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Darko InterviewWinne.com - Welcome
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Mr. Kwabena Darko,
Managing Director/Chairman of Darko Farms & Co. Ltd.
Could you please give us a brief overview of your career path?
Basically, I am a trained agriculturist. I did my training in Israel in the late 50's into the early 60's. I worked originally for about 6 months for the Agricultural Development Corporation in Ghana after I returned from Israel; and later, worked for my stepfather, who started a chicken farm in Kumasi with 5,000 birds, and within a space of two years, I built a farm of about 100,000 for egg laying. I resigned and started my own farm in early 1967 with $1,000, which at that time was the equivalent of ¢1,000. The company has since grown to be one of the largest chicken farms in the country, supplying about 35% of all the baby chicks that are produced in the country. Our turnover moved from $2,000 to $200,000,000 in the late 70's before the 1979 uprising, when Rawlings first took over as head-of-state, and then the economy started going down and our currency started to devalue. This greatly affected our company. The value of the dollar changed from $1 to ¢1.25, to $1 to ¢60 and has continued to depreciate with the exchange rate now standing at $1 to ¢7,000. This is automatically affecting the operations of every company that deals with the dollar. This is a major problem that this nation is facing because the private sector is crippled. For instance, one may have a valued asset but cannot get a good market price for it because nobody can afford it.
We, therefore, welcome the change of Government because, otherwise, our companies will all collapse, even though some business have managed to survive by borrowing from banks at a high interest rate basis. Most of us would like to stay in this country and support the economy. With the change of Government as a positive change, we trust that there will be discipline and also that more attention will be given to the private sector, especially from the financial institutions, to enable us reorganize ourselves. So, even though we (Darko Farms) are regarded as one of the big companies in the country, we must say that for the past 20 years the private sector has suffered a set back. We hope that by correcting the system of administration, the new administration will actually encourage the private sector to pick up again.
Are you involved in the regular business activities of Darko Farms?
Yes, currently I am the Managing Director and Chairman of the Board of Directors. I have also invested in various other businesses as well. I bought shares in some banking institutions; I have also bought shares in Ashanti Goldfields. Basically, all my investments are within the country. I have not made any investments outside this country.
Could you elaborate on the Danquah/Busia tradition and the Full Gospel Businessmen Fellowship, of which you were the President?
I do not belong to the Danquah/Busia Political tradition. I am, originally an Nkrumaist and ran as the Presidential candidate of the National Independence Party (NIP), which had strong antecedents in the C.P.P. family. With the Full Gospel Businessmen International our goal is more of spiritual than business but members form a network. Once one is a Christian businessman, he gets the opportunity of meeting with fellow Christian businessmen all over the world. It is easier to have a business network once people know and trust each other. The relationship between Christian businessmen is focussed on Christian virtues, which we all adhere to in private and business life. The morals, values and ethics of a Christian men are all based on his commitment to Christ. We share whatever blessing God has giving us in our business dealings. The aim of a Christian businessman is to reach out to fellow businessmen and tell them about the Lord Jesus Christ who makes a difference in our lives if we believe in him.
So it is a network.
Yes. For instance, we were invited to the United States by the Christian Coalition, which is a very large organization in the USA. The Full Gospel Businessmen International is part of the Christian Coalition. We get to meet people like Pat Robertson, who is the founder of the Christian Coalition and who is also a strong Republican. There are many organizations with such committed and prominent people with whom one can connect within the network.
To your opinion, what has been the impact of Ghana's smooth political transition on the business community?
The new government has its roots in a political tradition that believes in promoting the interest of private ownership as opposed to state ownership. They are more willing to give practical effect to the notion of the private sector as the engine of economic growth.
In the past the private sector was not allowed to operate freely. Basically, private companies were given instructions from the government. The business atmosphere was tense. In 1992 the former President made a statement saying that people should not buy chicken from Darko Farms, because if they did I would get money for politics. [ He also said that] they should not buy soap from a popular businessman called Appiah Minkah. There was yet another businessman who produced paper for packaging cement in Ghana, whose products were also not supposed to be patronized. He was not helping the private sector to grow by his utterances. I was, therefore, surprised that the former government later went outside this country to look for private investment, while internally they could not even develop their own private sector.
The new government has promised to develop the private sector and has gone to appointing a Minister for Private Sector Development. Also, in the President's sectional address, he said they are working towards simplifying the system. He also mentioned looking into the financial institutions' system operations, especially with the regard to financing private sector. His goal of course is to see to it that inflation is reduced to the barest minimum.
At the moment businessmen are paying up to 50% interest on loans. What kind of business would one do, to be able really to pay up such an interest? This is one of the reasons why macro-economics were thrown out of balance. There were too many imbalances within the system. Hence, this is the reason why the current government has asked the world to cancel some of its debts in order to give them a chance to do what is right for this nation.
China has expressed its intention to cancel Ghana's debts, due to the country's newly acquired HIPC status and the evolution of other macro-economic indicators. Do you expect some other Nation to take a similar stand?
I believe that with this government we will have some support from various areas. This government wants transparency. They don't want to peddle falsehood like trying to subsidize electricity, water and petroleum products, when in fact there is no money in the government coffers. The previous government did not discipline itself. They wanted to gain cheap popularity, which was wrong and hasn't helped us as a nation.
What would you like the government to achieve during its office term?
I think this government has started off well. The President has asked Ghanaians to sit up and together work hard towards developing this country. He is also trying to network with our neighbouring countries so that we can look into the markets in the sub-region. He has started in the right direction by seeking freedom of movement of goods within the sub-region in the collaboration with our neighbours. The visit of the President of Côte d'Ivoire is something that has not happened for years under the previous government, and this is a real demonstration that he has realized the need for co-operation, which I think is quite good.
I can also see that the President has lined up the right kind of people in his cabinet. They are all very level headed people and will focus to see how best to reduce inflation, bring down interest rates and stabilize the Cedi. We have peace in the country and we need economic stability in order to enjoy the peace, and this is what I hope this government should strive to achieve.
Major Quashigah and some of his deputies have agreed on the fact that Ghana's economy should emphasize on agricultural development. Do you share this point of view, and if yes, to what extent?
About 70% of all Ghanaians are in the rural Areas. If this 70% are into agriculture, something has to be done to add value to whatever they are producing. In the past we were more into raw food production, which is not so profitable. We need to go into food processing as well. If we are able to do this on a large scale it will help the economy. Fortunately, there is a market open to us in the U.S.A. called AGOA. We should take advantage of AGOA. For instance, we have started cotton production in this country and if we could add value to cotton production and, on a large scale, produce cloth and export it into a big market under AGOA, we can make a headway. With all the agricultural products from this country, all should be able to compete in the big markets. If we work hard, we can make the agricultural sector the engine of growth for our economy.
We have come to realise that some investors might consider the mode of acquisition of land for farming as an issue
The President comes from a royal family from the largest agricultural producing area in the Ashanti Region. What I know about acquisition of land especially in the Ashanti Region is that leases on land range between 50 to 99 years, and I know from experience that when a lease period expires it gets renewed if both parties are interested in renewing it. If documents for acquired land are kept properly one can feel secure because, with the judicial system now, if such a case gets sent to court, it will be settled in the right way.
I would be surprised if anyone has problems of acquiring land, because I have travelled outside this country and I know that land is cheap here. In a densely populated place like Accra, due to the fact that land is needed for putting up houses and for farming, there is always litigation over land in our law courts. If people can comply with the rules of our country regarding lands and have land title deeds, etc., they should have no problem at all.
Besides its economic programme, what would you say is the biggest asset of the current government?
Discipline. This government is very disciplined. The President spoke about zero tolerance and an example of that was action he took in removing the Minister of Sports when he lost $46,000 of state funds. He has also put in place a code of conduct for the ministers. I believe that whoever misbehaves will face the full rigors of law. Unlike the past government, who could arrest and detain people, infringe on their rights, this government is using the rule of law. This government is letting the courts take care of these decisions.
In appointing Ministers of State, they have all had to go through the vetting process. He wants to make sure that he works with the constitution and that the constitution is adhered to. I know that the past government would not have wasted time doing this.
What present impediment could inhibit the government's efforts from implementing its macro-economic policy?
I believe the major difficulty of this government is that this government came to inherit debts. Roads that have been built during the past government's term are all gone, but we still have the debts to pay on loans borrowed for building these roads. It is not going to be an easy task. We will have to discipline ourselves and together be able to attract investment into this country.
As far as Darko Farms is concerned, how successful have you been?
In the last two years we had some arrangements with the Tyson Foods of America, but unfortunately for us, because the past government was not investor-friendly, they were not sure if they could actually invest. Tyson came in and we did what we call the "West Africa Survey" but the words used by the previous government really discouraged them. The Minister of Trade actually went on national television and told a visiting team that they did not understand why Tyson Foods should come and flood our market with chicken!
With this new government, we are going back to them to negotiate, convince encourage them to come back. We learnt a bit of their technology, such that we can supply to other farmers who have their infrastructures, and then they take care of them and feed them, and we can buy them back into our farms and process them. Most of the farmers do not have finance and do not have collateral for loans, so we are suing their technology in order to expand our production base and to work as a team. We hope to be able to expand our business in the next two years to about 200 peasants by using that technology to increase our turn over from 20 billion Cedis to about 60 billion Cedis.
What is presently your market share of the domestic market?
The fact is that there is no competition in Ghana; whatever one is able to produce they can sell. At the moment we supply 40% of the baby chicks, but when it comes to meat we do just about 10% because the rest is imported. I am able to sell whatever I product here because it is fresh. It is only the inefficient producer who would like to charge everything on the price, and the consumers cannot afford that. The average person in this country consumes 0.2% kilos per person per annum of chicken, where as the United States is consuming about 36 to 37 kilos per person per annum. So I believe we haven't scratched the surface yet.
How do you market your products to your customers?
We have a cold chain system. This means, we sell to supermarkets, we sell also to hotels, and of course we also sell to middlemen and women. We also market by way of advertising and follow-up systems etc.
How many people do you employ?
At the moment we are 260. Previously we had about 600 staff but for now due to automation, our staff strength has been reduced.
What would you say has been your major achievement as Chairman of Darko Farms?
I have been able to tell Ghanaians that we can pick dollars from the chicken's eye, and my reason for saying that is that we have managed to show that we are agricultural pacemakers. We have been able to encourage professionals not to sit and wait for white-collar jobs but to set up farms and then apply their knowledge. My sons were all trained in the US in the field of agriculture and have all come down to take up farming which they would not have done before. Cocoa farming for instance was the main support for the economy, but technical expertise was not combined with professional knowledge for maximum results. That is why Malaysia took away most of our cocoa and was able to process it and make profit from selling it out.
All around the world we reach mostly businessmen. What would you like to tell them?
I would like to tell them there is a possibility to do successful business in this country; the rule of law is in place, the encouragement is given by this government for private sector development, and the land is fertile ---- these are all attractions for investment in this country. I can assure them that any investment they make he will yield a fruitful result, and there will not be any decrees in terms of confiscating assets. For people who are interested in our divestiture it is still going on; I am told that the Tema Oil Refinery will be divested, as well as the Electricity Company, and many more. The government wants to sell of all these companies and act as a referee for investors, and I believe strongly that as a democratic government and with the Ghanaian hospitality, we are the gateway to Africa.
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