The economy and its challenges – the way forward

Finding lasting solutions to the challenges

Introduction

Economic challenges in Nation building are common; both in developed and developing countries. It is therefore not peculiar that Ghana like any other country should have its share of economic challenges. What is worrying is the attempt to sell normal challenges as crises to the Ghanaian public and the world at large. Doing so, we only invite foreign interest and influences to exploit the economy. Do not forget, our larger industries are foreign dominated and our budget is subsidized by foreign donors who often operate in tandem with the larger foreign industrialists. If we allow, we will always be serving the interest of foreign economies and influences. The major issue here is to think “Ghanaian” and look within for solutions.

Attitudinal Change

It is important, first to think as Ghanaians when the economy and the National Interest is at stake. We cannot continue the way it was during the colonial and post colonial periods. We need a radical paradigm shift in our minds set. We need an attitudinal change to appreciate and contribute positively to the drive for rapid economic emancipation and against abject poverty.

It is on this basis that the analysis and contributions to the solution of our economic challenges, are made, taking into consideration the total environmental parameters governing the economy.

Court Case on 2012 election

Early 2013, the Government and so the economy was confronted with a court case on the 2012 election that threatened to divide Ghana. It was not the division that was relevant to the economy but the foreign influences. Investors saw the court case as a threat and so decided to adopt a wait and see attitude instead of direct investment. Similarly big time investors already operating in Ghana, suspecting political turbulence, decided to activate capital flight. Data from January-August 2013 from the Bank of Ghana and from the Ghana Investment Board, clearly indicate that Ghana lost several billions of GHc from the system. Just when the court case had ended, the EU and ACP agreement showed its ugly tentacles. It did not come as a surprise when donors from EU countries refused to pay the promised budget support (about 30%-40% of budget) because we did not sign the agreement as dictated by them.

Meanwhile our Middle Income Status had come with practical challenges. It became a barrier to some financial concessions reserved for very poor countries.

Public Payroll

It is important to note that in 2012, well before the late President Mills died, he had initiated the Single Spine Salary Scheme (SSSS). This SSSS raised the Government public payroll from 2 billion to about 11 billion GHc, accounting to about 70% of our national generated revenue. This leaves only 30% of the generated revenue for infrastructural and other development. This pay increase in the public service was a major upward adjustment of salaries. Any such major upward adjustment is often accompanied by well planned tax regime, and attitudinal change at working places. Before the late President Mills (the Taxation Expert) could start the tax regime, he passed on. When H.E. President Mahama took office, he picked up where the late President Mills left off. Unfortunately public opinion at that time, which had been marred by series of strikes, did not support the tax increases. Some were even withdrawn. Meanwhile the Government continued to subsidies and pay subventions for fuel and other items.

The way forward

It is important to stabilize the macroeconomic imperatives. Import-Export Strategy should be restructured. The volume of export has to increase. Trade gab should be closed as much as possible. We should as a matter of urgency refine our crude oil in Ghana. Imports of consumer goods should be reduced. Ghanaians should be encouraged to eat what they produce and produce what they eat. National spending should be reduced. The tax net should be widened. Ghost names have to be removed regularly from public pay roll. Above all the Ministry of Finance should exhibit transformational leadership.

Ghanaian Patriotism

It is important to think as Ghanaian when the National Interest is at stake. Our mindset should appreciate and contribute positively to the drive to robust economy that will bring glory to Ghana. It is therefore in the right direction to start a public debate on a 10% salary cut for Senior Staff and Senior Members towards National growth. The President H.E. John Mahama and his cabinet have set the pace, Senior members and Staff have to follow the example in the interest of Ghana. It is worth noting that H.E. President Mahama and his Ministers in a voluntary 10% pay cut have been able to raise 327,000 GHc within five months to support the economy. This is a great contribution to the National course.

Social System

The Government, in spite of the economic challenges has kept the social system intact. Our social system remains untouched. We have free school uniform for school children. We have free exercise books for schools. We enjoy free school feeding program. We have special programs that support Science and Mathematics. We have free education for disabled persons. We have free supply of computers for schools. We have poverty alleviation programs that has reduced poverty by more than 50%. We have increases in capitation grants. We have allowances for teachers who accept postings to remote areas in Ghana. We have free maternity care for pregnant women. Water and electricity is being extended to deprived areas. Financial support programs such as LEAP is paid to over 74,000 very poor households. The Government intends also to supply free shoes to school children. Plans are on the drawing board to support the aged. This indeed is a successful social network and a pride of Ghana.

Conclusion

The strength of our Governments (Presidents JJ Rawlings, Kufuor, Mills and Mahama) is in the concern and care for the less privileged. Let us passionately discuss the 10% salary deduction in the interest of Ghana. The irony of the situation is that, the 10% cuts will hurt. It will however ease the pressure on the economy. The macro economic imperatives will be corrected. The depreciation of the cedi will halt. Pressure on prices will reduce. Inflation will reduce. Ghanaians will be able to buy at cheaper prices than they are doing now. We will all be happy with the GDP growth.

This 10% salary cuts has been done in other countries before. In Britain, the British Broadcasting Corporation among others saw a 10% cut in salary in the interest of sustainability. Let us do same.

I call on the Finance Minister to calculate and make available all empirical data. How much will be realized in a month and how long it will take this 10% contribution to turn round the economy.

Dr E.K. Hayford

Convener

Think Tank of Some University Lecturers and Staff