Business News of 2014-02-21

Set up fund for critical economic areas — Dr Kofi Amoah

Enterpreneur and philanthropist, Dr Kofi Amoah, has suggested that the Government should set up a US$1billion fund to finance the growth of the critical areas of the economy.

Speaking at a roundtable discussion on “A New Economic Paradigm for Ghana”, which was organised by an Accra-based radio station, Citi FM, Dr Amoah said initiatives such as agriculture and manufacturing across the 10 regions of the country should speed up economic growth.

Ghana has, in the last few years, suffered some economic downturns with a depreciating currency, high fiscal deficit, soaring unemployment, poverty and a high infrastructure deficit causing analysts to downplay its rise to the lower band of a middle income status.

But the entrepreneur said a strategy based on agriculture, manufacturing and finance would help catapult the economy, create jobs, boost exports and cut poverty substantially.

He said, “The stark conclusion we must accept is that Ghana does not have an economy, and we must begin to build one. I am proposing for the nation the three legs of agriculture, manufacturing and finance”, adding, “To adopt a liberal economic approach at this stage of our development is suicidal,” he said.

Dr Amoah, who is also advocating for the protection of local industries and the institution of subsidies for farmers and manufacturers, said no nation was ever transformed without an activist state.

But a renowned economist on the panel, Mr Kwame Pianim, disagreed with him on the issue of state subsidies and cautioned against a protectionist trade policy– saying both strategies were applied in the past but failed.

According to him, protectionism breeds inefficiency in local producers and limits the size of their market, whereas an open economy creates new markets and brings competition that reduces prices and improves the quality of goods.

“We’re too small to do import substitution behind tariff walls. We’ve been there before. It didn’t work and we cannot go back, ” Dr Amoah noted.

He said the economy must remain private-sector led, with government providing a stable macroeconomy, infrastructure, energy, a regulatory framework and institutions that deliver modern, as well as efficient public services.

On BoG forex directives

Mr Pianim also cautioned that the string of control measures instituted by the Bank of Ghana to halt the fall of the cedi would not work.

“…In the final analysis, the Bank of Ghana measures will simply be a blip. It was a panic and it will not work,” Mr Pianim predicted.

According to him, “we’ve seen it before. Administrative controls, regulations have never worked in Ghana”.

“…It will not work. We’ll go back to the current market, to the black market and foreign exchange, and investors may not be coming, exporters will keep part of their foreign exchange outside and all of us Ghanaians will keep our working balances in London or in New York, when we get there we sign a cheque. We are not going to bring the cedis here. So you’ve dealt with the stock problem [but] the flow problem you haven’t dealt with. The foreign exchange that will be flowing will not come because of these measures but the stock ones, you can eat it but nothing is coming again”.

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