Opinions Fri, 12 Feb 2010

Pandering and Pasturing: the cause of Ghana's Economic Decay.

Over the years Ghanaian journalist and politicians, both on the NDC and NPP side, have accused the other of pandering to the Britton Wood Institutions when they are in opposition. Yet, as soon as they assume the mantle of leadership they fly to these same institutions for funding and economic antidote for our development challenges.

When the PNDC overthrew the Limann government in December 1981, they accused the Limann administration of selling out Ghana’s sovereignty to foreign entities. A few months after, the populace PNDC government of Mr. Rawlings was at the same institutions it had earlier chastised for help. The Britton Wood’s prescription to our then economic problems was the Economic Recovery Program (ERP) of the 1980s, and later the Structural Adjustment Programs of the 1990s. We all know what happened after.

Then came the NPP administration in 2001. The party had long been criticizing the PNDC in the shadow of darkness. When the ban on party politics was lifted in 1991/1992, the NPP criticism of the Britton Wood policies of the PNDC and NDC became public and even louder. They accused the NDC government of acquiring mountains of debt for future generations of Ghanaians. They even divided the debt by the national population and showed just how much each Ghanaian would be responsible for if we were to pay all our debt.

As soon as the NPP assumed office in 2001, they flew directly to same the institutions they had chastised under their predecessor’s administration for help. They brought back with them the Highly Indebted Poor Countries Initiative (HIPC). The initiative promised to relieve our debt and in exchange for that, the Ghanaian government would continue some of the policies started under the NDC administration; privatizing state own industries, open up our market to be flooded with foreign produce, and more importantly curb investment in agriculture, the mainstay of Ghana’s economy.

Ghanaians are witnesses to the barrage of criticisms that came from the NDC when the Kufour led administration decided to go HIPC. In fact, by the end of Kufour administration the national debt was even higher, and that is in spite of the debt relieve under the HIPC initiative. Now the Mills administration is back to the same “saviors” of the Ghanaian economic woes help. Surely, they will, like their predecessor, come back with same prescription.

The reason for this article is not to re-litigate the past, or blame the two administrations for criticizing the other and doing the same. The reason is a call on the government to re-examine the structural problems of the Ghanaian economy that has hampered Ghana’s development for over five decades.

It is time for Ghanaians to call on the government to stop racking up mountains of debts for future children and grand children. The least we can do for the future generation of Ghanaians is to leave them an economy they can manage and live in prosperity.

It is against this back drop that we should first commend the Kufour administration for reducing Ghana’s annual deficit from 15% to 10.2% in 2008, and the Mills administration for promising to travel along the time lines. The Mills administration has already started this by reducing the number of ministers, cutting down government staff, and presidential convoys. This process if continued would save Ghana some money and help, in whatever small ways, to address our long term deficit and debt problems.

But this is just the tip of the iceberg, to address Ghana’s long term economic deficit and debt; it is time to address the ever growing imports of agricultural produce in the country. Some of which the country has the potentials, if not the capacity, to become a net exporter. Ghana import millions of dollars of rice, chicken and flower every year from China and other Asian countries, while Ghana sits on the most fertile lands of West Africa and has the potential to be a net export of agricultural items.

It is a known fact that it takes a lot of courage from whoever is in the Castle to do this because the Britton Woods would not allow it. They would threaten to cut off Ghana’s lines of credit if we refuse to allow their “right” to use us as a dumping ground for their exports. Also, it is a known cliché among Africans leaders to own the already discarded Reagan republican mantra of less government and more privatization around the world, or what came to be known as the Washington Consensus.

Even though the Asian Tigers and the Chinese development model had long laid to rest the false assumption that it is only the private sector that could lead an economy to growth and development. After several experts have researched and written about this model and its failure to address the challenges of the developing world, particularly Africa. Even the United States, the power house of Adam Smithian global capitalism of less government and more privatization, is beginning to back off from the Washington Consensus because it did not work and has not produced the desired results.

But it is common among African politicians to hear, “the private sector is the engine of our growth.” The point is that the private sector could be our engine of growth only if we have a private sector. The fact is that Ghana does not have a private sector strong enough to lead our growth and to compete in an ever competitive global economy. Our suggested model is simple, government should do what works and stop does not. Government can act through targeted investment and incentives to stimulate and develop a viable private sector capable of competing in a global economy.

We can start in the agric sector, where our people know best. Over 60% of our population is farmers and rural dwellers. The government should impose taxes on rice and other agricultural imports in Ghana, and use the proceeds to invest in our local farmers. Government can provide incentives to our farmers to come together as co-operatives and through government support engage in large scale farming. Government can buy modern farming implements and allow small scale farmers to rent them at a subsidize rate during the farming season at all farming villages across our country.

Government can encourage small businesses that produce stuff through tax and borrowing incentives to expand and grow. We can reform our land laws to allow Ghanaians willing to go into agriculture to do so easily. We can partner with other African countries and increase exports to our neighbours.

By doing this, we are not only going to reduce our debt and deficits, but we will increase production, increase employment, and above all be self reliant. It sickens many Ghanaians if we see our government officials, cup in hand, in many foreign capitals begging for aid. It is degrading to us for others to pity us all the time, and assume we can’t make it without their assistance.

A cursory examination of our budgets, whether in an NDC or NPP administration, are deep wholes usually filled by foreign aid. It seems our governments can not function without the injection of foreign capital in the form of aid in our economy. What happens if we wake up one fine morning and there is no longer foreign aid coming our way? This scenario will destabilize our economy, damage our government’s ability to function, and God forbid, we can become a failed state. That is why it is agent that the Government of Ghana acts, and acts now. There are already signs of this happening. The economies of our major donors and aid givers are already shrinking. Our entire donors are more worried about fixing their economies than our poverty. Some had even announced budget cuts, including foreign aid.

There are local ways to resolve these problems. Government can find ways to cut spending and increase local revenue generation. Less then 10% of Ghanaians pay their taxes. Government can move to reform our tax system so that more Ghanaians would pay their fair share of taxes. The obvious fact is that let finds to restore our independence and not remain captive of foreign institution, whose main objective is make us addicted to foreign aid.

Some would argue that if we impose tariff on imports from countries like China and others they will reciprocate by imposing taxes on our exports to them. The fact is that we don’t export to these countries at all. Our exports to these countries are only a dent as compared to the dumping that they are doing our economy. Ghana has been reduced to a nation of buyers and retailers of foreign goods. All over Accra and major Ghanaian cities around the country are small kiosks of retailers of foreign manufactured produce. We can not buy and sell ourselves in to economic prosperity. History thought us that it is production that leads to economic development and prosperity.

The world is moving, and it is doing so very fast. Countries that used to be in our category (third world) are finding their way out of economic backwardness. India, China, South Korea, Malaysia, to mention just a few, have found ways to move millions of their people out of poverty. Ghana can, in small and very simple ways, do the same for its’ people.

Ghanaian politicians and media pundits are very good at litigating the past than doing what is good for their people. They will spend days on end debating which party is better, or more democratic. The media spends months and sometimes years writing about how bad Rawlings or Kufour was whiles in office. These guys are gone; they had served their tenures of office.

It is time to let them go and allow a new administration to forge ahead with the business of the people. The majority of who are languishing in poverty. It is about time our media houses paused their political punditry, and start bringing the predicament of our poor men, women and children in to the political lamplight. Else democracy itself will be meaningless. Governments are elected to serve their people and advance their interest, and not became captives of some foreign economic institutions.

Columnist: Abbul-rahman, Sidibe