Mahama's 24-hour economy is best sellable policy in Ghana's current economy – Economist

Professor Lord Mensah, an Economist and Senior lecturer at the University of Ghana Business School (UGBS), says the 24-hour economy proposed policy by the flagbearer of the National Democratic Congress (NDC) John Dramani Mahama is currently the most appropriate economic policy proposal considering the state of the Ghanaian economy.

John Mahama has assured that the next NDC government will introduce a 24-hour economy with incentives and tax breaks for manufacturers who will run extra shifts to create more room for employment and boost production and services in the country.

Professor Mensah highlighted the challenges of a dollar-denominated economy, suggesting that increasing production through the 24-hour economy policy could bring more inflows and stabilize the currency.

He stressed the importance of targeting specific key areas with the 24-hour economy approach.

“Our economy is fully dollar-denominated. How do we reduce it? We need production. We need an economy that can produce and bring in more dollars and the 24-hour economy should be targeted very well in certain key areas. It should be able to bring us more inflows and that will stabilize the currency. The 24-hour economy is the best sellable policy as we speak now if you look at the current state of the Ghanaian economy,” he said.

The economist said this during a public lecture organized by the National Youth Commission of NDC Professionals Forum (PROFORUM) at SDA College of Education, in Koforidua in the Eastern Region.

On fiscal policies, Professor Mensah pointed out that heavy government borrowing has stifled individual lending and recommended minimizing budget deficits to encourage banks to lend more to individuals.

“Money only flows when the government is not borrowing that much. If the government reads a budget and the budget positions itself in such a way that the government’s intention to borrow is minimal, the banks will start lending to individuals, that, is why every time we go to the IMF they tell us to reduce the budget deficit. Because it is the budget deficit the causes the financing,” Prof Lord Mensah stated.

He critiqued Ghana’s reliance on the Euro Bond market arguing that it has made politicians complacent and hindered export-driven policies.

Prof. Lord Mensah warned that the ease of accessing international markets has harmed the economy, leading to the sacrifice of export-driving policies for quick Euro Bond money.

“We have sacrificed our export driving policy for the Euro Bond market since 2007 when the market was opened for Ghana. It has made our politicians so lazy they refuse to think beyond the bond, they refuse to think beyond the box, they refuse to apply the possible policies that will generate exports so the Euro Bond is easier,” he said.

“Since we had access to the international market it has caused harm to Africa it has made us sacrifice all our export-driving policies just to get the money. There is an incentive to get Euro Bond money. Because when you are defaulting it is difficult for the lenders to come together,” he stated.

Prof. Lord Mensah advised careful borrowing, noting the importance of balancing growth potential and debt levels.

He said, “You have to borrow when you have growth potential but our debt level has siphoned our growth potential. There is always a threshold when borrowing. When you are borrowing and the rate at which you are growing your debt is more than the interest that you are paying you have to stop borrowing.”

Professor Mensah also expressed concern about the true state of the Ghanaian economy.

He argued that the country’s suspension of external debt payments since 2022 has artificially impacted the exchange rate and suppressed demand for foreign currency.

This he says creates a partial and potentially misleading picture of inflation and the overall economic situation.

“The true state of the Ghana economy is an economy that is in debt, is an economy that all the inflation numbers that we are recording are partial not the true state of the Ghanaian economy. The reason why I am saying this is that we have suspended our external debt payment. Since 2022. It means we are fixing the exchange rate. the reason is that the government will demand the dollar to go and pay for the debts but you are not paying so you have suppressed demand for the exchange rate”.

Prof. Lord Mensah urged government government to seriously commit to Ghana’s energy transition plan to deploy infrastructure and technologies that will ultimately reduce the importation of fuel which continues to hurt the exchange rate.

“The most sensitive part of the economy is that we import fuel and so far we have not rolled out any alternative transportation infrastructure that will reduce our fuel import. The railway they are doing is one of them. If we don’t find ways to balance our transportation infrastructure there is no way we can control the exchange rate,” he lamented.