Ghana, 61 years on, maintaining the economic narrative

It is easy to pinpoint Ghana’s peers when it attained independence in 1957 – South Korea, Singapore, Malaysia and the like – and use that to judge Ghana as a spectacular failure in delivering much-desired economic goods for its people.

Sixty-one years is a long time in a country’s development journey. Indeed, for all the potential that Ghana possessed at independence, it is safe to say the country’s journey – as remarkable as it has been – has not lived up to its potential.

While where we have come from as a people matters, it matters more where we are going. In January 2017, the Nana Akufo-Addo administration came to power with the promise of transforming the country’s economy from a largely agrarian to an industrialised one.

To say that Akufo-Addo’s vision can be achieved within his four-year mandate is to wish for the impossible. But it is very possible for Akufo-Addo to lay the foundation for the sort of economic development the country so much desires.

Never has there been such widespread optimism about Ghana’s future in the post-independence era as when the country discovered oil in the late 2000s. The oil was seen as the panacea to all of Ghana’s problems. In 2011 when Jubilee came on stream, it propelled the country’s economic growth to an excess of 14 percent, the highest in the world.

The windfall from the oil led to an increased fiscal space that saw government taking advantage by borrowing more without much to show for it. Just four years after the record-growth, Ghana was back at the International Monetary Fund (IMF) begging for assistance after a debt overhang, widening deficit and others proved more than stubborn for government.

So here steps in the IMF with a three-year Extended Credit Facility (ECF) programme. Fiscal consolidation not only meant austerity, but growth was sacrificed as well. Thus, from a 14 percent growth rate in 2011 the country was managing a just-about 3.6 percent growth in 2016 – the lowest in more than two decades.

Fiscal deficit was near double-digits and the exchange rate was at its fluctuating best against all the major currencies. Growth in key sectors such as industry and agriculture had been depressing, and commodity prices, too, never offered government any respite.

Such was the dire straits the economy was in when President Akufo-Addo was sworn in amid promises to fix the economy and transform it into one beyond aid. For such grandiose promises to come to fruition, it was important for the President to get the foundation right.

So far, the country’s macroeconomic indicators are telling the story of a nation that is returning to the right path – an economic environment favoured by businesses. Inflation recorded for January 2018 was 10.3 percent, the lowest in five years; growth in 2017 is expected to rebound to 8 percent from a two-decade low – with deficit, which was at 9.3 percent last year, also expected to decline to 6.3 percent.

Exchange rate volatilities still persist, except that this time round the cedi has moderated in its gyrations. The monetary policy rate also eased from 25.5 percent at end-2016 to 20 percent in 2017 – albeit sluggishness in the rate impacting on banks’ lending rate.

Nevertheless, there exists a growing sense of optimism for businesses – and that is partly confirmed by the Ghana Investment Promotion Centre’s (GIPC) attraction of more than US$5billion in foreign direct investment (FDI) during 2017.

Also, the Bank of Ghana’s Composite Index of Economic Activity (CIEA) recorded an annual growth of 10.7 percent in November 2017, compared with a contraction of 1.5 percent in the same period of last year: providing further evidence of improvements in the real sector. The uptick in the CIEA was driven primarily by industrial consumption of electricity and a gradual rebound in bank credit to the private sector.

In addition to the growth momentum, the Bank of Ghana survey of businesses and consumers conducted in December 2017 showed that confidence remained high throughout 2017, pointing to positive sentiments on growth prospects and realisation of business expectations and general improvements in the economy

Over the years, we have shown that we are capable of managing this economy competently – but the problem is managing it competently for a longer period. More often than not, prudent decisions have been unmade by politically expedient ones to suit the whims of those people that are in power.

Speaking at a recent event organised by the IMF in Accra, Vice-President Dr. Mahamudu Bawumia touched on a very important point that has been our bane over the years – our inability to make prudent decisions irreversible.

That same point is reiterated by Finance Minister Ken Ofori-Atta, who believes that the country needs to create systems that will make it impossible for economic gains made to be reversed arbitrarily. There has been talk about passing a Fiscal Responsibility Act, which would bring in a Fiscal Council.

If Ghana is to become a model country by the time it celebrates 100 years of independence, it needs to put in place a system to ringfence the prudent decisions it takes today from the political uncertainties which are bound to be many over the next 39 years.

No matter to which side of the divide one may belong, we have to admit that this country’s future could be impacted positively by flagship programmes such as the Free Senior High School (FSHS), Planting for Food and Jobs and the Marshall Plan for Agriculture – One District, One Factory, among others.

At sixty-one years, some of these policies seem late in coming – but it is never too late for us to take opportunities that we missed in the past. Sixty years may have gone by really quickly, and we may not have utilised them the way we would have wanted – but we have the next 39 years to write an entirely new story.

We owe it as a duty to our children and their children to make this opportunity count – let’s make our independence meaningful, and not set the stage for the next generation to question their forefathers like the way Israelites questioned Moses why he brought them from slavery in Egypt to die in the wilderness.

Happy Independence Day!