-Options for Ghana
By Kwesi Atta Sakyi 12th September, 2014
In the late 70s and early 80s, most advanced economies such as the UK, offloaded public corporations into the private sector through the process of denationalisation and privatisation, following economic propositions mainly championed by academics such as Milton Friedman and his adherents from the Monetarist anti-socialist Chicago School of Economics.
The paradigm shift and transition from central government-driven to market-driven economies became the norm, and it was transmitted carte blanche around the world, without elbow room for the fledgling economies to adjust and take off at their own pace. It is sad to reflect on hindsight that development of a country should not be allowed to follow a ‘one-size-fit-all’ approach because of cultural differences, different values, among other pertinent and critical factors such as terrain, climate, levels of technology, income levels, perceptions, and wealth distribution in various countries.
The 70s and 80s were periods when state-intervention was heavily frowned upon. In Ghana, massive jobs were lost after the closure and liquidation of state enterprises such as SHC, TDC, STC, GNCC, SCC, Workers’ Brigade, GIHOC, NADECO, Ghana Airways, Black Star Shipping Line, among others. Critics observed that some of those outfits were waste-pipes draining the economy, as they were alleged to be used as fronts to siphon money into the accounts and pockets of political party operatives.
Besides, some of them were grossly inefficient, with extremely low levels of accountability, transparency, productivity, and probity. On balance, they created wealth for some sections of the population, created jobs for many, while some of them posted heavy losses, and therefore they were unsustainable. However, from hindsight, some state enterprises such as the Black Star Shipping Line, STC, and Nsawam Canneries should not have been privatised in the first place, as they were going concerns or viable entities at the time of being sold to the private sector.
It was indeed a grievous error on the part of some past governments to have sold off golden geese such as Ghana Telecom, Black Star Line, and others, as those were strategic assets of state which created job avenues. Public utilities such as ECG (Electricity Corporation of Ghana), GWSC (Ghana Water and Sewerage Corporation), TOR (Tema Oil Refinery), Ghana Post, are inextricably linked with the survival and welfare of all Ghanaians and residents, and therefore they should be operated from the public domain to make them cheaply accessible to all and sundry, and to mitigate poverty.
The neo-classicals believed in the automaticity of the equilibrium of the economy through the magic wand of Adam Smith’s ‘invisible hand’ of the free market, contrasting the latter demand-side ideas of Keynes, outlined in his ground-breaking treatise in 1930, The General Theory of Employment, in which he proposed the ingenious idea of the multiplier to help restore equilibrium if the economy was under-performing, and not at the optimum level of GDP.
China’s phenomenal economic growth in the last three decades is an eye-opener that massive population size is rather an asset and not a hindrance, that the pursuit of state-capitalism and massive infrastructure development belie the idea of free economy. If anything, we should contemplate the mixed economy idea more seriously as a developing paradigm, in order to benefit from the multiplier effect of Keynes’ under-consumption thesis. Our economy in Ghana has a lot of room for growth, as it has not reached anywhere near its efficiency frontier or production possibility curve.
If anything, the recent global economic meltdown from 2007 to 2009 informs us that at one point or the other, state bailouts, subsidies, eleemosynary economics, and public interventions are inescapable, and so-called economic forecasting models of interest rate and inflation targeting, among others, are not exact sciences as they are heavily prone to error in their predictive abilities. This being the fact that human beings are kaleidoscopic, mercurial, capricious, and unpredictable in their behaviour. South Korea emerged from massive state subventions, guided capitalism, and protectionism in the early years, following the Second World War. Of course, despite the Chaebol, local syndications and cartels which propelled industrial growth in South Korea, they relied heavily on massive external inward investments, mainly from Japan and the USA.
Here is where we can rely on inward investments from our Ghanaians in the Diaspora and their investment partners, to make great inroads into the Ghanaian economy, by establishing new businesses.
Friedman had argued that the business of business is business, therefore government had no business doing the business of business because by their very nature of wielding massive power and instruments of coercion, they are likely to abuse it and not pursue the private interests of capitalists and investors, who seek profit maximisation.
Governments may cause crowding out effect of private enterprise, by borrowing excessively from the capital and money markets. Countering this argument of non-intervention were friends of J. M. Keynes (Demand-siders), who believed in Corporate Social Responsibility (CSR), who believed that the massive deleterious and negative externalities and social bads created by private businesses, far outweighed their benefits by way of payments in taxes, employment creation, wealth creation, value addition, among others.
Thus, Elkingham, Mintzberg, Sternberg and Carroll, among other CSR gurus, took on Friedman and the Supply-siders by arguing that the negative impact of businesses is far in excess of their benefits to society, so they should draw up social compacts and charters, to be good corporate citizens, who would play fair and square, and uphold high ethical and corporate governance standards, though this is not a legally-binding obligation.
Friedman in his view was perhaps re-echoing the ideas of Adam Smith in his treatise, The Wealth of Nations, which was published in 1776, and which marked the genesis of Economics as a discipline. At one point, Economics was decried as, ‘the dismal science’. Friedman’s ideas influenced the emergence of hard-nosed, and iron-fisted economic approaches dubbed Thatcherism in the UK, and Reaganomics in the USA, whereby the dole or welfare payments were whittled down, state-owned enterprises sold off, subsidies withdrawn, and many government outfits suffered heavy haemorrhage of mass retrenchment of labour, downsizing of government apparatus, and the total dousing of the power of Trade Unions.
Perhaps, the situation of the emergence of the enormous political clout of the Trade Unions in the docks of Gdansk in Poland, led by Lech Walesa, was a political threat and fiendish incubus, threatening the stability of governments in Western Europe. Sadly enough, the abdication of the state and her abandonment or withdrawal of state support, threw many poor people to the elements and the wild dogs of business, further widening the gap between the haves and have-nots.
The ascendancy of capitalism since then, has led to mass exploitation of labour around the world, leading to unethical labour practices in Third World countries such as casualization of labour, loading few workers with work which should be done by many, among other unhealthy labour practices. In Ghana, the aftershock effects of mass denationalisation in the late 80s was the increase in the brain-drain, downward trend in the quality of education, deterioration in health standards, emergence of the middle class in the private sector (for a good cause and welcome development), and the worst of all, the enthronement of commercial elephantiasis, pluto-political corruption, bureaucratic corruption, jinabu, kalabule, ehy3 wo bo, and all forms of anti-social behaviour during the SAP and EPRP days, under the multilateral institutions’ policy prescriptions.
Adam Smith had proposed that if individuals pursued their selfish interest of profit maximisation, it eventually redounded and translated into the greater public good for the greater number, or pro bono publicio or sommum bonum. This concept of individual selfish goal maximisation is unfortunately not universally accepted or applicable to countries and cultures in Asia and Africa, where spiritual aspirations and collectivist proclivities are paramount, and they supersede western concepts of individuality, competition, and personal achievement of individual selfish goals, among others. Developing countries were forced to follow suit if they wanted foreign aid from the multilateral lending institutions. They have not had it easy going since then, in terms of job creation for the youth.
In Ghana in the early 60s, before Kwame Nkrumah’s overthrow, we used to have the national outfit known as the Workers Brigade. That countrywide outfit was conspicuously ubiquitous by their green khaki, military-style uniforms, and sturdy black military boots. Some used their outfit for iniquitous acts, though. They were deployed on farms throughout the country, and they cultivated a lot of crops on state-owned farms. They helped feed the nation. The Workers’ Brigade was an easy job avenue for many school-leavers to find jobs.
I remember very well some elderly relatives of mine who were seven years ahead of me in school, finding jobs there. We also had other state-owned outfits such as the State Construction Corporation (SCC), the State Hotels Corporation, the State Housing Corporation, Ghana Industrial Holdings Corporation (GIHOC), Tema Development Corporation, State Transport Corporation (STC), Real Republicans Football Club, Black Star Shipping Line, among others.
Recently, last month to be specific, we learnt that about 68,062 candidates out of a total number of 242,162 candidates who sat the WASSCE exams in Ghana were successful with passes ranging from 1 (distinction) to 6 (credit). (In Nigeria, there were in excess of one million candidates with similar results as Ghana). In Ghana, this represents a pass rate of 28% of those who can proceed to university and other tertiary institutions. 52.4% were male and 47.6% female. Where do we take the 174,100 candidates who failed? The BECE results are also out with a reported 427000 candidates who sat. However, the pass rate has not yet been made known. The girls among the failures may resort to early marriages, or resort to trading on the streets. The boys may become taxi drivers, call boys, and some will take to becoming migrants to other countries, as jobs are hard to come by in the country.
Apostle Kwadwo Safo has come up with his many inventions at Gomoa Mpota near Winneba. Perhaps he can be heavily funded to start mass production of his car model, Kantanka, to offer jobs to the school leavers. A similar car has been invented at Suame Magazine in Kumasi, known as Boafo/Boame. It went on show in the Netherlands last year. It should also be state-funded to come on stream to create massive jobs. We should incorporate Entrepreneurship as a subject in all school curricula in Ghana, and make it a compulsory, examinable subject. So also should we do the same for Technical Drawing, ICT and Agriculture. We should encourage establishment of venture capitalists and business angels in Ghana to offer soft loans to young budding entrepreneurs. We need to refocus our education away from white-collar job orientation.
In all Junior and Senior Secondary Schools throughout Ghana, they should appoint Career Guides/Counsellors to help group all the students into the following proposed categories:
1. Sports and Soccer Brigade
2. ICT and Innovation Brigade
3. Entertainment, Performing Arts and Cultural Brigade
4. Environment Protection Brigade
5. Tourism and Hospitality Industry Brigade
6. Production Unit and Agriculture Brigade
7. Science and Technology Brigade
8. National Service and Armed Vanguard Brigade
9. Sanitation and Horticulture/Town Planning Brigade
10. Commerce and Trade Brigade
11. Engineering and Fabrication Brigade
12. Education and Professorial Brigade
13. Vocations and Design Brigade
If each school forms these units, the students can start identifying with their career clusters early, and this will create an army of middle level pool of artisans, mechanics, technicians and the like, which we lack in this country to meet demand for requisite labour from industry. Local practitioners in these fields can be attached as part-time instructors in the schools. This will create massive jobs. It will help complement the work of the Polytechnic Institutions, and will fill the labour market gap, and help accelerate the pace of industrialisation in Ghana, for us to become like Germany or South Korea. In the past, the Germans had developed their Arbiturs and Technikons. We should advocate for HND qualifications and Diplomas to be put at par with university degrees to de-emphasise the purely academic pursuits in Ghana.