The root cause of Ghana’s economic woes

In the wake of obvious economic hardships that have engulfed Ghana in recent times, many social, economic, and political analysts of varying capacities have proffered myriad of factors as being the cause, with some of these analysts unreservedly blaming governments for doing little to alleviate the suffering of Ghanaians. Those who have been around long enough, as well as those who have not been around long enough, but who have come to appreciate pretty much the economic history of Ghana by virtue of their prolificacy in reading, have often looked at the issues retrospectively and conclude that the challenges are legendary and cut across all the political regimes that came after the colonial era. Perhaps, the only regime that has often been spared a bit of the blame is the CPP government under the leadership of the late Dr. Kwame Nkrumah. The reason why the CPP regime would normally escape some amount of blame for Ghana’s economic woes underlies this very write-up, which becomes manifest in the unfolding paragraphs.

Oftentimes, Ghanaians advertently or inadvertently avoid looking at the core reason for the country’s economic woes but rather prefer to engage in the everyday usual dirty ‘poli-attacking’ of political opponents whereby adherents of the dominant political parties: NDC and NPP alike, spend all the precious time available in this world accusing each other of being responsible for the ongoing economic hardships. Few, however, are those who draw on their objectivity, regardless of their political orientation, to diagnose the etiology of the chronic economic woes of Ghana by blaming it on a weak manufacturing sector. Much as the writer agrees with the view that the feeble manufacturing sector could account for the dwindling economic fortunes of Ghana, it is not entirely the root cause for the back and forth movement of the Ghanaian economy.

Indeed, in today’s Ghana, it is undeniably the case that almost every petty item being used/consumed is imported with no significant corresponding exports. This has often resulted in an unfavorable trade relationship between Ghana and her trading partners with the accompanying balance of payments deficits. The overall impact of this is the recurrent depreciation of the local currency (Cedi) against the major foreign currencies (Dollar, Pound, Euro, CFA etc. ) in the global market, since the country often sends out more foreign currencies by importing more goods, but only brings in less foreign currencies by exporting less goods. Given the prevailing economic situation therefore, no matter the quantum of measures put in place by the Bank of Ghana or the Ministry of Finance or the number of zeroes that get knocked off again from the Cedi counting, the Cedi shall always return to its usual weak performing position in the midst of the major foreign currencies if Ghana’s economy remains heavily dependent on indiscriminate importation of goods from consumables to non-consumbles.

What then is the root cause of Ghana’s chronic economic woes over the years, one would ask? The answer is not far-fetched as it hugely lies in the unreliable supply of energy as opposed to non-intermittent supply of energy required to power the country’s industrial sector. And this is precisely where one would spare the CPP government under Dr. Nkrumah when apportioning blame for the country’s economic woes to the various regimes over the years. For those who have been around long enough would agree that Ghana’s industrial sector saw tremendous growth during the reign of Dr. Nkrumah which was made possible by the construction of the Akosombo Dam to power the numerous factories, including VALCO, located across the then industrial estates of Ghana with VALCO alone consuming about 60% of the total power generated from the Dam at the time. The same, however, cannot be said today, as most of those factories that were fully operational during the CPP regime have either collapsed completely or are being operated below their initial capacity obviously due to inadequacy of power supply. Undoubtedly, given the current population growth, the capacity of the Akosombo Dam has become insufficient to meet the current industrial, commercial, and domestic energy needs of Ghanaians. Even though successive governments after the CPP have, in one way or the other, expressed or shown concern about the increasing demand for energy for both domestic and industrial purposes, little or nothing concretely had been done about it. The current energy generation capacity of Ghana’s electricity which is estimated around 2800 mw certainly cannot guarantee adequate supply to homes let alone fuel the manufacturing sector. A combination of climate change which has made homes warmer than before and improved standard of living of some Ghanaians have compelled them to convert their louvre-blade-fixed homes into all -glass homes fixed with multiple sophisticated air-conditioners thereby putting additional burden on the already burdened energy generation capacity.

As a matter of fact, Ghana as a country is endowed with multiple potential sources of energy which include hydro, solar, geothermal among others all of which could be harnessed to propel the growth of the manufacturing sector and hence usher in an industrial revolution in the country, a sure way of fixing the economy.

However, in order to ensure constant supply of energy all year round without generation getting pummeled, nuclear power plant is required in the country’s energy mix. It is in the light of ensuring constant supply of electricity, considering the current energy crisis, hardships, fast depreciating of the Cedi all resulting from Ghana’s weak manufacturing sector, that the writer supports the call for a nuclear power plant to be built in Ghana now so as to bring an end to the country’s perennial energy crisis and usher in a new era of industrial revolution which would thus put the country’s economy on a good pedestal. For skeptics, nuclear energy is not dangerous as the anti-nuclear advocates would normally want the public to believe. The upside of a nuclear plant is far greater than its downside. It is all about ensuring that the right measures are put in place to pre-empt any potential calamity. For those who doubt the potential of nuclear power to turn around economies, they should take a look at South Africa, perhaps the only African country running a nuclear power plant and which is no doubt the best performing economy on the continent. It is not by mere coincidence that South Africa is among the globally emerging economies usually referred to as the BRICS nations namely: Brazil, Russia, India, China and South Africa. All these countries have at least a nuclear power plant in their respective energy mix.

To be sure, the multinationals can only be wooed to invest in Ghana if only they can be assured of uninterrupted electricity supply. So with reliable energy supply, they would come and establish subsidiaries or independent companies and produce the very commodities Ghana keeps importing right here and drive down the high costs often associated with imported goods. Also, indigenes can venture into the light industrial sector and possibly partner with the multinationals to engage in heavy industrialization whereby machinery such as trucks, bulldozers, caterpillars and other automobiles could be manufactured locally. This has the potential to further create jobs and make life comfortable for everyone and take everyone out of the present quagmire of poverty. China is a typical example to look at in this regard, where its reliable energy sector has facilitated the relocation of most multinationals to that region thereby making China today’s world industrial hub. Towards this end, all that Ghana requires now, so as to facilitate quicker economic transformation, is nothing short of reliable energy supply. For, the country is endowed with both human and natural resources with good business climate which makes it the most preferred destination for investors en route to the African Region. The only repellant to investors is inadequate energy supply. Until the country’s energy crisis situation is salvaged by nuclear power generation, the political blame game shall rage on in the face of the present economic hardships.

By Jude Nuru

The Writer is an Energy Professional and can be contacted via nurujude@yahoo.com/0502179321