

I will assume that Ghanaian politicians’ prefer to win elections. Winning elections ensures that politicians can address their other interests, such as serving the people. To win elections, a Ghanaian politician must satisfy the material needs of her constituents. These social pressures for private beneﬁts detract from a politician’s ability to legislate or provide public goods (Lindberg 2010). Ignoring the demands of one’s constituents, however, could result in a candidate losing the next primary. Almost all politicians in my sample lamented constituent requests as a heavy burden of oﬃce.

“That one is terrible! They come in as early as 4AM on phone. Some come to parliament with social issues, school fees, funerals, marriage,

50 Figure 3.1: Districts in Which DCEs Contested Parliamentary Seats, 2012.

outdoorings, harvests. All manners of people: some want employment with police and security. They look at you as their lord. If you don’t pick it, there is a problem.” Member of Parliament, New Patriotic Party

As Schlesinger (1966) notes, politicians’ incentives can be framed by the higher oﬃces available to them. For a DCE, the next higher oﬃce is that of Member

51 of Parliament. Being an MP confers numerous advantages over being a DCE. A DCE can be removed from office at any time by the President, and this removal is especially likely if the DCE loses favor with her local party executives. An MP, on the other hand, serves a fixed four–year term. If a politician is motivated by profit, then being elected as MP would allow them to network with large corporations and donors in Accra. According to my calculations, in the 2012 parliamentary election, 52 sitting DCEs contested for parliament, at either the primary– or general–election stage. Figure 3.1 details which DCEs contested parliamentary seats. Thirteen DCEs ultimately prevailed. The attractiveness of parliamentary office can poison relations between a district’s DCE and its MP(s), regardless of their party affiliations.

Bureaucrat Preferences

Similar to politicians, many Ghanaians reported a desire to serve their country as motivation to join the bureaucracy. The bureaucracy has long been respected in Ghana.1 However, bureaucrats face social pressures to provide favors to friends and family, similar to the pressures facing politicians.2 Citizens expect bureaucrats to live an affluent life and share their wealth. However, the social expectations that frame bureaucrats’ behavior also condone corrupt actions. Bureaucrats must find a source of funds to finance their own lives and meet familial requests. Family pressures discourage bureaucrats from reforming the system. For bureaucrats, saving for retirement is a paramount concern. Bureaucrats specifically report that they must build a house before reaching the retirement age

1For literary context, see Achebe’s No Longer at Ease. 2See discussion on prebendalism in van de Walle (2007).

52 of 60. It is shameful if a bureaucrat has not planned for his or her retirement accommodations.

“First and foremost, in Ghana, we think of housing and start preparing for that. Civil servants—using money to build a house and we get loans from bank. Stress will be on you if you build after you retire. Some have insurance, etc. Foremost is to get a house. Second is to educate your children. For me, when I started work, my children were small and you just buy small to build your house. Stay focused on plan.” Food & Agriculture Oﬃcer, District D

Contractor Preferences

Construction contractors are private business persons, and their main interest is to win project contracts. The Government of Ghana is the largest player in the construction industry, frequently commissioning new infrastructure across the country. In Ghana, anyone can claim to be a construction firm, and kinship networks contribute money and equipment to support one’s firm.3 While there are technical requirements that must be met before a contractor is certified by the government, in practice, certification status is usually overlooked when awarding contracts.4 Due to high infrastructure demand from the government, construction can be lucrative—as long as one has the right political and bureaucratic connections.

“You see, Joe, in this country anyone can be a contractor. You don’t have to go to university, you don’t have to be Bill Gates. All that you need to know is that a politician needs money. That contractor may not be very intelligent. But he knows real politics.”Contractor, District C 3I will further discuss these dynamics in Chapter 5. 4Please see Chapter 4 for more detailed analysis of contractor–certiﬁcation fraud.

53 Party–Chair Preferences

Political–party chairs’ central preference is to ensure that their preferred candidates win elections. Similar to politicians, party chairs serve their local constituents, but their candidates must win to ensure that chairs have access to funds. Almost all villages in Ghana host branch offices of each of the major parties.5 Party chairs welcome constituents, who are often kinship relations, to these offices to listen to their concerns. Typically, chairs will provide funds for school fees and funeral expenses, and they will present themselves at important social events. The party chair’s schedule is grueling. For a chair, maintaining these social relations is one of the most important parts of the job. Party chairs oversee the electoral fortunes of political candidates. Even before the primary stage, political aspirants are vetted by party chairs, who can determine whether those aspirants progress to the next stage.6 Party chairs also manage the “foot soldiers”, party activists and brokers who are mobilized to rally votes during an election. In Ghanaian villages, the relationship between party chairs and foot soldiers is rooted in kinship networks. The relationship between party chair and foot soldier is familial, with the chair providing financial support and personal sympathy to the foot soldier in exchange for vote canvassing. Ultimately, party chairs want their preferred candidates to win and their party to capture the presidency. Because political candidates owe their electoral victories to party chairs and foot soldiers,

5This situation is little changed from the analysis in Hodgkin (1961). 6This is a very important point. While both of Ghana’s major political parties are expanding their primary suﬀrage to all members of the party, the chairs still control the vetting stage prior to the primaries. As a result, the party leaders are actually not ceding much control to the broader electorate, and they can still extract rents, especially in the form of contracts, from their candidates.

54 chairs can exercise pressure on politicians when they need ﬁnancial support.

“Because my party is in power, I help my people. When I win the election, I’ll help people with funerals, weddings, etc [...] As for my relationship with contractors, when jobs come up here, I help them so they have something to eat.” Regional Party Chair, National Democratic Congress

Regional party chairs are especially powerful. In addition to inﬂuencing larger, region–level contracts, they play key roles in selecting Presidential candidates at party conventions. Historically, regional chairs could mobilize delegates to vote for favor Presidential candidates, so, once in oﬃce, a President is obliged to meet her regional chairs’ requests.7

Summary

The preferences of the four groups above are connected by the sourcing and allocation of money. Few members of each player set has the individual wealth to achieve their goals. In Ghana, the central government ﬁnances the bulk of local development. For every school block, road or clinic that is approved comes a process—procurement— by which a contract is awarded to a builder. Those contracts ﬁnance politicians, bureaucrats, contractors and chairs. Local kinship pressures drive the extraction of that money: politicians satisfy constituents to win votes; bureaucrats adhere to social obligations to be respected; and party chairs maintain foot soldiers to hold power. The four players together rig the procurement process to extract rents—and they do so in ways that thwart prosecution.

7I explore further the actions of regional chairs in Chapter 5.

55 3.2.2 Actions

From the moment a citizen decides to run for political oﬃce, she must raise money. Some citizens possess enough wealth to ﬁnance their campaigns, but a political campaign is a gamble that could lead to substantial losses. After ensuring that she has popular support, the candidate seeks donors.

“Most don’t fund campaign alone: friends, relatives, contractors—not just loans. There are expectations. If you want to go to Parliament, if from a district, most rich people will assist you. If you can become Minister, you can help them get contracts.” Regional Party Secretary, National Democratic Congress

In Ghana, a political aspirant can borrow money from local contractors to finance her first campaign. There is no shortage of small contractors, with over 5000 officially registered and countless others not registered. These borrowed funds can be used to attract primary and general–election voters with private benefits or outright vote buying. In exchange, the political candidate promises to repay her financial backers with contracts should she win office. Campaigns are expensive. In January 2014, the Majority Leader reported that each MP in the House owes at least 30,000 Ghana cedis (then about US$10,000) to private banks for their campaigns.8 Members of Parliament salaries are around 70,000 Ghana cedis annually.9 DCEs receive less, but they must still satisfy constituents’ demands. 8http://www.myjoyonline.com/politics/2014/january-19th/ each-mp-owes-ghc300000-majority-leader.php 9Interview with MP, District E.

56 District–level procurement provides contractors with the funds by which they can finance political candidates. Several times per year, districts advertise “Calls for Tender” in the national newspapers, inviting contractors to bid for such projects as schools, clinics and rural roads.10 Contractors submit their sealed bid packets to the district, usually within a month of the advertisement’s posting. On the deadline date, the DCE meets with her senior bureaucrats (District Coordinating Director, District Finance Officer, etc.) to open the sealed bids. As demonstrated in the prior chapter, bidders are required to submit numerous documents with their bid amounts, such as their contractor registration, labour certificate and social–security forms. Following the bid–opening meeting, senior bureaucrats convene for two weeks to conduct a “tender review process” to determine the contractors’ quality. A contractor cannot simply submit a low–priced bid, assuming she will win the contract. The procurement law allows for bureaucrats to evaluate contractors and choose a higher–priced contractor if they believe she will do a better job. In theory, such discretion should lead to better contractors chosen, but, in practice, it affords significant latitude for malfeasance. Bureaucratic discretion pervades the procurement process. Because bureaucrats are technical experts and are empowered by the procurement law to assess contractor quality, their imprimatur is a signal to outsiders (namely, auditors) that the selected contractor has been properly vetted. As a result, politicians need the bureaucrats’ cooperation to ensure legal protection, and the politicians can harness the

10It is not always the case that a district’s politicians and bureaucrats make the ﬁrst move and advertise projects. Many district oﬃcers reported that they often faced pressure from contractors and party executives to rush the advertising process so that those contractors and executives could get their funds earlier.

57 Health Budget Planner Finance Engineer Education Agriculture Players Set Coalition Minimum Yielding DCD DCE Figure 3.2: A DCE Shares Projects With Bureaucrats Clinic Dorm Projects Public Public WC Feeder Road Market Stalls School Block

58 bureaucrats’ desire to retire comfortably and meet social expectations to gain that cooperation. Politicians allows bureaucrats to also extract kickbacks from contractors building district projects—these kickbacks amply supplement bureaucrats’ salaries. Typical district–level projects in Ghana are valued at around 50,000 Ghana Cedis, or US$12,000. To illustrate this dynamic, I employ a visual example from a district assembly. In Figure 3.2, a district is awarding six projects, shown on the left side. The DCE has chosen two projects for her own contractors. The DCD, the district’s bureaucratic head, also has two projects for her own contractors. Other bureaucrats receive a single project. This coalition is sufficient to ensure that the procurement process is validated, but small enough to maximize winnings for each participant. In subsequent procurement rounds, depending on the number of projects, other bureaucrats can be included in the coalition to ensure continued complicity. A contractor offers kickbacks to politicians and bureaucrats to ensure that he wins contracts.11 Typically, a kickback amounts to 10% of the contract value. The negotiations between contractors, bureaucrats and politicians occur informally, such as through phone or text message, outside of official records. Such messages would be costly to trace. Respondents often referred to kickbacks as a “thank you” exchanged between participants; such behavior, though corrupt, has been embedded as a social norm. For bureaucrats, the kickback provides the funds for retirement. For politicians, the kickback finances campaigns.

“Before you tender, make sure you have all arrangements set. Here, I get

11In practice, only a few contractors will bid because those without the right connections know they will not win.

59 in touch with MCE, DPO, DBO, etc. They have to know you well. If there is a tender, and you don’t do your homework, you lose.” Contractor, District H

Ultimately, for contractors to realize profits they construct shoddily. Many contractors reported to me that between 30-50% of a contract award could be expended on kickbacks alone. There are other financial challenges. Ghana suffers from periods of rapid inflation, which hampers a contractor’s ability to purchase materials. The distribution of funds from the district government to the contractor can be severely delayed, and many contractors reported that they could wait up to four years for payment. Many contractors use fewer bags of cement than required or adjust building plans to account for bribes and delayed payments. The result is that structures often fail within a few years.12 Precise measurement of procurement corruption is difficult, given the incentives of the actors to keep these actions secret as well as the poor quality of the data. In Chapter 4, I will analyze project and contractor data to identify procurement violations and their potential impacts.

3.2.3 Enforcement

While politicians must finance campaigns and bureaucrats must finance retirements, these needs alone are not sufficient to maintain the system. A set of politicians could coordinate to reform political finance or a set of bureaucrats could expose these actions. I argue that political parties, namely their executives, are central to

12Such politically induced obsolescence provides opportunity for future rent extraction in the form of rehabilitation projects or new projects altogether.

60 ensuring the stability of this political–ﬁnance arrangement. Party chairs mobilize the activists and voters that a candidate needs to win. At the village level, these activists—popularly known as “foot soldiers”—turn out votes for the party. Chairs oversee these foot soldiers and maintain good personal relations with them. In exchange for their support, foot soldiers expect beneﬁts from their party chairs.13 In interviews, most party chairs emphasized their personal relationships with the foot soldiers: attending family funerals, supporting children’s events, paying medical bills, etc.

“You see, it was the party that got you into power, whether you are the President or an MP. In the Party, we have what are called ‘foot soldiers’. They go into the very rural, remote areas, and they canvas for votes. They go places where President and MPs cannot go. That is why they are important, and that is why Accra listens to them.” DCE, District E

To meet the requests of these foot soldiers, party chairs need financing. Most party–chair respondents indicated that contractors and other private business owners were key sources of funds. This holds true for local party chairs who are associated with smaller campaigns and national chairs who affiliate with presidential candidates. Most candidates for national office will form finance committees in which skilled party advocates solicit donations from prominent business owners. To ensure a party chair’s assistance with mobilization, an incumbent or political aspirant must provide financial assistance with which the chair can mobilize foot soldiers. Typically this assistance entails the promise of contracts, whether for the

13I further discuss the relationship between foot soldiers and chairs in Chapter 5.

61 chair herself or for the chair’s associates. Such action shows that the politician is “committed” to the party.14 Regional party chairs hold significant power over the politicians in their region, and Figure 3.3 depicts the interactions between chairs and politicians. In a given region, a party chair oversees multiple politicians. Each chair can mobilize foot soldiers to support these politicians during election periods. In exchange, foot soldiers expect chairs to provide for them and maintain good relations. Chairs finance these relationships through the kickbacks received from the politicians in her region, who are themselves extracting funds from the contractors building the projects. Party chairs are often closely connected with the contractors in the region, as well. A region’s politicians are caught in a dilemma. Chairs possess the credible threat of mobilizing foot soldiers against a politician if the politician fails to provide sufficient funds. It would take a critical mass of politicians to stop funding a chair over several procurement cycles to disable the credible threat. However, it is in each politician’s individual interest to kick funds back to the chair to ensure that foot soldiers are not used against them. A chair who mobilizes foot soldiers against a politician can inflict electoral defeat—and ensure a more loyal candidate wins in the next election. In Figure 3.3, the Regional Minister, a DCE and an MP failed to supply enough money, and foot soldiers were sent to destabilize those politicians.

“The Regional Chair mobilized youth and they vandalized the Regional

14Members of Parliament, in particular, complained about this equilibrium. They argue that they should be allowed to perform their national–level duties rather than be local development agents, but they are compelled to satisfy the demands of their local party executives and constituents if they wish to be reelected.

62 MP DCE MP DCE Chair RM DCE MP DCE Figure 3.3: Regional Chairs, Foot Soldiers and Politicians. Money Flow Supporting Foot Soldiers Supporting Attacking Foot Soldiers

63 Coordinating Council. They destroyed the tender box. The Regional Chair has all the projects in this region, but only one project is executed by himself. They give these out on percentage basis. They become a party chairman to enrich themselves.” Constituency Party Secretary, National Democratic Congress

The party chair’s control of the foot soldiers compels politicians to steal funds from the procurement process. The chair’s pressure on the politician is transferred to bureaucrats and contractors to ensure funds are extracted from procurement.

“The pressure transcends from DCE to staﬀ. You transfer it to staﬀ in ensuring they do what is right. [...] I want to favor you, this is the process and we must act contrary to what is right.” Member of Parliament, National Democratic Congress

In the ideal case, a bureaucrat could turn into a whistleblower, reporting illicit practices to superiors in the capital. This is not the case in Ghana. In interviews, many bureaucrats acknowledge that the central bureaucracy has been politicized. Conse- quently, politicians have a powerful weapon against a bureaucrat that attempts to disrupt the system: the political transfer. Wade (1982), studying the Indian case, describes the transfer mechanism as Indian politicians’ chief weapon to ensure that bureaucrats extract funds for them. I surveyed bureaucrats on the prevalence of political transfers in their districts, and I present response data in the next chapter.

“As internal auditor, I know it. And external auditors, they know it. With me, I cannot get my way, because my report goes to DCE. Even if I send report to internal—audit agency, he (DCE) knows someone there— and he can call them to change it.” Internal Auditor, District G

Access to Contracts Income Chair

Contractor Income

Election Finance, Mobilization Income Job Security

Expert LegitimacyExpert Access to Contracts

Income Access to Contracts to Access Figure 3.4: The Iron Square of Political Finance.

Expert Legitimacy ce o C tacs, ob Security b Jo , cts ntra Co to s Acces Politician Bureaucrat

65 This, in sum, is the Iron Square Theory of Political Finance, to play oﬀ the classic image of American politics. As depicted in Figure 3.4, contractors exchange promised kickbacks for access to contracts, which they receive from politicians, bureaucrats and party chairs. Expert bureaucrats legitimate a sham procurement process, which prevents prosecution and ensures that politicians and chairs do not interfere with their job security. Politicians provide income to ﬁnance a party chair’s activities, and in turn the chair ensures that the politician has the electoral support of the party and its foot soldiers.

3.2.4 Continuity

Political finance based on government contracts is a risky endeavor, particularly when there are party changes in government. A party can be out of power for four years, eight years and even longer, while the party in power strengthens itself. Contractors loyal to opposition politicians will not win government contracts, which means they may go out of business. Political aspirants of the opposition also cannot benefit from these contracts. How do players cope with the risk of being out of power? In Ghana, political institutions and kinship networks ensure the continuity of this political–finance system.15 The President appoints all regional ministers and DCEs, which ensures that both major political parties are present throughout the country, rather than being localized to stronghold areas. As a result, there will always be NDC and NPP affiliated contractors in each district, ready to be awarded a government’s projects when their party is in power.

15I discuss the kinship networks of contractors further in Chapter 5.

66 Big School Project: General Contractor (NDC) Contract DCE (NDC) Kickback

Insurance Subcontract

Subcontract

Insurance Electrical Wiring: Plumbing: Subcontractor A (NPP) Subcontractor B (NPP)

Promise Donation

Donation Promise Political Candidate (NPP)

Figure 3.5: Subcontracting Across Party Lines.

Given the supply of NDC and NPP contractors across the country, kinship relations between the two sides mitigate the risk of being in opposition. Contractors in each district are often related to each other by family ties or other associations. Be- cause of reciprocity obligations, contractors, regardless of political aﬃliation, assist

67 each other. Contractors rarely own all the equipment needed to complete a project, and it is common for fellow contractors to lend dump trucks, cement mixers and other equipment. As Figure 3.5 demonstrates, when a contractor receives a government project, she can subcontract portions to opposition contractors. Those opposition contractors then have funds to ﬁnance their own party and its preferred candidates. Should the opposition come to power, those subcontractors can subcontract their own projects to the ﬁrst contractor.

“We are like one family, all one tribe. If I have a job and don’t have equipment, you can help—cement, roller, etc. When my cement comes, I release it back to you. It is cordial. Sometimes we’ll subcontract, especially with electricals. NDC guys help out NPP now for help in the future.” Contractor, District C

As further insurance, many contractors own side businesses to earn extra income. These businesses sell construction materials, or lease equipment to contractors who win projects. Many survey respondents report that contractors switch sides between elections by changing ownership or business names.16 However, the complexity of managing of side businesses and the uncertainty of winning contracts prevents many contractors from expanding their core construction firm. Few contractors report willingness to merge with other firms, citing profit uncertainty and a desire to keep business within the family.

16It is also the case that contractors, once attached to a rising politician, will follow that politician as she ascends to higher oﬃce, eﬀectively forming a political action committee.

68 3.3 Reshaping Accountability

In the provision of public goods, bureaucrats and voters should act as safeguards to prevent or rectify suboptimal provision. Under the above system of political finance, however, both groups are compromised. In Ghana, bureaucrats are legally required to monitor the construction of projects. When those bureaucrats benefit from contract kickbacks, however, there is a conflict of interest. Rational politicians and bureaucrats will not rigorously inspect favored contractors, because those favored contractors possess two credible threats. Contractors can threaten to expose the corruption of politicians and bureaucrats. While many citizens are aware of such corruption, negative exposure could lead to a loss of project funding from external donors. In addition, contractors are often allied with political–party executives, who can punish politicians and bureaucrats. Bureaucrats are acutely aware that angering contractors could impact their ability to save for retirement and meet other social obligations. As a result, bureaucrats cope by conducting only superficial inspections. Bureaucrats do not test for more technical factors such as the quality of concrete used or the installation of adequate drainage, and many projects fail within a few years. Over time, the constraints imposed on bureaucrats by contractors and party chairs crowd out honest bureaucrats at the junior levels of the civil service. In interviews, younger bureaucrats affirmed that they joined the civil service to serve their country, but were discouraged by the corrupt actions of senior bureaucrats, who demanded their tacit complicity. Many younger bureaucrats plan to exit the public service after a few years, a situation in which only the most corruptible bureaucrats

69 are retained (cf. Hanna & Wang 2014). With bureaucrats’ ability to inspect effectively neutralized, contractors have incentive to construct shoddy works. If audited, bureaucrats can still plausibly claim that they followed the procurement process and inspected projects. At worst, a bureaucrat can be transferred to a different district, but their jobs will not be ter- minated. Shoddy contractors can easily change firm names to continue bidding on other works. Neither contractors nor bureaucrats bear the costs of shoddy construction, leading to a situation of moral hazard that perpetuates shoddy construction. The costs, rather, are concentrated on citizens. Given that citizens bear the costs of shoddy construction, why do they not take action to rectify shoddy construction? As one MP explained,

“Why do we allow it? In Ghana, we have a culture of silence. We’re not informed enough where elections are based on policy—here it’s popularity and cash.” Member of Parliament, New Patriotic Party

Even traditional chiefs, well respected by the people, rarely criticize politicians and bureaucrats for shoddy public goods. For a chief, there is the additional problem that criticizing politicians and contractors today, might result in few or no projects delivered to his village in the future. It is better to have a half–built school than no school at all.

“Yes, there is shoddy work. The District Assembly awards, but they do not involve the chiefs. Or the contract may be awarded by the region or by Accra. You cannot just tell a contractor that he is doing a bad job. He will report you to the DCE and you will get insulted. [...] On the

70 outside, we chiefs have to welcome all contractors and pledge our support. It is our duty to ensure that all people in our villages are happy and well cared for. But on the inside we are weeping.” Chief, Northern Zone

Under a standard political–accountability model (Humphreys & Bates 2005), citizens are principals and governments are the agents that (imperfectly) serve them. Governments choose a mix of public and private goods to bestow on citizens in exchange for citizens maintaining them in power; optimally, governments will allocate the minimal amount of public goods and distributive benefits to ensure reelection, while maximizing the benefits of office–holding. In Ghana, politicians affirm that the allocation of distributive benefits to constituents is a central, exhausting feature of their job. Politicians and bureaucrats extract funds from public–goods procurement to finance the distributive benefits requested by citizens. As many citizens live near the subsistence margin, these benefits—often hospital fees, money to buy food or tuition payments for children—are necessary to survive, outweighing their valuation of public goods. Receipt of these distributive benefits silences citizens (Finan & Schechter 2012, Leight et al 2015) who might otherwise eject politicians and bureaucrats for extracting funds from procurement. That is, citizens might be well aware that the public goods they are receiving are shoddy, but because politicians and bureaucrats have helped them survive, they will not hold them to account and risk losing those sources of assistance. Humphreys & Bates (2005) posit that as elections become more competitive, governments must provide a greater level of public goods to remain in office. I remain doubtful, however, as it is not clear whether, under increasingly competitive elections, governments will provide a greater quantity, greater quality, or both, of public goods. If distributive benefits silence citizens but allow

71 governments to remain in office, then it is possible that governments will provide a greater quantity of public goods, but at lower quality, to finance those distributive benefits.

3.4 Conclusion

I have developed a theory that political finance in Ghana is governed by an iron square of politicians, bureaucrats, contractors and party chairs, who extract resources from the public–procurement process. Contractors promise kickbacks to politicians, bureaucrats and party chairs, in exchange for the assurance that they will win contracts. Politicians use their kickbacks to finance political campaigns, citizen requests and electoral support from party chairs. Bureaucrats allocate income from kickbacks to save for retirement and ultimately build a house. Party chairs use kickbacks to finance party foot soldiers and ensure that preferred candidates win. This system is legitimated by bureaucrats, whose expert approval deflects auditors. Because this system of political finance extracts funds from public–goods construction and compromises the players charged with monitoring construction, the quality of public–goods provision may decline. As Scott (1969) argues, such an outcome needs a social context that justifies its behavior. In Ghana, voters benefit from the distributive benefits supplied by politicians, which stymies their ability to evaluate politicians’ performance (Finan & Schechter 2012, Leight et al 2015). Ulti- mately, it is unclear what the impact of procurement–based political finance will be on political accountability and public–goods provision in Ghana (cf. Humphreys &

72 Bates 2005). In the following chapter, I examine data from bureaucrat surveys that will illuminate the constraints and political pressures they face. I will also present archival procurement data that validates the theorized behaviors of politicians and bureaucrats.

73 Chapter 4

Empirical Findings on Procurement

4.1 Introduction

In the prior chapter, I theorized that politicians finance political activities through kickbacks received from project contracts. Bureaucrats, contractors and party chairs participate in this system and obscure corrupt activities. While varied sources across Ghana repeatedly assert that development projects suffer because of the financial needs of these players, it is difficult to present hard evidence of corruption. Many studies measure perceptions of corruption based on the opinions of everyday citizens or elites (cf. Afrobarometer, Corruption Perceptions Index). In this chapter, I will demonstrate that procurement irregularities are widespread in Ghana. De- spite significant training in procurement standards, Ghanaian bureaucrats regularly

74 circumvent regulations.

4.2 Survey Results

4.2.1 Elite Bureaucrats’ Survey

I interviewed 83 senior–level bureaucrats across 10 districts of Ghana. As noted in Chapter 1, I sampled 10 districts according to regional, urban, political and ethnic criteria. Once embedded in a district, I interviewed all senior bureaucrats available. These bureaucrats included engineers, finance officers, planners, budget officers as well as sector bureaucrats overseeing a district’s health, education and agriculture programs. Each interview lasted one to three hours. Table 4.1 characterizes the 83 bureaucrats interviewed. To preserve confiden- tiality, districts are referred to by the region in which they are located, and I also indicate whether the district is urban or rural in nature. On average, senior bureaucrats in my sample are in their mid–40s. With Ghana’s civil–service retirement age set at 60, bureaucrats may spend 15 to 20 years at the senior director level. Senior bureaucrats average 16 years of experience, and have worked in their current districts for 4.5 years, ranging from a low of 1.4 years in the Upper West to 6.9 years in the Upper East. Table 4.2 presents education and pay for bureaucrats in my sample. The sample is well educated, with 87.0% attaining at least a bachelor’s degree. Common undergraduate majors include planning, statistics and sociology. Overall, 75.0% of bureaucrats have enrolled in additional professional training, such as in auditing and

75 Table 4.1: Descriptive Statistics of Bureaucrat Sample

Region Type n Home Reg Age Total Years Dist Years All All 83 47.0% 44.2 16.0 4.5 Ashanti Rural 7 85.7% 42 12.5 2.4 Br. Ahafo Rural 10 30.0% 46 20.3 6.7 Central Urban 7 28.6% 42.9 11.8 3.1 Eastern Rural 8 37.5% 40.8 12.5 6.5 G. Accra Rural 7 14.3% 45 15.6 5.3 Northern Urban 9 66.7% 44.4 17.4 3.7 U. East Rural 10 50.0% 45.0 19.3 6.9 U. West Rural 10 50.0% 44.2 14.3 1.4 Volta Rural 8 62.5% 43.1 14.5 1.6 Western Urban 7 28.6% 47.7 18.3 7.6

Table 4.2: Education and Pay of Bureaucrats

Region Educ Training Salary Other Income Per Diems Workshops All 87.0% 75.0% 14508 45.1% 1739 6 Ashanti 100.0% 71.0% 13650 50.0% 1463 6.14 Br. Ahafo 90.0% 80.0% 14459 60.0% 1157 6.5 Central 86.0% 29.0% 12943 71.4% 1460 5.5 Eastern 87.5% 63.0% 10808 0.0% 836 3.06 G. Accra 100.0% 71.0% 14539 71.4% 2198 7.29 Northern 100% 78.0% 13650 33.3% 763 8.61 U. East 70.0% 70.0% 13389 70.0% 1005 6 U. West 80.0% 90.0% 13696 20.0% 1005 7.45 Volta 75.0% 63.0% 15207 37.5% 1073 3.19 Western 86.0% 86.0% 23033 42.9% 3388 7.57

management. Many have studied at the prestigious Ghana Institute of Management and Public Administration. On average, bureaucrats reported an average salary

76 of 14508 Ghana cedis, which at the time of surveying was around US$5000, about five times higher than Ghana’s per capita income. As mentioned in prior chapters, bureaucrats are motivated to save for retirement, and 45.1% of bureaucrats in my sample report a second source of income. Bureaucrats in Ghana are not restricted from earning other income, unless those sources of income present a conflict of interest with their official duties. Bureaucrats are mandated to serve outside their home regions, but approximately half of my sample reported serving in their home regions. This invites potential conflicts of interest. Serving in one’s home region may encourage bureaucrats to cultivate connections with local businesses that could win contracts from the district assembly. In Greater Accra, less than 15% of bureaucrats in the sample hail from that region, while in the Ashanti district, more than 85% of bureaucrats come from Ashanti. In addition, bureaucrats must be rotated to new districts every four years to prevent corruption, so it is illegal that so many have overstayed their terms. Many junior bureaucrats complained that managers had overstayed their positions, which left few opportunities for advancement. In this environment, junior bureaucrats leave the public sector for private opportunities or to further their educations. Some junior bureaucrats claim that only the most corruptible stay in the public service to become senior managers. Despite procurement regulations, bureaucrats regularly hold outside positions that conflict with official duties, such as owning a construction firm or consultancy. Some bureaucrats in my sample even admitted owning such firms. To bolster personal

77 rnfr.A iue42dmntae,aothl ftebracasi ysample my in bureaucrats the of half and about appointments demonstrates, of 4.2 nature Figure As political increasingly transfers. the at about bureaucrats, complained Ghanaian Many levels, all 1982). (Wade bureaucracy objective otherwise an practices wrong change to organization. easy” their “not at be would Almost it that organization. responded their bureaucrats at of practices 40% asked wrong that change question could a bureaucrats for results easily presents how 4.1 (Wilson Figure culture 2010). organization’s Dormody & their Clason of 1989; perceptions bureaucrats’ assess to included 10-20%. by salaries augment can where pay workshops, donor–sponsored numerous attend bureaucrats wealth, oiia rnfr r ehns ywihpltcascnasr oto over control assert can politicians which by mechanism a are transfers Political were questions Likert–scale and rank–order survey, bureaucrat the of part As

changing_wrong 0.0 Not Easy iue41 hnigWogPractices Wrong Changing 4.1: Figure 0.2 Changing Wrong Practices 0.4 78 Somewhat Easy 0.6 0.8 Very Easy e diem per 1.0 ul rjc n otatr hudbdo htpoet otatr hnhave documents These then Contractors district. the to project. documents their that submit on to weeks bid two approximately should will contractors district and their project that a newspapers build national project, Ghana’s needed in a advertise identifying After must set bureaucrats 2003. procedure of a Act follow Procurement must Public makers Ghana’s decision by out key a the whether program, need, development social a of or has awarding road district the school, a facilitate When to district. is her in duties contracts important project most bureaucrat’s senior a of One Experiment Conjoint 4.2.2 reasons. political for transferred been had bureaucrats fellow that stated

political_transfer 0.0 Very Often iue42 oiia rnfro Bureaucrats of Transfer Political 4.2: Figure 0.2 Political Transfers 0.4 79 Somewhat Often 0.6 0.8 Not Often 1.0 Figure 4.3: Sample Bid–Opening Report from a District Tender Committee attest to a contractor’s capabilities, provide cost estimates for materials and labor, and they should assure bureaucrats that contractors can meet their tax and other obligations (Public Procurement Act 2003). In theory, many contractors should competitively bid on projects. At an appointed date, the DCE and bureaucrats open the bids from various contractors. Figure 4.3 shows a sample document from such a District Tender Meeting. For each project, bureaucrats enter the contractor’s bid amount and whether or not the contractor has the required documents. After bid openings conclude for each project, the DCE and bureaucrats certify the form by signing at the bottom. Though this form should indicate which contractor is the lowest bidder, bureaucrats spend two

80 more weeks assessing the contractor’s background and qualifications to determine whether the contractor can actually complete the work. If he cannot, they will evaluate the next lowest bidder and award the contract to the one who is both qualified and within their cost estimates. But how well do bureaucrats adhere to the requirements of the Public Procurement Act? Do bureaucrats evaluate purely on technical qualifications? I investigate bureaucrats’ knowledge and approach to procurement through a conjoint experiment. Conjoint experiments approximate real–world decision processes (Hainmueller et al 2013). In a conjoint experiment, respondents are presented with a series of pairwise comparisons. Each item in the comparison possesses several attributes, which are randomized in each comparison. In my survey, bureaucrats compared eight pairs of hypothetical contractors. For each pair, respondents would decide which of two contractors should receive a contract. Each of the eight pairs was printed on a separate card, and respondents viewed cards one at a time, answered the comparison and then moved on to the next card. Hypothetical contractors possessed six characteristics, and each characteristic could take on three randomized values. I read the following instructions to each respondent:

“Suppose that there is a local development project that this District Assembly wishes to complete. The overall cost of this project, the number of people it is expected to impact and its timeline to completion are about average for projects that this Assembly has seen within the past ﬁve years. Imagine that you are reviewing comparable, qualiﬁed tender bids from two similar contractors, and you must assist the tender committee of this Assembly to choose a contractor. Please review the following. There will be eight cards in total, and you will compare two contractors on each card. Each contractor will have six characteristics. These examples are

81 Characteristics: Contractor A Contractor B

Relationship with Political Does public work no matter Frequently does public work Administration which party is in power. while the NPP is in power.

Donor Relations Occasionally works with Often works with external external donors. donors.

Relationship with Local Managers interact with the Managers interact with the Politicians MP but not the DCE. MP but not the DCE.

Subcontracting Managers frequently Managers frequently subcontract work to other subcontract work to other firms. firms. Rapport with Assembly Managers frequently visit Managers never visit and Staff and contact Assembly contact Assembly officers. officers. Cooperation in Contract Managers are cooperative in Managers are cooperative in Management contract management. contract management.

To whom would you allocate the project? Please tick: __Contractor A __Contractor B

Characteristics: Contractor C Contractor D

Relationship with Political Does public work no matter Does public work no matter Administration which party is in power. which party is in power.

Donor Relations Occasionally works with Often works with external external donors. donors.

Relationship with Local Managers interact with both Managers interact with the Politicians the DCE and MP. MP but not the DCE.

Subcontracting Managers frequently Managers frequently subcontract work to other subcontract work to other firms. firms. Rapport with Assembly Managers sometimes visit Managers frequently visit Staff and contact Assembly and contact Assembly officers. officers. Cooperation in Contract Managers are cooperative in Managers are not Management contract management. cooperative in contract management.

To whom would you allocate the project? Please tick: __Contractor C __Contractor D

Figure 4.4: Two Sample Conjoint Evaluations

82 all hypothetical and randomly generated, and I would like you to answer as honestly as you can.”

The following is the universe of characteristics randomly assigned to each hypothetical contractor. These characteristics were chosen after careful discussions with oﬃcials in my pilot district and at the Public Procurement Authority in Accra.

Rapport with Assembly Staﬀ

1. Managers frequently visit and contact Assembly oﬃcers.

2. Managers sometimes visit and contact Assembly oﬃcers.

3. Managers never visit and contact Assembly oﬃcers.

Cooperation in Contract Management

1. Managers are not cooperative in contract management.

2. Managers are somewhat cooperative in contract management.

3. Managers are cooperative in contract management.

Relationship with Political Administration

1. Frequently does public work while the NDC is in power.

2. Frequently does public work while the NPP is in power.

3. Does public work no matter which party is in power.

Subcontracting

1. Managers frequently subcontract work to other ﬁrms.

2. Managers sometimes subcontract work to other ﬁrms.

3. Managers never subcontract work to other ﬁrms.

Donor Relations

83 1. Never works with external donors.

2. Occasionally works with external donors.

3. Often works with external donors.

Relationship with Local Politicians

1. Managers interact with the DCE but not the MP.

2. Managers interact with the MP but not the DCE.

3. Managers interact with both the DCE and MP.

Bureaucrats in pre-testing revealed that the above categories were important issues that arose in the procurement process. On the first category, contractors are often based near the districts in which they work, and are expected to have a good rapport with the officials of the district assembly. However, frequent visits to the assembly could indicate a close connection between contractors and bureaucrats and, thus, conflicts of interest. Frequent contact—for instance, via mobile phone—may taint the procurement process. Officials at the Public Procurement Authority emphasized that poor contract management could hinder public procurement and project implementation. Con- tract awards contain specific criteria that contractors must fulfill. For example, such criteria include the dimensions of a school, the number of classrooms it must have, the number of electrical fixtures per classroom, quality of concrete, etc. Since bureaucrats cannot monitor contractors directly, contractors may perform shoddy work. Some contractors, especially those with political connections, may refuse to be inspected or will perform shoddy work since they cannot be punished.

84 Contractors maintain political connections to ensure that they will win contracts. As a result, some contractors are popularly known as “NDC men” or “NPP men”. In qualitative interviews, bureaucrats readily admit that this phenomenon exists, and can be a critical factor in the determination of a contract winner. Many respondents cite subcontracting as a factor that hinders the building of quality projects. Contractors who win a contract will often subcontract portions (such as plumbing and electrical wiring) to others. Unless the contract explicitly allows subcontracting, it is illegal. There are many reasons why contractors subcontract. They will subcontract if they lack expertise in particular areas. Several interviewees report that winning contractors are often incompetent; they skim money from the award amount, and pass the contract on to a different contractor, who must complete the project with less funding. Some contractors report a risk–based insurance reason for subcontracting. These firms, who may be partisan to one party, will subcontract to their contractor–friends of the other party to ensure that those firms have work, even though their party is not in power. As a result, it is expected that those firms will subcontract to them when there is a party change in government. I discuss risk aversion and reciprocity between contractors in the next chapter. Some contractors work with donors, such as the World Bank or USAID. These donors impose strict requirements on quality and perform background checks on contractors. Further, most donors pay contractors on time, while contractors working on government projects can wait up to four years to be paid, during which inflation, accumulated interest on loans and fluctuations in material costs will have diminished the contractor’s profits. Donors’ actions mitigate principal–agent problems.

85 Background checks and stricter oversight ensure that higher quality contractors are chosen and that they do not shirk. Certainly, there are donor projects that are still shoddy, and donors may have their own perverse incentives. Only a select minority of larger contractors will have the opportunity to work with donors. Nonetheless, a contractor who works with a donor is perceived more favorably. Many politicians, bureaucrats and contractors reported that contractors are closely connected with politicians, namely ambitious DCEs and MPs. Such a relationship forms the basis of political finance and upward political ambition, especially for a DCE seeking higher office (cf. Schlesinger 1966). In a district, many contractors may have close, mutual relationships with the DCE. Similarly, MPs have their own contractor–friends, who may receive projects that the MP is sponsoring. Table 4.3 and Figure 4.5 present the results of my conjoint experiment. In the table, negative estimates indicate that bureaucrats are less likely to choose a contractor that has that characteristic (“level”), while positive estimates suggests that bureaucrats would be more likely to choose a contractor with that characteristic. Contractors who never visit the district assembly are less likely to be chosen by bureaucrats. Bureaucrats prefer to know particular firms, but the procurement law forbids relationships and negotiations with bidders. Firms submit bids in person, though bidding should be anonymous to the tender officials. In contract management, bureaucrats disliked contractors who were uncooperative in contract management. This result is sensible, as bureaucrats have to work with those contractors. Contractors’ political affiliation was contentious for bureaucrats, with many of them amused by the political attributes assigned to the hypothetical contractors. Many

86 Table 4.3: Conjoint Experiment Results

Attribute Level Est. SE p Assembly Rapport Never Visit -0.13 0.03 *** Assembly Rapport Sometimes Visit 0.0037 0.033 Contract Management Not Cooperative -0.21 0.03 *** Contract Management Somewhat Cooperative -0.049 0.034 Political Administration NDC -0.23 0.033 *** Political Administration NPP -0.31 0.030 *** Subcontract Never Subcontracts 0.015 0.032 Subcontract Sometimes Subcontracts 0.074 0.037 * Donor Relations Occasional 0.11 0.037 *** Donor Relations Often 0.11 0.034 ** Local Politicians DCE -0.10 0.035 ** Local Politicians MP -0.20 0.033 ***

bureaucrats do not want partisan aﬃliations to enter the contracting process, in ac- cordance with the procurement regulations, though they admitted that it certainly existed. The estimates on choosing a contractor aﬃliated with the NDC or NPP are both negative. On subcontracting, bureaucrats preferred contractors who sometimes subcon- tracted. According to respondents, occasional subcontracting indicates that contractors are willing to let specialists construct portions of projects, such as electrical wiring or plumbing. On the other hand, frequently subcontracting might imply that a contract winner is a political activist without construction experience, simply looking to extract resources. Donor relations yielded positive results for the hypothetical contractors, with bureaucrats demonstrating a preference for contractors who had worked with donors. Working with donors is a sign of quality. Similar to political

87 Assembly_Rapport: (Baseline = Frequently visit) Never visit Sometimes visit Contract_Mgt: (Baseline = Cooperative) Not cooperative Somewhat cooperative Pol_Admin: (Baseline = Both) NDC NPP Subcontract: (Baseline = Frequently subcontract) Never subcontract Sometimes subcontract Donors: (Baseline = Never) Occasionally Often Local_Pol: (Baseline = Both ) DCE MP -0.4 -0.2 0.0 0.2 Change in E[Y]

Figure 4.5: Conjoint Experiment Results affiliations above, bureaucrats did not favor contractors that worked closely with individual politicians. In the conjoint experiment, bureaucrats demonstrated that there are non-technical factors that influence how winning firms might be chosen. In procurement, it is not sufficient for contractors to simply be the lowest bidder: they must also be investi-

88 gated and pass quality checks. Bureaucrats are the experts who are entrusted with that necessary discretion, and it is their duty to prevent unqualiﬁed contractors from winning. Nonetheless, it is well known that projects are still being built shoddily, despite bureaucrats supposed adherence to the procurement standards and distaste for political interference. In the next section, I investigate records of district projects to determine whether actual behavior matches idealized behavior.

4.3 Archival Results

Despite Ghana’s public procurement law and a cadre of well educated bureaucrats, shoddy construction persists. While bureaucrats possess the discretion to ensure that the most qualiﬁed contractor of a group is chosen, their expertise can be used to prevent detection of illicit activities. To investigate whether illicit procurement activities are occurring, I gathered tender reports from 9 of the 10 districts in my sample, and I also analyzed national–level contracting data.

4.3.1 Tender Reports

Tender documents reveal many irregularities. In Figure 4.6, thirteen projects have been awarded in a northern district of my sample. This is a straightforward record of district projects, and many districts provided similar sheets. Included in this ﬁgure are the type of project, the winning contractor (but not the losers), the funding sources and the award amount of the contract. What is notable is the clustering of project sums: many are around 100,000 GHC or 200,000 GHC, despite being diﬀerent

89 Figure 4.6: Contractors and Projects, Northern District. projects in diﬀerent locations.1 The projects funded by “GSOP” in particular show 1Many of these sums are, of course, above the 50,000 Ghana cedi threshold demarcated in the Public Procurement Act for entity tender committees and the 200,000 Ghana cedi threshold for

90 clustering just below 200,000.2 Due to inherent differences between projects and contractor capacities, such clustering of bid amounts could indicate collusion. The types of projects involved also draw suspicion. For instance, rehabilitating a DCE’s residence is a commonly awarded project. In this case, the sum is over 90,000 GHC, which aligns closely with the school or day care in this figure. Notably, the refurbishment of the residence is awarded to the same company, which should be less likely to happen in a competitive market. I detect further irregularities by cross–checking contractor firm names with the national directory of licensed contractors, which I acquired from the Ministry of Water Resources, Works & Housing and the Ministry of Roads & Highways in Accra. These registries included over 5000 companies that are officially certified by these ministries to perform construction in Ghana. Each contract winner is supposed to be registered, but this is often not the case. In Figure 4.6, there are 11 contractors, and only three are properly registered. I further analyze contractor–registration data later in this chapter. Figure 4.7 presents procurement data from a different district. This figure shows three projects, but also includes the losing bidders and their bids.3 This particular district had twelve project bids being opened at once. The first irregularity to notice is that each project had exactly three bidders, the minimum required under the Public Procurement Act of 2003, and many projects from this district had the same three bidders. While this is not an impossible or illegal occurrence, it raises doubts tender review boards. 2These projects are funded by the World Bank under the Ghana Social Opportunities Project (GSOP). 3In these cases, the ultimate winners are the contractors with the lowest bid amounts.

91 Figure 4.7: Contractors and Projects, Southern District. concerning the level of competition involved for bidding on projects, as one would expect projects to attract more than three bidders. Many contractors have reported that they do not even bid because they have no relationship with a particular district

92 assembly, and thus will not be chosen. Projects 10 and 11 of Figure 4.7 feature the same three bidders, but the winner (with the lowest price) is different in each case. This occurs with other projects awarded by this same district on this particular day. Such cyclical bidding can be indicative of collusion, where a group of bidders will buy out contract documents and agree to let one member win, as long as other members win different projects. While this example seems suspicious, the detection of collusion rings can be difficult in practice, and scrupulous auditors must marshal further evidence (Asker 2010, Porter & Zona 1992, Kawai & Nakabayashi 2014). For project 10, in particular, there are only two qualified contractors, as the third did not provide all required documents. However, there is a large monetary difference between the bids; many bureaucrats would argue to me that due to this large difference in bids, they have to go with the obvious choice. Even if that contractor is not fully qualified, a bureaucrat who is forced to recommend that contractor can plausibly deny favoritism and argue that the procurement law was followed. Finally, in Figure 4.7, there are six distinct contractors, but only one is present in the national registry of contractors. Figures 4.8 and 4.9 both come from a third district, and represent some of the most detailed data on district–level contracts in my sample. In this district, eight contracts are simultaneously up for auction, and they are indicated by the “Lot” numbers across the top. The gray boxes contain the initials of the bidding contractors. These tables indicate whether bidding contractors submitted the correct documentation to be considered qualified to win a contract. The first irregularity to notice is that many of these projects have fewer than three bidders, which is a direct

93 Figure 4.8: Project Bidders Data, Southern District violation of the Public Procurement Act. In these tables, Lot 3 is notable. There are three bidders, but two are missing documents, leaving only one viable choice. Internal auditors often complain that

94 Figure 4.9: Project Bidders Data, Southern District they are forced to allow these situations to happen, though it seems implausible to them that this situation accords with the procurement law. While I do not show the contract sums in this particular example, the winning bidder also happens to have the lowest bid price. Similar to the situation in Figure 4.7, it is possible that bureaucratic oﬃcers are assembling “plausible deniability”: they had to choose

95 that first contractor because he was the only one qualified, and even if the other contractors were qualified, they were too expensive. External auditors would have little evidence to prosecute, as the letter of the procurement law has not been broken in Lot 3. Note also contractor ACL, who appears in Lot 1 and Lot 8. In Lot 1, ACL is fully qualified, but in Lot 8, he is missing his bid security, and therefore cannot be considered fully qualified. All of these bids were submitted on the same day to the same tender box, so it is suspicious that only one bid of two from the same company was missing a key document. Each bidding envelope must contain all of the required certificates to be compliant with the procurement regulations. A similar anomaly occurs with contractor SCL, who appears in Lot 5 and Lot 7. Of the 16 contractors who appear in these figures, only three are actually recorded in the national registry of contractors.

4.3.2 Contractor Registration

While archival data drawn from my sample districts suggests a variety of procurement irregularities, how can one definitively pinpoint irregularities and their prevalence across Ghana? Many irregularities can be argued away by bureaucrats, which thwarts outside auditors. A clearer violation, one which cannot be argued away, is needed. The Public Procurement Act mandates that all bidding contractors must prove their qualifications to construct public works—such approval is typified by a registration certificate issued by the Ministry of Water Resources, Works & Housing. In Figure 4.3, there is a column entitled, “Ministry of Works & Housing.” This column

96 Figure 4.10: Sample Contractor Registration Certificate is checked off by a district tender committee to ensure that a contractor is registered with the ministry. The Ministry for Water Resources, Works & Housing provided me with the registry of all certified construction contractors in Ghana for the year 2013. In addition, I obtained data on contracts that were awarded in 2012 from 117 of 170 of Ghana’s districts. Figure 4.10 presents a sample contractor registration certificate; contractors, when bidding, must include a copy of their certificate in each bid packet. Figure 4.11 presents a subset of the data obtained from the Ministry for

97 REGISTER OF MINISTRY OF WATER RESOURCES, WORKS AND HOUSINF CONTRACTORS CLASSIFICATION NAME OF NEW/UPGRADING RENEWAL ITEM CERT NO. COMPANY (D) (K) (E) (G) (D) (K) (E) (G) JINS 1 COMPANY 18563 3 3 LIMITED NOAMS 2 CONST. & 22397 3 3 TRD. ENT. HIGH TRUST 3 18266 2 2 (GHANA) LTD. CHINA 4 ZHONG HAO 23918 1 1 (GHANA) LTD. MAKENBA 5 CONSTRUCTI 25402 3 3 ON PERMAROOF 6 15334 3 3 LIMITED

Figure 4.11: Selected Data on Contractor Registrations

Water Resources, Works & Housing. This data includes the name of a contractor and the firm’s certificate number. In addition, contractors are classified according to their size, with the largest firms rated as “D1K1” and the smallest, “D4K4”. The vast majority of firms are small and classified as D3K3 or D4K4. Of the D1K1 firms, most are foreign–owned. Figure 4.12 depicts a sample page from a district’s Annual Progress Report for 2012. This page includes a column that identifies which contractors completed the district’s projects. I collected all available progress reports for 2012, and analyzed over 7700 projects. Figure 4.13 presents regional–level analysis of the proportion of contracts awarded to certified and uncertified contractors in 2012. Under ideal conditions, every project should be awarded to a contractor that is registered with the Ministry and therefore qualified to construct works. Unfortunately, there is no region where more than

98 Asante Akim North (AKN) Quarterly Project Table 2013 - 1

No. Location Project Name Sector Contractsum Payment Fundingsource Contractor Award Status

AKN0041 Agyareago Construction 2 unit Teachers Quarters Education 89,062 84,564 DDF Kasita Enterprise 23/12/11 completed

AKN0064 Agyareago Construction 6 unit Classroom Block Education 292,252 Get Fund E. Palm Ofie 15/03/12 On-going Ventures

AKN0037 Anuroso Construction 3 unit Classroom Block Education 30,000 30,000 CBRDP Direct Labour 01/02/07 abandoned

AKN0068 Different Supply 250 Street Lighting/Electrific Economic 62,900 62,900 DACF ECG 15/03/12 completed Locations AKN

AKN0061 Different Supply 300 Street Lighting Other 64,148 64,148 DDF K.N. Donfeh and 23/12/11 completed Locations AKN Sons Ltd

AKN0025 Different Supply 1000 Furniture Education 40,000 40,000 DDF Sahada Shop 22/12/10 completed Locations AKN

AKN0024 Different Construction 22 boreh Borehole Water 100,000 100,000 CWSA-contributio Jansa Geology 31/08/10 completed Locations AKN Engineering

AKN0015 Different Other Other Economic no info completed Locations AKN

AKN0002 Dwease Construction 1 unit Library Education 14,000 14,000 DDF Direct Labour 03/05/10 On-going

Page 1 of 2

Figure 4.12: Sample from a District 2012 Annual Progress Report

25% of contracts are awarded to a certified contractor. In seven of 10 regions, the plurality of contracts are awarded to unregistered contractors. Awarding contracts to unregistered contractors is a clear violation of the procurement law. Contract registrations are designed to ensure that only contractors with the appropriate capacity and technical expertise are eligible to build public projects. Cir- cumventing registrations may allow unqualified contractors to win projects, which could lower the quality of construction. Further, it is possible that these unregistered, unqualified contractors may actually be cronies of politicians and bureaucrats. With- out a formal record of the company, auditors may find it more difficult to prosecute

99 Distribution of Certified Contracts 1.0 0.8 0.6 0.4 0.2 0.0 Ashanti Brong_Ahafo Central Eastern Greater_Accra Northern Upper_East Upper_West Volta Western

Unknown Uncertified Certified

Figure 4.13: Proportions of Certiﬁed and Uncertiﬁed Contractors, 2012. individuals involved in illicit procurement acts.

4.3.3 Media Accounts

Numerous media sources in Ghana have written about the connection between procurement irregularities and the low quality of public construction. In March 2016, Christina Cobbinah, Chief Executive of the Tarkwa Municipal Assembly, opened a six–classroom school that had been commissioned under her administration. The contractor in charge of the project was Kweku Adu, who is a former National Demo- cratic Congress (NDC) chairman for Tarkwa. Journalists present at the school opening noted many structural deﬁciencies,

“The shoddy work was in the form of pot–holes, which had developed inside all the six classrooms. The new classroom block replaces the old

100 dilapidated building built some hundred years ago. It was surprising to see how a newly–commissioned classroom block could develop holes in all the ﬂoors, [which] spoke of the kind of shoddy work undertaken by the NDC former Chairman–cum–contractor.”4

Despite the obvious deﬁciencies in the classroom block, Cobbinah opened the school, and did not inquire with the contractor regarding the work’s quality. In addition, the school lacks adequate toilet facilities and has not received its full complement of desks, forcing students to sit three to a desk. As one journalist described,

“It was obvious that the contractor did not do a good job. However, I was expecting the authorities to question the contractor, yet they went dumb.”

The silence of local politicians and bureaucrats towards the low quality of projects was a prevalent theme throughout field research. Given bureaucrats’ knowledge of procurement and their high education levels, it is possible that the persons involved have a conflict of interest that prevents them from criticizing contractors. Beyond schools, utilities construction is another major challenge for Ghana’s local governments. Over the past several years, many media outlets have lamented Ghana’s continued electricity crisis, where lengthy blackouts lead to lost economic output. Shoddy work can disrupt the flow of electricity at many stages: generation, transmission across long distances and at the step–down stage for use at the village– or household–level. In 2016, the Auditor–General investigated the Self–Help Electrification Project, which is targeted to several rural districts,

4Adams, Alfred. 8 March 2016. “Six–Unit Classroom Block Exposes Shoddy Work as Floor Becomes Pothole–Ridden.” The Ghanaian Chronicle. URL: http://allafrica.com/stories/ 201603081350.html.

101 At Sedorm, the report said ten low voltage (LV) poles were discovered to be poorly erected and found to be made of substandard poles posing a danger to community members in the event the poles collapse. According to the Auditor’s report, the contractors of the project said they were not responsible for the substandard poles saying, in line with the Self– Help Electrification Project (SHEP) policy, it is the responsibility of the beneficiary community to provide the low–voltage poles. [...] Further, the report said projects at Kwaku Ansah in Ewutu Efutu Senya District were captured to be completed and listed in the 2012 financial year, even though they have not been executed.5

Substandard materials are commonly used by Ghanaian contractors, often as a cost– savings measure. Even though the above project’s contractors claimed that the poor– quality poles were provided by the communities, such projects also maintain a team of monitoring consultants, who should have identiﬁed the poor–quality poles prior to their erection. The ﬁnal point, concerning the reporting of incomplete projects as complete, was reiterated by many interviewees. In addition to journalists, several NGOs in Ghana are monitoring procurement and the low quality of district public goods. One such organization is the Ghana Integrity Initiative. During a speech, the Initiative’s Programmes Manager, Mary Awelana Addah, noted,

“[...] records had proven that as a result of some key authorities at the district level demanding kickbacks from contractors, it aﬀected their expenditure during execution of projects, hence poor works. She cited for instance that many projects that were executed under the ﬁrst President of the Republic of Ghana, Dr Kwame Nkrumah, were still strong, whilst

5Joy FM News. March 15, 2016. “Auditor–General Angry Over Shoddy Work on $350m Electriﬁcation Project.” http://www.myjoyonline.com/news/2016/March-15th/ auditor-general-angry-over-shoddy-work-on-350m-electrification-project.php.

102 those that were executed after that period were in a very deplorable state.”6

Many respondents noted that colonial–era (pre-1957) buildings in Ghana were still used for government purposes, while newer construction deteriorated after only a few years. Given improvements in construction technology since the colonial era, it is diﬃcult to blame the poor quality of construction on a lack of technology or more adverse environmental conditions. Rather, I posit that Ghana’s poor construction quality has political origins. In the following chapter, I explore further the reasons for poor–quality construction from the perspective of contractors.

4.4 Conclusion

Bureaucrats in Ghana are well educated and highly qualiﬁed for their jobs. Simi- lar to workers in other sectors, bureaucrats in Ghana are concerned with saving for retirement, an area in which they report social pressure. Bureaucrats indicate an often hostile relationship with their political bosses, which negatively impacts the bureaucracy’s culture. Bureaucrats fear speaking out against wrong practices because such actions may lead to ostracism or, worse, a politically induced transfer to a less desirable district. In addition, bureaucrats must accede to requests from DCEs and political–party members. A bureaucrat’s incentives concerning retirement, combined with an organizational culture that stymies whistle–blowing, lead to fertile ground for corruption. Bureau-

6Ghana News Agency. February 13, 2015. “Execution of Shoddy Projects in Ghana is Due to Corruption.” http://www.newsghana.com.gh/ execution-shoddy-projects-ghana-due-corruption/.

103 crats play a significant role in awarding project contracts in Ghana’s districts. They are present at the opening of contractors’ bids, and they can exercise discretion in determining the quality of a contractor and the ultimate winner. In conjoint exper- imentation, bureaucrats favor contractors who lack political connections and who work closely with donors, a signal of a contractor’s capacity. In reality, development projects are still poorly built, despite the existence of a procurement law and a well trained bureaucracy to administer it. Archival data reveals irregularities in the awarding of contracts that, as many journalists report, yields poor–quality construction. Registration records from the Ministry of Water Resources, Works & Housing, cross–checked with districts’ annual progress reports, reveal contracts are routinely awarded to unregistered, and potentially unqualified, firms, a clear violation of the procurement act. While bureaucrats are trusted with the expertise and discretion to determine contractors’ qualifications, there are numerous opportunities where that expertise can be abused to facilitate private gain.

104 Chapter 5

Uncertainty, Kinship and Contractors

5.1 Introduction

Public goods in Ghana are poorly provided. It is not the case that there are too few projects being built, however, as 5,048 projects were reported to be in construction during 2012 alone. Though many of these projects remain unfinished (Williams 2015), I argue that, even if a project is recorded as completed, there is little incentive to ensure that the project is built well. Contractors in Ghana rarely win projects without connections to the political party in power. While Ghana has passed comprehensive procurement regulations and bureaucrats are well trained, I presented evidence in Chapter 4 that such regulations are routinely ignored. Political–party chairs wield significant influence in distributing

105 Ghanaian contracts, and chairs ensure that politicians award contracts according to their wishes. To become a favored contractor, however, the contractor must credibly signal his or her loyalty to the chair. Party chairs ensure that political candidates win elections or are appointed to coveted offices. Party chairs rally activists—known as “foot soldiers”—to increase turnout during campaigns, and these foot soldiers subsequently impose financial and social demands upon party chairs (Bob–Milliar 2012). For chairs, it is critical to amass funds to ensure electoral victory and satisfy the foot soldiers. In this chapter, I focus on small–scale contractors who operate at the local levels, rather than large international firms which typically bid on much larger projects, such as highways and airports. While local contractors in Ghana are still motivated by profits, most live close to the subsistence margin, meaning that they also minimize income volatility (Scott 1979). Though agriculture is the largest source of employment for Ghanaians, many are exiting agriculture to start construction firms. Any entrepreneurial Ghanaian can start a construction business, especially because there is little enforcement of the requirements to register as a qualified contractor. Despite private demand for contractors increasing in urban areas, the Government of Ghana remains the largest purchaser of contractor services. There is significant uncertainty in the awarding of contracts: contractors are under pressure to satisfy party chairs, who are under pressure themselves to win elections. To mitigate this uncertainty, contractors rely on kinship networks for financial support while they are not winning contracts. As I demonstrate below, such kinship reliance benefits individual contractors but reduces the quality of public

106 goods. In prior chapters, I have referred to contractors as a single group. To facilitate the forthcoming discussion, I will assume contractors can be categorized as two types: party foot soldiers and subcontractors, who take no partisan aﬃliation. Contractors in these two groups both live near subsistence. Section 2 details relevant literature on investment uncertainty and kinship. Sec- tion 3 presents two dictator games that depict rural contracting in Ghana. Section 4 discusses implications for the quality of development. Section 5 concludes.

5.2 Firm Investment and Kinship

The construction industry in Ghana is characterized by the following:

1. Ease of entry.

2. Risk dispersal.

3. Capital generation for secondary businesses.

There are few barriers to entry in Ghana’s construction industry. While the Ministry for Water Resources, Works & Housing mandates that contractors meet education and technical requirements, in reality, these criteria are rarely enforced, reducing the average expertise and capacity of contractors. Though rural Ghanaians have historically been employed in small–scale agriculture, many have realized poor returns and are exiting agriculture to start their own construction ﬁrms.

107 “Simple thing, easiest thing, to do is to decide to become a contractor. He knows a way. He knows true politics. If he knows the party in power, he may get something to do.” Contractor, District B.

In agriculture, one’s economic risk is governed by the location of one’s farm. A drought, for instance, can eliminate a whole season’s income. In the construction industry, ﬁrm owners can disperse risk by building projects in various locations so that conditions in one locality do not impede income ﬂows from other localities. In rural Ghana, most citizens lack access to formal banking (CGAP 2011). With- out access to banks, aspiring entrepreneurs have few options for raising capital to start a business. Contractors can potentially access lucrative sums through government projects, and many report that they provide capital for rural entrepreneurs to start businesses. The ability to lend to one’s neighbors increases the prestige of a local contractor.

“They stay here in Upper West because this region is having the largest amount of construction. This is where (construction) you can raise capital for other businesses. If I need to build a house, I can use the big money to buy it.” Contractor, District B.

As mentioned before, the contractors’ market in Ghana is governed by political favor, and political favor is inherently uncertain. Though Ghana has enacted public– procurement regulations (Act 663), it has been established that such regulations are often ignored. Politicians, bureaucrats and contractors report that projects are awarded to contractors loyal to the political actors in power. In exchange, winning contractors deliver kickbacks to support the campaigns of political actors. However,

108 it is possible for these party actors to lose the next election, depriving the loyal contractor of her patron and income source.1 To win the favor of politicians and party chairs, some contractors join political parties and canvas rural areas to raise money and turn out votes for the party. Such party loyalists are known in Ghana as “foot soldiers” (Bob–Milliar 2012, Ninsin 2006). Many foot soldiers rally votes and funds through kinship and ethnic networks, particularly in areas where the party may be electorally weak. In exchange for their services, foot soldiers demand “selective incentives” (Whiteley & Seyd 2002) in the form of personal support and project contracts. The most lucrative selective incentives are bestowed upon foot soldiers who have devoted the most time and money to improving the party’s standing in a given area, and foot soldiers compete against each other (Bob–Milliar 2012). Nonetheless, a party can still lose the national elections, which will hamper the party’s ability to distribute selective incentives. Under conditions of demand uncertainty, firms under–invest in themselves rather than risk idling capital in times of decreased demand (Pindyck 1988, Pattillo 2000, Bates 2000). Pindyck (1988) illuminates this concept for marginal investments by incorporating McDonald & Siegel’s (1986) option value of waiting to invest. That is, when deciding to invest, a firm’s owner considers not just the cost of implementing the investment and its expected returns: she must also consider the cost of giving up the option to invest at a future time, when conditions or other information might be more favorable. For firm owners, it is the irreversibility of investments that induces them to hold less capacity in case demand drops; once a steel factory is built, its cost

1In the case of a contractor loyal to a DCE, that DCE can be removed from oﬃce at any time, not just during election years.

109 is sunk, and diminished demand for steel will reduce the value of that plant (Pindyck 1988).2 Firm owners, therefore, weigh the value of waiting and invest under favorable demand conditions. Construction firms in Ghana align well with Pindyck’s (1988) framework, though their capital investments—trucks, cement mixers, steamrollers, etc.—are not as irreversible as physical factories. However, construction equipment is still subject to the “market for lemons” (Akerlof 1970). Though such equipment may be bought new, their resale value plummets immediately as future buyers cannot differentiate between high– and low–quality used construction machinery. Construction firms in Ghana are therefore averse to investing in new equipment due to the uncertainties of political favor and winning future contracts. I depart from Pindyck’s (1988) framework, however, in its discussion of the option value of waiting. As mentioned above, many Ghanaian citizens enter Ghana’s construction industry due to its low barriers to entry, relative mobility (and risk dispersal) and its potential for lucrative gains. These citizens live close to the subsistence margin and cannot wait long for the next contract to arrive. Essentially, there is little worth to the option value of waiting to invest as waiting would result in starvation. Ghanaian contractors are, thus, faced with a risky dilemma: they are averse to capital investment due to the uncertainty of political–favor–based contracting, but they have little patience to invest in future time periods due to their proximity to the subsistence margin. To protect against starvation, Ghanaian contractors rely on kinship networks for

2As well as the owner’s ability to continue ﬁnancing the plant.

110 support. Kinship norms are central to the functioning of Ghanaian society. Follow- ing Winick (1956) and La Ferrara (2007), I define “kin group” to denote persons that comprise “socially recognized relationships based on supposed as well as actual genealogical ties”. In common parlance, a kinship group may be thought of as one’s “extended family”. Focusing on Vietnamese peasant life, Scott (1976) emphasizes kinship and the centrality of the “subsistence ethic”. Being close to subsistence changes how an agent acts, resulting in deviations from rational economic theory. Surviving involves adopting a “safety first” strategy towards income (Scott 1976). That is, peasants will be risk averse and forgo profit maximization to establish a minimum income level to prevent starvation (Popkin 1981). Contractors in Ghana face an uncertain stream of income: winning a contract is volatile due to the unpredictable nature of politics, and winning still entails the costs of paying kickbacks to politicians, bureaucrats and party chairs. To establish a minimum income above subsistence, contractors in Ghana spread their risk and income across multiple sources. Bates (2001) describes the Kikuyu’s methods for minimizing risk by engaging in agricultural activities in diverse climac- tic zones and investing in kin members who have migrated to urban centers. Scott (1976) writes that, “risk dispersal has also been observed among poor ex–peasants who may respond to the risk of unemployment by pursuing several minor occupa- tions to minimize the danger of ever being entirely out of work.” (cf. Greenfield 1964) Contractors in Ghana frequently maintain side businesses to ensure income streams when contracts are not being awarded to them. Common side businesses in-

111 clude managing construction-supply companies, providing consultancy services and offering places of hospitality, businesses which are less susceptible to political cycles. Given such risks, contractors do not consistently invest in capital equipment. Under a regime in which procurement rules are implemented perfectly, these firms would not meet the minimal requirements and would be ineligible to win contracts. However, firms that have secured political favor do win contracts, despite not owning the required equipment. To address this shortfall, winning firms subcontract portions of the contract to other firms within their kin group that have the necessary equipment. Subcontracting to firms within one’s kin group accomplishes two goals. First, it allows a firm to claim that it has access to all necessary equipment should an auditor inquire.3 Second, it establishes a norm of reciprocity between firms that mitigates income shocks over time. Insurance provided by one’s kin group is important in societies facing unpredictable shocks (La Ferrara 2007, Scott 1976). Scott (1976) reaffirms the reciprocity of peasant relations under the subsistence ethic: “It is also evident that as soon as a peasant leans on his kin or his patron rather than on his own resources, he gives them a reciprocal claim to his own labor and resources.” Winning firms know that they might not win contracts in the future. By subcontracting the struggling firms in their kin group now, they ensure that these firms will subcontract to them in the future. While subcontracting stabilizes contractors’ incomes above the subsistence mar-

3As noted in other chapters, auditors rarely inquire. Data gathered from the National Devel- opment Planning Commission and the Ministry for Water Resources, Works & Housing indicate that regions award less than 25% of projects to certiﬁed contractors. Careful auditors should have noticed such a large irregularity.

112 gin, I argue that it further discourages investment in the firm. During periods in which a construction firm’s outputs are in demand, the successful firm’s owner must maintain kinship obligations by subcontracting, which diminishes the profit she would receive as well as the amount she could use to invest. Breaking one’s kinship obligations will incur significant social sanctioning, and Hoff & Sen (2005) note that many kin groups erect exit barriers to prevent members from shirking their obligations. The cost of breaking one’s kinship obligations outweighs the benefit of investing in one’s firm. A person that is blacklisted by one’s kin group for not honoring his obligations, may be forced to relocate and integrate into an unfamiliar location, which inflicts significant costs. Political uncertainty and the kinship strategies used to mitigate such uncertainty discourage investment in Ghana’s construction firms. In the following section, I employ two dictator games to illustrate local contracting in Ghana.

5.3 Suboptimal Contract Allocation

Though politicians and contractors must abide by an impartial public–procurement process, respondents overwhelmingly report that contract allocation has become “political”. At the regional and district levels, party chairs hold the most power in determining how contracts are allocated. Party chairs select candidates and ensure their election with the support of foot soldiers. Party chairs maximize funds as well as the satisfaction and loyalty of their foot soldiers.4 Sitting politicians owe their

4As such, party chairs prioritize winning elections over strict proﬁt maximization. They must also consider maintaining their network of foot soldiers in addition to raising funds.

113 oﬃce to the party chair’s assistance, so, while politicians can allocate contracts to their own favored contractors, the party chair holds the ﬁnal word, as chairs must reward their loyal foot soldiers.

“The Minister and Regional Party Chair can take up to 30 or 40 contracts and share with any party supporters. The parties are ﬁnanced by individuals, and if the party comes to power, they get back their money and have opportunities at many things. They will even get more than 100x return on party ﬁnance.” Contractor, District A

“As for my relationship with contractors, when jobs come up here, I help them so they have something to eat.”Regional Party Chair, Northern Zone.

Foot soldiers are central to party operations. They serve party chairs and candidates, campaigning in rural areas, particularly those in which chairs and candidates do not have an ethnic advantage. Foot soldiers also observe polling stations, settle disputes and garner the support of traditional chiefs. For their services, foot soldiers expect a reward, with many demanding contracts. As mentioned above, it is easy for a Ghanaian citizen to circumvent formal requirements and claim to be a contractor. As a result, many Ghanaian “contractors” are unqualiﬁed to construct public works. Despite the economic demands of foot soldiers, chairs expressed gratitude and aﬃnity for their foot soldiers, placing heavy importance on maintaining good relations.

“We had the best relationship. One thing is that you need to let the followers feel important. You must respect them, acknowledge them and identify with them. If you sympathize with them, they will give you their

114 attention. When moving, you must move with them. It is not always giving them what they want—it goes beyond their material wants. Let them feel spiritually that you’ll be with them. If they realize that what- ever happens, you’ll be there, they’re forever for you.” Former Regional Chairman, New Patriotic Party

The regional party chair occupies a critical conﬂuence in Ghanaian politics. He manages a relationship that spans the voters, foot soldiers, and political candidates, and that relationship is greased by the ﬂow and distribution of funds. The chair is not all–powerful, though. He must maintain a supporting, reciprocal relationship with foot soldiers. Many foot soldiers are members of a chair’s kin group, and he cannot ignore their concerns.

“Because my party is in power, I help my people. When I win the election, I’ll help people with funerals, weddings, etc.” Regional Chairman, National Democratic Congress

District governments in Ghana award contracts to address local development needs with little direct guidance from higher levels of government. However, many of the largest contracts are distributed to the regional levels from Accra. How do regional chairs influence the distribution of these larger contracts? In short, regional chairs strongly influence presidential elections, and this influence again stems from their relationship with the foot soldiers, many of whom are voting delegates at presidential nominating conventions. Regarding presidential primaries and conventions,

“The regional chair plays a big role. As a regional boss, it is expected that you have control over your constituents, your delegates. Once a

115 regional chair, you have control. Delegates come from the constituency, and they respect your views. Candidates invite you and talk to you. You have control, managerial control.” Former Regional Chairman, National Democratic Congress “By Constitution, we need to be fair oﬃcers. We are humans, though. Four stood in front, and deﬁnitely you like one. You give every candidate a chance. If you have a choice, you work behind the scenes for that choice. But, still, be a father to all. We did our list on the quiet.” Former Regional Chairman, National Democratic Congress

Each party has ten regional chairs, who oversee legions of supporters. During presidential primaries, regional chairs can ensure that favored candidates win the nomination with the support of loyalists in their region. As a result, a President of Ghana owes regional chairs for their support, and that loyalty is repaid in various ways. Regional chairs are powerful in recommending DCE candidates to the President, and they thoroughly vet potential contenders. Chairs also recommend Cabinet Ministers and Regional Ministers, with the latter often being subservient to a regional party chair.

“As a typical example, in 2009 the Regional Minister awarded three new senior high schools to [redacted]. In each SHS, Chair has two projects. Regional Minister started a library project; money was too huge, and library was not pre-ﬁnanced. The Regional Minister wanted competent contractors, but the Regional Chair wanted the contract—he even went to Accra. The Regional Chair engaged sole bidder, that is, selling the contracts to someone who gets all the bid documents. The Chair took 10 percent, about 220,000 GHC.” Constituency Secretary, National Demo- cratic Congress

Should a President fail to adhere to his chairs’ recommendations, the chairs possess a credible threat of destabilizing regional capitals and supporting other candi-

116 Foot Soldier’s Signals

Weak Strong

Party Chair Party Chair

Build Allocate Build Allocate

10 10 − x 12; −α 12 − x; +α 0 x 0 x

Figure 5.1: Party Chair’s Dictator Game. dates in the next Presidential primaries.5 Chairs also exert inﬂuence over MPs and Ministers, which can stymie a President’s agenda.

“The Chair mobilized youth and they vandalized the Regional Coordi- nating Council. They destroyed the tender box. The Regional Chair has all the projects in this region, but only one project is executed by himself. They give these out on percentage basis. They become a party chairman to enrich themselves.” Constituency Secretary, National Demo- cratic Congress

5In a famous example from 2014, the DCE for Ahafo Ano South District was removed by President John Mahama for unprofessional conduct. However, the NDC coerced President Mahama to reinstate that DCE.

117 I illustrate contract allocation between party chairs, foot soldiers and subcontractors through two dictator games. In a dictator game, one player, the dictator, holds an endowment of money. She chooses how much of that endowment to give to a second player, the recipient. The recipient has no active role: he simply receives what the dictator offers to him (Kahneman et al 1986; List 2007). According to clas- sical economic theory, the dictator should be a profit maximizer and keep the entire endowment for herself, allocating nothing to the recipient, who is no worse off than his current state.6 The dictator is in no danger of losing her endowment, as would be the case in an ultimatum game. Party chairs are not in danger of losing their endowments, and they have numerous foot soldier–recipients from which to choose. Should one foot soldier reject a contract from the chair, the chair has the option to allocate that contract to another loyal foot soldier—with the original foot soldier likely being blacklisted. Figure 5.1 demonstrates the first dictator game, in which the chair chooses an allocation to give to a foot soldier. The chair’s payoffs are indicated in blue, while the foot soldier’s payoffs are shown in red. This dictator game includes a tipping mechanism (Ruffle 1998), but it also resembles a trust game (List 2007). In this game, the foot soldier exerts effort in prior time periods to raise funds and electoral support for the chair to increase the party’s probability of electoral victory (Bob– Milliar 2012). Often, the foot soldier will rely on her kinship networks to solicit votes and funds, particularly if she comes from an area or ethnic group that is not typically

6Repeated experiments demonstrate that dictators in these games do not act as proﬁt maximiz- ers, allocating 20% of the endowment on average (Camerer 2003). Explanations for these deviations from expected behavior include reciprocity (Rabin 1993), inequity aversion (Fehr & Schmidt 1999; Bolton & Ockenfels 2000) and altruism (Levine 1998).

118 aligned with the party. The chair observes the foot soldier’s efforts, and determines whether the foot soldier is strong and loyal enough to be awarded a contract. A loyal foot soldier will increase (the tip) the chair’s endowment—in this case, from 10 to 12—such as the case where the activist has helped the chair win a new parliamentary seat. After observing a foot soldier’s prior actions, the party chair selects from two actions: build a contract himself or allocate it to the foot soldier. Party chairs often manage their own construction companies, so keeping contracts for himself maximizes income. Why does a chair, however, allocate some contracts to foot soldiers? In the case of a weak foot soldier, the chair will allocate the contract to himself, as receiving a payoff of 10 is preferred to 10−x.7 In the case of a strong foot soldier, there are two components of the chair’s payoff: profit and a “kinship” term, α. In this dictator game with tipping, a loyal foot soldier has increased the chair’s endowment; as a result, she expects that the chair will award her a contract. If the chair does not award a contract to the loyal foot soldier, he incurs a penalty of −α. If he does award a contract, he retains a portion, 12 − x, for his own profit, leaving the rest for the foot soldier, while also gaining +α for maintaining good kinship relations. The chair allocates contracts to his strong foot soldiers because he needs their future electoral support. Figure 5.2 presents the second dictator game, where the foot soldier, who has

7There is variation in how payments are divided between chairs and foot soldiers. In this case, the chair simply retains a portion of the contract sum for himself, and gives the rest to the foot soldier. Depending on the timing of contract payments, chairs can force foot soldiers to pay a sum up front from their own savings or to kick back percentages of the contract award as it is paid out by the government. For simplicity, I focus on the ﬁrst example.

119 Subcontractor’s Signals

Weak Strong

Foot Soldier Foot Soldier

Build Allocate Build Allocate

9 9 − y 9; −β 9 − y; +β 0 y 0 y

Figure 5.2: Foot Soldier’s Dictator Game. received a contract from the party chair, is now the dictator. Should a foot soldier receive a contract, she faces two choices: build the project herself or allocate it to a subcontractor. Similar to the ﬁrst stage, a foot soldier observes whether a subcontractor has historically been a weak or strong member of her kin group. Again, the foot soldier–dictator is in no danger of losing her endowment. The foot soldier selects from two actions: build the contract herself or allocate it to a subcontractor. In this game, I assume that the chair has withheld 25% of the original contract sum, x = 3, leaving the foot soldier with 9. When faced with a subcontractor that is a weak member of one’s kin group, the foot soldier should build the project herself as a payoﬀ of 9 is preferred to 9 − y. When interacting

120 with a subcontractor who is a strong member of her kin group, the foot soldier will have two components to her payoff. Refusing to subcontract to a strong member of her kin group will incur a kinship penalty of −β. However, should a foot soldier subcontract, she retains a portion 9 − y for her own profit and gains +β as a kinship bonus. A foot soldier will retain enough for her own survival. She must allocate enough to the subcontractor so that the offer does not offend the subcontractor and so that the subcontractor can construct the project.8 With too low of an offer, the subcontractor may reject the contract, imposing social penalties on the foot soldier. Because the foot soldier can only extract enough for her survival and must make a respectable offer to the subcontractor, she has little funds with which to invest in her own firm.9 Foot soldiers subcontract to members of their kin group as insurance to stabilize their long–term incomes (Scott 1976). Foot soldiers know that in future time periods their party may not be in power or their party chair may have lost influence. As a result, they will rely on members of their kin group to survive. Subcontracting to a member of one’s kin group carries the reciprocal expectation that that member will subcontract to you in the future.

“Subcontracting is not usually partisan. If you come to mind, and you can do it, then you are chosen. Sometimes party matters, but usually not. We are brothers. If an NPP or NDC man does us a favor, we will return it. It happens.” Contractor, District A

8Because of the reduced contract sum, however, the subcontractor may substitute lower–quality materials. 9As noted above, the foot soldier can also use the funds she retains to start other businesses, further spreading her risk, rather than investing in her construction ﬁrm.

121 “We are like one family, all one tribe. If I have a job and don’t have equipment, you can help—cement, roller, etc. When my cement comes, I release it back to you. It is cordial. Sometimes we’ll subcontract, especially with electricals. NDC guys help out NPP now for help in the future.” Contractor, District B

Over time, the distinction between foot soldiers and subcontractors can ﬂuctuate, depending on whether individuals believe that they can gain the favor of a particular party chair. Some contractors become NDC foot soldiers during their time in power, change ﬁrm names, and support the NPP when that party is in power. Other contractors never become foot soldiers because they disdain politics and believe that being tagged as partisan will harm their reputations. These contractors rarely receive contracts on their own from chairs, so they must rely on the subcontracts from foot soldiers. For a contractor that does not support a party, there are other options for economic survival. Many contractors sell or rent construction materials, such as cement, iron rods, mixers, dump trucks, etc. This is an attractive option since, even if a contract is awarded to a foot soldier, that person still needs materials or equipment. To further protect against partisan perceptions, many contractors placed other family members as heads of these side companies.

“If the projects are not coming in, you sit down and do nothing. That is why I have small businesses! That’s so I can survive whether rain or shine.” Contractor, District B

In these dictator games, chairs and foot soldiers either build a project or they allocate it to the next player. To decide, chairs and foot soldiers consider their kinship

122 networks: failing to reward a loyal member of one’s kin group could generate social penalties. Chairs reward strong foot soldiers to ensure electoral success for their political parties. Before allocating, chairs observe the actions of their foot soldiers to determine the strongest; as a result, foot soldiers must compete for the chair’s favor. Unlike chairs, foot soldiers and contractors live closer to the subsistence margin. When a foot soldier subcontracts to a member of her kin group, she is stabilizing her future income streams. The foot soldier knows that, by subcontracting to a loyal member of her kin group, that member is bound by reciprocity to assist the foot soldier in the future political cycles.

5.4 Discussion

5.4.1 Construction Quality

Contractors, whether foot soldiers or not, have little guarantee of winning contracts as procurement has become politicized. Foot soldiers must compete for a party chair’s favor, and they are not certain to win it. Should a foot soldier receive a contract from a chair, the chair retains a portion of the contract sum, leaving less money for the actual building of the project. The foot soldier can choose to subcontract to insure herself against future income ﬂuctuations, but subcontracting further reduces the amount of money used to construct a project. As shown in the games above, the original contract value was reduced from 12 to 9 to a value, y < 9. The ultimate builder of the project would then substitute lower cost, poorer quality materials to complete the project.

123 In Ghana, there is little reward for a contractor who builds quality work. Such demonstrations of quality do not necessarily attract more business (in this case, from party chairs), as they would in other markets. Rather, chairs and politicians extract money from contractors to finance vote–buying and other political activities, activities which suppress accountability measures that voters might otherwise exercise (Kitschelt 2000, Finan & Schechter 2012, Leight et al 2015). Without voters to protest shoddy construction, contractors who devote funds and efforts to quality construction only harm themselves. Under conditions of demand uncertainty, firms under–invest in capital equipment (Pindyck 1988). Ideally, when firms are more certain of demand, they will invest; however, in a poor country, those successful firm owners are beholden to kinship obligations, which they can only break at considerable social cost. For many kinship–based societies, successful members report financial pressures generated by less successful kin members (Achebe 1960, Hoff & Sen 2005). In successful times, firm owners that live near the subsistence margin will be bound by kinship obligations, which prevents them from investing to improve their firm. As equipment costs in Ghana exceed most contractor’s savings, many foot soldiers and contractors own only one or two pieces of equipment. Should a contractor choose to finance additional capital investments, he might not receive contract income necessary to finance regular payments. When a foot soldier or other contractor receives a contract, she will rely on subcontractors with complementary pieces of equipment to complete the project. Equipment that is shared and spread across multiple contractors, however, can delay construction and result in faster capital deterioration.

124 Political and demand uncertainty raises challenges for contractors who prefer to construct quality works and not engage in political favoritism. The presence and persistence of ﬁrms that misrepresent the quality of their goods in the market drives out legitimate ﬁrms (Akerlof 1970). Many quality contractors in Ghana have already exited the construction market, taking their expertise with them. Opportunistic foot soldiers with little experience take their place. As demand from foot soldiers for projects increases, chairs can raise the auction price (that is, the amount they keep for themselves), resulting in foot soldiers accepting smaller contract sums. In turn, this leaves foot soldiers with a smaller contract sum to allocate to subcontractors, which again forces quality contractors, who cannot accept such a low price, to exit the market.

5.4.2 Firm Mergers

While firms could pool their equipment and construct more complex (and lucrative) works, few Ghanaian firms merge. Most construction firms in Ghana are small, family–run businesses. These firms, on their own, can only build small projects, such as elementary schools, market stalls and public latrines—conditional on having political connections. However, despite kinship connections, there is little interest amongst firm owners to merge their firms.

“It’s diﬃcult because of our legal system. People don’t understand business law. Company is seen as a family thing. Construction companies don’t ﬂoat shares or have shareholders. Here it’s my business, when I die, it goes to my kids. We haven’t gotten to that stage.” Contractor, District J

125 Inheritance traditions in Ghana discourage ﬁrms from merging. The Akans, Ghana’s predominant ethnic group, practice matrilineal inheritance. For a man, property is not passed to his own son upon his death, but rather his sister’s son (La Ferrara 2006). While alive, there are few limits to asset transfers from parents to their children. Businesses can be shared with one’s children, and this arrangement allows parents, while alive, to transfer assets directly to their children in exchange for future elder care (La Ferrara 2006). Keeping a business small, but above the subsistence margin, ensures that the family maintains a small but stable income stream that is theirs alone. It is simply too risky for individual contractors to share their small business outside of the immediate family, because doing so may jeopardize income stability and access to future elder care.

5.4.3 Party Chairs

Given their position in the dictator games and their ability to solicit contracts from Accra, regional party chairs seem insurmountable. However, many chairs reported that their positions are tenuous and they face challengers from within the party. Distributing contracts to foot soldiers is beneﬁcial and risky for party chairs. If there are not enough contracts to hand out, chairs risk estranging foot soldiers, who could then plot against the chair. As a result, chairs are under pressure to ensure that development projects are brought to their region from Accra and that districts continue to concoct project opportunities.10 As mentioned above, party chairs are inﬂuential in choosing a presidential can-

10In one district in my sample, a senior party oﬃcial lamented that projects were built shoddily to ensure that the chair could re–award contracts in a few years’ time for project rehabilitation.

126 didate at the primaries, but if their candidate loses in the general election, party chairs will be in a difficult position. In Ghana, winning the presidency guarantees that the governing party will select all 216 DCEs across the country. In reality, party chairs choose DCEs, who must then maintain their ‘loyalty’ to the chair or risk being replaced. However, without DCEs, regional chairs lose a guaranteed source of contract income. Chairs can rely on their remaining MPs for contract income, which is easier in regions where the party is already powerful, but losing MP seats could be disastrous for a chair.11 Successful chairs may draw income from other businesses or receive funds from party sympathizers, but the balance of power is shifted if the chair’s party is not in government. Foot soldiers, some of whom have savings from subcontracting, can select a candidate to challenge the chair in internal elections. These foot soldiers and contractors could also use their funds to support another party, if they believe that party is more likely to win the next election. For a party chair, it is critical to amass contracts and wealth while in government to maintain one’s position and fight off internal challengers.

5.5 Conclusion

Many developing countries struggle to provide quality public goods. In Ghana, donors and local governments have pinpointed numerous development priorities: rural roads, schools, clean water, health clinics and so forth. In the ideal case, local governments accept bids from contractors willing to construct these projects and these contractors build at a high level of quality. In reality, this rarely happens in

11Several regional chairs in my sample cited losing MP seats as a reason for their demise.

127 Ghana, and, with little effective oversight, projects are constructed poorly. In this chapter, I identify political uncertainty as a determinant of poor construction. To win contracts, Ghanaian contractors must court political–party chairs. These chairs, even more than politicians, control the flow and distribution of contracts at the regional and district levels. Ambitious contractors become party “foot soldiers”, and canvas for votes and funds for the party. If a foot soldier impresses a party chair with her loyalty and ability to attract votes, the chair will give that foot soldier a contract after extracting a percentage for himself. Foot soldiers and contractors know that receiving a contract from a party chair is not guaranteed, given that the chair has a finite number of contracts with many foot soldiers jockeying for favors. Due to this uncertainty, there is little incentive to invest in capital equipment that might improve a firm’s capacity (Pindyck 1988). Investing in such equipment runs the risk that demand for a contractor will drop, leaving them unable to finance the investment or pay back a loan. If she receives a contract, the foot soldier has two choices. She may build the project herself, and retain as much of the contract sum as possible for profit and future investment. Uncertainty, however, appears again. She may not receive a contract in the next time period, and, because she is close to the subsistence margin, she risks starvation. The foot soldier’s other choice is to subcontract to a contractor in her kinship network, in exchange for insurance that her fellow contractor will help her in the future. Each iteration of subcontracting, however, further reduces the contract sum that can be used to build a project. Kinship reciprocity allows a contractor to survive when political actors do not

128 favor her. However, such reciprocity restrains her in periods of high demand, as she must assist other contractors instead of investing to improve her own ﬁrm. Ulti- mately, construction ﬁrms in Ghana are unable to upgrade their capital equipment and they cannot construct larger or more complex works. Over time, quality contractors exit the industry, and are replaced by opportunistic foot soldiers who lack the expertise to construct quality works. Unless steps are taken to reduce contractors’ uncertainty and improve their capacity, Ghana’s infrastructure is unlikely to improve.

129 Chapter 6

Conclusion

This dissertation enhances our understanding of the political economy of development by grounding it in political finance. The sourcing and distribution of money impacts how politicians campaign and shapes their priorities in office, ultimately affecting policy implementation. This dissertation examined the following two questions:

• Why is the quality of public–goods provision in Ghana so poor?

• How do politicians and parties ﬁnance expensive political campaigns?

On the second question, I find that political campaigns and activities are financed through the collusion of an “iron square” of players: politicians, bureaucrats, construction contractors and political–party chairs. I briefly detail their actions here. Politicians first seek to win elections and stay in power. To win votes, politicians must satisfy myriad personal requests from their constituents, such as demands to pay hospital bills and school fees.

130 Turning to bureaucrats, their utmost concern, given relatively low salaries, is to save for retirement. For a bureaucrat, it is socially shameful if she lacks funds and fails to build a house by retirement age. Similar to politicians, bureaucrats receive numerous requests for personal assistance from family and friends. Providing public goods in Ghana necessitates the awarding of project contracts to construction firms. In line with other private businesses, these firms are motivated by profit, and their core interest is to win contracts. Ghanaian firms are often under– resourced and face significant uncertainty in the market. Political–party chairs seek to ensure that their preferred political candidates win office. They also manage relationships between politicians, party activists (“foot soldiers”) and voters. Citizens regularly turn to party chairs when they need assistance. For a party chair to stay in power, he relies on the efforts of foot soldiers to turn out votes for the party. These four players are connected by the requirement that they must raise money to fulfill these obligations. Studying actions at the district level, I find that these four players finance their activities by manipulating the public–procurement process. Contractors promise kickbacks to politicians, bureaucrats and party chairs in exchange for assurances that they will win contracts, which those three players can allocate. Politicians use income from these kickbacks to meet the private requests of voters and finance their campaigns for office. They also pay party chairs to ensure that they have the support of the party. Bureaucrats divert money from kickbacks to their savings, which they utilize to build a house for retirement. Party chairs take their income from kickbacks to reward party foot soldiers and ensure that their party

131 wins elections. I demonstrate that such behavior violates the spirit—and often, the letter—of Ghana’s Public Procurement Act. In interviews, respondents note that bureaucrats’ signatures inhibit auditors attempting to detect and prosecute violations. Bureau- crats can always maintain that procurement procedures were followed as well as possible, and that they are not liable for the resulting failures in delivery. While many bureaucrats are aware of their complicity in this deception, they concede significant political pressures to obscure illicit activities. Bureaucrats cannot report the true nature of these acts to auditors for fear of being transferred and losing the income sources necessary to finance their retirements. To detect procurement violations, I gathered data on project contracts awarded in Ghana’s districts in 2012 as well as data on contractor registrations from the central government. As mandated by the procurement law, all contracts must be awarded to registered contractors to ensure that projects are built by qualified construction firms. I demonstrate that, in 2012, less than 25% of contracts were awarded to registered contractors. Political financing that extracts funds from public procurement impedes the quality of public–goods provision in three ways. First, politicians and bureaucrats in Ghana are charged with monitoring and evaluating projects as they are being constructed. Because politicians and bureaucrats benefit from the kickbacks that contractors provide, they have little incentive to rigorously inspect a favored contractor that is performing shoddy work. Contractors often maintain close relationships with these politicians and bureaucrats, and violations of that relationship could generate

132 reputation costs. Ghana’s construction industry is governed by political relationships between contractors and political actors. Such relationships are inherently uncertain, as contractors cannot predict when their patrons will lose power. Such uncertainty discourages contractors from investing to improve their firms. To win contracts, many contractors demonstrate their loyalty to political actors by serving the party and promising kickbacks. Paying kickbacks reduces the money with which a contractor can build a project, forcing many to resort to substandard materials and methods. Qualified contractors are exiting the industry because of the kickbacks system, reducing the proportion of local contractors that are well qualified. To cushion against income fluctuations, many contractors subcontract projects to fellow contractors as insurance. Should those contractors receive government projects in the future, they are bound by reciprocity obligations to assist the initial contractor. However, these subcontracting arrangements again reduce the funds with which the eventual contractor can build the project. In addition to monitoring failures and the exit of qualified contractors, a lack of voter accountability afflicts the provision of public goods in Ghana. Rural voters rely on local politicians and bureaucrats in times of need, turning to them to pay hospital bills and school fees for children. Many voters are aware that politicians and bureaucrats extract funds from contracts to pay for these private goods, but voters choose not to eject complicit politicians and bureaucrats for fear of jeopardizing these income streams. Political finance drawn from public procurement diminishes projects but also provides the means to suppress voters’ accountability mechanisms.

133 While this dissertation offers three explanations for the poor quality of public goods in Ghana, future research must directly measure quality. Such quality measures include ensuring that the proper materials are used, concrete is mixed correctly, all project subcomponents (e.g., electricity, plumbing) are built to specification and so forth. Projects should also continue to be inspected over time. While some districts report vague measures of project completion and quality, such data gathering must be executed objectively and across all districts. Future research must also focus on obtaining data on contracts and procurement from all districts. Given the unlawful actions described above, gathering such data from this study’s sample districts was a significant challenge. Procurement data is not centralized nor is it maintained in a systematic manner across districts. Nonetheless, future studies, whether in Ghana or other developing countries, will benefit from access to such data. Donors, in particular, may be instrumental in encouraging more transparency in procurement data. Despite data and resource limitations, I affirm that policy makers can take steps to mitigate the problems associated with procurement–based political financing. I recommend that policy makers reform public–sector retirement schemes. Retirement fears compelled many bureaucrats to engage in unlawful behaviors. Policy makers can allocate funds to guarantee and build houses for retiring public–sector workers at a subsidized price, relieving those workers of some of their financial worry. Such houses can be reused as successive generations of public–sector employees retire. The exiting of qualified Ghanaian contractors from the market is another phenomenon that policy makers can mitigate. To better compete with foreign firms,

134 some small–scale contractors are forming cooperatives to pool their resources and share risk. A cooperative of contractors can take on larger, more profitable contracts. As these cooperatives profit, individual contractors can gain the expertise and capital to bid on and build smaller projects at a higher level of quality. Policy makers should commit to reserving some contracts for these cooperatives to encourage qualified contractors to stay in the industry and combine their resources. In a developing country, political finance impacts the quality of development. The allocation of money shapes how politicians, bureaucrats and other actors behave, and also allows these actors to silence the accountability mechanisms that should restrain their behavior. For many Ghanaians, these insights will come as no surprise. While political actors, including voters, behave according to their individual interests, the collective result is suboptimal. Without significant policy changes, political and economic development in Ghana risks backsliding.

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144 Appendix A

Ten districts were chosen for the main study. Each region had one district in the main study. Sampling took several criteria into consideration. Every district has a DCE selected by the ruling party, but MPs can come from the NDC or NPP. I ensured that there was balance between districts where both major politicians were from the NDC and districts where there was a divide. Secondly, DCEs can serve multiple terms, so I selected districts in which the DCE had been reappointed and those where the DCE was new. It was also important to take a DCE’s ambition into account, so I considered whether the sitting DCE (new or incumbent) had run in either the primary or general election for Parliament in the prior election (2012). Finally, I ensured that at least one of the 10 districts was newly created, and that three were more urban, which is proportional to the rural—urban composition of the 216 districts in total. Descriptions are kept general to protect the identities of respondents.

District A, Upper East Region Criteria: DCE did not run for Parliament in 2012. DCE is new appointee. DCE and MP of diﬀerent parties. This is a district of the Upper East Region. This district is known for its rolling hills as well as many traditional shrines. The traditional leader of this district is well respected throughout the region. As this district lies in the North, it tends to be hot year-round, with two primary seasons, wet and dry. The current dry season extends from October through April, and daytime temperatures are expected to exceed 110F. Despite such diﬃcult conditions, this district’s primary economic activity is agriculture, which employs 75 per cent of the population. According to the Ministry of Food & Agriculture, the main vegetation of this district is Guinea savannah woodland, with the common economic trees being baobab, Shea nuts, dawadawa and acacia.

145 District B, Upper West Region Criteria: DCE did run for Parliament in 2012. DCE is a new appointee. DCE and MP are of the same party (NDC). This is a district of the Upper West Region. This district is generally ﬂat and low-lying. Similar to District A, this district is hot and dry, and experiences a pronounced harmattan season. Agriculture is also the main source of employment in this district, with baobab, shea nuts, dawadawa and acacia again being the main tree crops. Ad- ditionally, the guinea savannah grasses are suitable for livestock, particularly cattle, sheep, goats, pigs and poultry.

District C, Northern Region Criteria: DCE did not run for Parliament in 2012. DCE is a new appointee. DCE and MPs are of the same party (NDC). This is a municipal district of the Northern Region of Ghana. This district is a mix of Guinea savannah woodland and a part of the Volta River basin. This district is generally ﬂat, with a few hills located to the south. Similar to the previous districts, this one experiences a hot and dry climate, with harmattan winds blowing dust from the Sahara. Agriculture is the main source employment, with major crops being rice, groundnuts, yams, cassava, maize, cowpea and sorghum. Shea nuts and dawadawa are also important crops.

District D, Brong Ahafo Region Criteria: DCE did not run for Parliament in 2012. DCE is serving second term. DCE and MP are of diﬀerent parties. This is a district on the western border of Brong Ahafo Region, adjacent to Cote d’Ivoire. Consequently, cocoa smuggling is a known problem in this district. This district is rather undulating, with elevations varying from 150 to 600 meters above sea level. According to the Ministry of Food & Agriculture, this district lies within the wet semi-equatorial zone. The main vegetation consists of woodland, and, indeed, timber such as odum, mahogany and teak are harvested from here. Food and cash crop production remains the main economic activity of this district, with such crops as cashews, yam, maize, cassava, groundnut and tomatoes being prevalent.

District E, Ashanti Region Criteria: DCE ran for Parliament in 2012. DCE is serving a second term. DCE and

146 MP are of the same party (NDC). District E, is located in the Ashanti Region, close to the border of the Brong Ahafo Region. This district contains many rolling hills and numerous rivers for drainage. According to the Ministry of Food & Agriculture, 83 per cent of the population is engaged in farming. The district’s climate favors the production of cocoa, citrus, palm oil, maize, cassava, rice, plantain, tomato and eggplant. The major ethnic group in this region is the Akan, who follow diﬀerent land-ownership and inheritance structures relative to the northern districts.

District F, Eastern Region Criteria: DCE ran for Parliament in 2012. DCE is serving second term. DCE and MP are of diﬀerent parties. This district is located in the Eastern Region, close to the border of Ashanti Region. Geographically, this district features a gentle, undulating topography, and also experiences a bimodal set of rainy seasons. This district is in the wet, forested region of Ghana, though it does contain savannah. Much of the population of this district is engaged in agriculture. According to the Ministry of Food & Agriculture, major food and tree crops include cocoa, maize, cassava, yams and groundnuts. The Ministry also notes that this district features numerous farmers’ cooperatives.

District G, Volta Region Criteria: This is the one newly created district in my sample. It is located in the Volta Region, which is the ethnic and political stronghold of the NDC, current governing party. District G is a new district of the Volta Region, created in 2012. This area, like much of the Volta Region, is populated by the Ewe ethnic group, though the Guan form a substantial minority. Nonetheless, the NDC is the most dominant party in this area.

District H, Greater Accra Region Criteria: DCE did not run for Parliament in 2012. DCE is serving a second term. DCE and MP are of the same party. This district is in the Greater Accra Region. Geographically, this district features coastal savannah and is generally flat, though there are isolated hills. A significant portion of this district is active in livestock production, particularly fishing. From a climate perspective, this district exhibits a bimodal set of rainy sea-

147 sons, and is suitable for growing maize, cassava, rice, tomatoes, watermelon, banana and export vegetables. There are also several ostrich and ﬁsh farms in this district. The Ministry of Food & Agriculture notes that, despite this district’s proximity to Accra, it is still fairly rural with poor infrastructure.

District J, Central Region Criteria: Current DCE ran for Parliament in 2012. DCE is newly appointed. DCE and MP are of diﬀerent parties. District J, in the Central Region, is the second municipality in my sample. Forestry is important in this district, and much of the district sits on a plateau, though other parts are characterized by valleys and steep hills. Like most southern districts, this one experiences a bimodal set of rainy seasons. Agriculture is an important part of this district’s economy. Beyond forestry, approximately 50 per cent of the land in this district is used for cocoa production. Other major crops include maize, plantain, cassava and cocoyam. In terms of livestock, fowl, cattle and goats predominate.

District K, Western Region Criteria: DCE ran for parliament in 2012. DCE is serving second term. DCE and MPs of diﬀerent parties. District K, in the Western Region, is the third municipality of my sample. The climate of this district is equatorial, and like most southern districts experiences a bimodal set of rainy seasons. Agriculture employs about 25 per cent of the people in the municipality, with the majority in services and small-scale businesses. Fishing is an important industry. Notable economic activities include gari production, groundnut processing, oil (culinary) processing, etc.

148 Appendix B

149 Survey Form: A District: Date: Respondent ID: Public-Servant Interview Survey Guide

Investigator: Joseph Luna

Enumerator Instructions: • Deliver information sheet to respondent. Ensure respondent understands it. • Show reference letters. • Assure respondent that answers and identity will be kept confidential. • Ensure interview location is as private as possible.

Read: “My name is Joseph Luna, and I am a PhD candidate in political science at Harvard University. I am conducting a research on Ghana’s public servants, particularly their job motivations, how they allocate contracts and how they relate with politicians and development partners.

This information sheet describes my study and what will be required of you. I expect that this interview will take no more than 45 minutes of your time. Your identity will be kept strictly confidential, and you will be one of many similar respondents, drawn from the various public services across all 10 regions of Ghana. You may refuse to answer any questions, without penalty. You will receive a small, non- monetary reward for your time, even if you refuse questions. Please, do you understand these terms?”

Section I: Background

“I will now ask you questions about your background. These questions will be mostly multiple-choice, and some of them will appear on cards to assist you in making your choice. Remember that you may skip any question, and that you may opt out of this study at any point with no penalty.”

1. In which town and region were you born?

a. Town:

b. Region:

c. Country (if not Ghana):

2. In which year were you born? ______, or Not Sure.

3. Are you currently married? Yes No

4. (if applicable) From which region does your spouse hail?

5. How many children under the age of 18 depend on you for food and medical expenses, including infants? ______

6. CARD. Which of these best describes your highest educational attainment? Please do not include certificates or other distinctions. I will ask about those in the following question.

a. Some senior secondary school or less.

b. Completed senior secondary.

c. Some polytechnic.

d.Completed polytechnic.

1 of 9 150 Survey Form: A District: Date: Respondent ID:

e. Some first-degree level (incl. LLB). Field? ______Where? ______

f. Completed first degree (incl. LLB). Field? ______Where? ______

g.Some master’s level (incl. JD, LLM, MBA). Field? ______Where? ______

h.Completed master (incl. JD, LLM, MBA). Field? ______Where? ______

i. Some doctoral level. Field? ______Where? ______

j. Completed doctoral. Field? ______Where? ______

7. SAME CARD. Do you have any of the following additional educational qualifications? Please indicate only the most recent of these qualifications.

a. Certificate. Field? ______From where/whom? ______

b.Special Course/Training. Field? ______From where/whom? ______

c. Other? ______

8. CARD. Besides your work as a public servant, do you currently have other sources of income? Yes No

9. SAME CARD. (If applicable) What are these sources (e.g., farm, small business)?

10. SAME CARD. (If applicable) About how much do you earn per year, after taxes, from these sources?

11. Which ethnicity are you? ______

12. Which language do you primarily speak at home? ______(If ‘English’, follow- up once for African language.)\

13. Are you a member of a religion? ______If yes, which one? ______

14. I will now ask a few questions about your membership in organizations. Do you belong to a union? ______If yes, which one(s)?

15. Do you belong to any professional associations (e.g., Institute for Chartered Accountants, Ghana Bar Association)? ______If yes, which one(s)?

16. I will now ask you about how you receive your news. Do you listen to the radio for news? ______What is your favorite station?

About how many hours per typical week? ______About how many times in a year do you “call in” to contribute to radio discussion? ______

2 of 9 151 Survey Form: A District: Date: Respondent ID: 17. Do you read the papers for news? ______What is your favorite paper?

About how many hours per week? ______

18. Do you watch the television for news? ______What is your favorite station?

About how many hours per week? ______

Section II: Projects & Contracts

“I will now read to you questions concerning the decisions you make when handling projects and contracts for the District Assembly. These questions may be written on cards for you to see to assist in responding.”

19. Many public servants are known to plan and lead their own projects. Have you ever designed and led your own project? ______Would you please describe it to me?

20. Would you please explain to me, how are contractors made aware of tenders and projects in this particular district?

21. Do you ever sit on the district tender committee or tender evaluation panel? Yes No

22. (if yes) During committee meetings, do you make recommendations backing specific firms for given contracts? Yes No

23. (if no) Then who usually makes recommendations for firms on a given contract?

24. (if yes) How often, would you say, are your recommendations over-ruled? Very Often Somewhat Often Occasionally Never

25. (if more than never) Who typically over-rules, or has ‘final say’ over, your recommendations? 26. CARD. “Suppose that there is a local development project that this District Assembly wishes to complete. The overall cost of this project, the number of people it is expected to impact and its timeline to completion are about average for projects that this Assembly has seen within the past five years. Imagine that you are reviewing comparable, qualified tender bids from two similar contractors, and you must assist the tender committee of this Assembly to choose a contractor. Please review the following. There will be eight cards in total, and you will compare two contractors on each card. Each contractor will have six characteristics. These examples are all hypothetical and randomly generated, and I would like you to answer as honestly as you can.”

3 of 9 152 Survey Form: A District: Date: Respondent ID: Characteristics: Contractor A Contractor B

Rapport with Assembly Managers frequently visit Managers sometimes visit staff and contact Assembly and contact Assembly ofﬁcers. ofﬁcers. Cooperation in contract Managers are not Managers are somewhat management cooperative in contract cooperative in contract management. management. Relationship with political Frequently does public work Does public work no matter administration while the NPP is in power. which party is in power.

Subcontracting Managers frequently Managers never subcontract subcontract work to other work to other ﬁrms. ﬁrms. Donor relations Never works with external Occasionally works with donors. external donors.

Relationship with local Managers interact with the Managers interact with both politicians DCE, but not the MP. the DCE and MP.

To whom would you allocate the project? Please tick: __Contractor A __Contractor B

27. On a scale from 1 to 7, where 7 indicates that you would always allocate, how often would you allocate projects to Contractor A? Please tick one of the following.

Never Allocate Always Allocate

__1 __2 __3 __4 __5 __6 __7

28. On a scale from 1 to 7, where 7 indicates that you would always allocate, how often would you allocate projects to Contractor B? Please tick one of the following.

Never Allocate Always Allocate

__1 __2 __3 __4 __5 __6 __7

29. In one sentence, why do you prefer to allocate to your selected contractor above?

51. CARD. I will now list five criteria by which contractor bids might be selected. Please rank these criteria on a scale from 1 to 5, with 1 being the most important.

___ Contractor’s work history

___ Cost of proposal

___ Strict adherence to bid requirements

4 of 9 153 Survey Form: A District: Date: Respondent ID: ___ Proposed timeline

___ Assembly’s relationship with contractor

Section III: Work Environment

“This is the final section of the survey, and thank you for your participation so far. I will now ask you questions concerning your work environment here in the district. These questions may be written on cards for you to see to assist in responding.”

52. For how many years have you been in the public service? _____

53. Briefly, why did you join the public service?

54. As a junior officer, how were you trained into your job?

55. For how many years have you been posted in this district? ______

56. In which other districts have you been posted? ______

57. Briefly, why were you moved from these districts?

58. CARD. How often, would you say, are public servants transferred due to political reasons? Please tick one.

___Very Often ___Somewhat Often ___Not Often

59. CARD. Who would you say has the most oversight of your career as a public servant? Please tick one.

__District Assembly __Regional Level __Accra __Other______

60. About how much money do you earn in a typical year, base salary, after taxes? ______

61. About how much money do you earn in a typical year, in total per diem and benefit amounts, after taxes?

62. About how many times per year are you engaged in workshops sponsored by organizations besides your Ministry, Department, Agency or Assembly? For example, capacity-building workshops.

5 of 9 154 Survey Form: A District: Date: Respondent ID: 63. CARD. I now want to know which criteria are considered most important in evaluating a public servant in your position for promotion. I will list five criteria that many people consider to be important. Please rank these criteria, with 1 being most important, and 5, least important:

___ Seniority

___ Initiative

___ Creativity

___ Results for Government Projects

___ Results for Donor Projects

64. Briefly, which other criteria would be considered important for promotion?

65. What are the three main challenges you face in performing your job?

66. Some say that financing, particularly its timely arrival, is a major challenge in this work. How does your organization continue to carry out its duties when finances are delayed?

67. In one sentence, what is the mission of your office?

68. Does your organization have a clear set of targets derived from its mission? __Yes __No

69. How flexible would you say your organization is when it comes to responding to new practices, techniques or regulations? __Very Flexible __Somewhat Flexible __Not Flexible

70. CARD. With which of these statements would you most agree? Please tick one:

___ I am always allowed to take initiative.

___ I am sometimes allowed to take initiative.

___ I sometimes have to conform to expectations.

___ I always have to conform to expectations.

71. CARD. If you see wrong practices being carried out at your organization, how easy would it be for you to change those practices? __Very Easy __Somewhat Easy __Not Easy

72. CARD, If you attempted to change wrong practices at your organization, how would you be treated by your colleagues?

6 of 9 155 Survey Form: A District: Date: Respondent ID: __Well __Somewhat Well _Somewhat Badly __Badly

73. CARD. Could you please give me a brief example of when you or someone you know attempted to change a wrong practice at your organization?

74. In a typical day, which part of your job, would you say, takes the most time?

75. What would you say are your overall career goals? Please list at most three.

76. Different people may have different views on what constitutes a fulfilling, satisfying life. What three things would you say is necessary to leading a fulfilling, satisfying life?

77. CARD. Many people have opinions on the relationship between a district’s DCE and the district public servants. How would you describe the relationship between the DCE and the district public servants in your district? a. Very cordial b. Somewhat cordial c. Neither cordial nor hostile d. Somewhat hostile e. Very hostile

78. CARD. Many people have opinions on the relationship between a district’s MP and the district public servants. How would you describe the relationship between the MP and the district public servants in your district? a. Very cordial b. Somewhat cordial c. Neither cordial nor hostile d. Somewhat hostile e. Very hostile

79. CARD. Many people have opinions on the relationship between a district’s DCE and the MPs. How would you describe the relationship between the DCE and MP(s) in your district? a. Very cordial b. Somewhat cordial c. Neither cordial nor hostile d. Somewhat hostile e. Very hostile

80. SAME CARD. Briefly, would you explain to me why you think that is the case?

7 of 9 156 Survey Form: A District: Date: Respondent ID: 81. CARD. How often would you say has the DCE made a specific request to your office that would benefit his/her supporters or a specific part of the district? Please tick one: __Very often __Somewhat often __Not often

82. CARD. How often would you say has the MP made a specific request to your office that would benefit his/her supporters or a specific part of the district? Please tick one: __Very often __Somewhat often __Not often

83. CARD. How often would you say has a district-assembly member made a specific request to your office that would benefit his/her supporters or a specific part of the district? Please tick one: __Very often __Somewhat often __Not often

84. CARD. Could you please give me an example where a politician (DCE, MP or assembly member) made such a request?

85. SAME CARD. What would happen if you did not fulfill those requests?

86. CARD. Some people, regardless of party loyalty, would today agree that the NPP’s development ideas are objectively the right direction for Ghana. To what extent would you agree with those people? a. Strongly agree b. Agree c. Disagree d. Strongly disagree

87. CARD. Some people, regardless of party loyalty, would today agree that the NDC’s development ideas are objectively the right direction for Ghana. To what extent would you agree with those people? a. Strongly agree b. Agree c. Disagree d. Strongly disagree

88. CARD. I will now ask you about private contractors to which projects are contracted. I will present to you a list, and I would like you to tell me how many items in the list are true. You do not have to tell me which items are true.

List A: How many are true? ___

• Contractors here are competent.

• There are many contractors here able to do the work.

• Contractors here employ mostly Ghanaians.

89. List B: How many are true? ___

• Contractors here are efficient.

• Many contractors submit proposals.

• Contractors here employ few foreigners.

• Contractors are sometimes pre-determined before the tender committee meets.

8 of 9 157 Survey Form: A District: Date: Respondent ID: 90. In five years, where would you like to see yourself working?

91. Besides continuing in the public service, where else might public servants wish to work:

Donor sector? Very often Somewhat often Not often

Start NGO? Very often Somewhat often Not often

Higher education? Very often Somewhat often Not often

Establish a consultancy? Very often Somewhat often Not often

92. In your experience, where do people who leave the local-government service usually go?

93. How do local-government service staff prepare for their retirements?

9 of 9 158