Understanding the trend of the doing business index in Ghana

On Monday, December 3, 2018, I read a news report on Ghanaweb.com titled “we have managed our economy well – President”, attributed to the President Nana Akufo-Addo.

In the statement he is alleged to have said “At the halfway stage of my government’s tenure, we have proven, by all accounts, to be good managers of the Ghanaian economy, and we have made significant progress in all aspects of our nation’s life and towards the realisation of the vision of a Ghana beyond Aid”.

To buttress his point, “the President referred to the World Bank's recent announcement of Ghana’s improvement by six places in the ranking on the ease of doing business rank”.

Based on this disingenuous presentation from the President, I wish to elucidate on this issue.

The Doing Business Index by the World Bank was first published in 2003 and every year since. This index measures the ease with which private business people can go about their daily business activities. It focuses on how business regulation impacts the establishment and operation of businesses.

The report publishes yearly quantitative data on identified regulatory constraints that affect small and medium-size enterprises in an economy. 190 economies (as it stands presently) are ranked. Data from the preceding year accounts for a year’s ranking. For instance, the 2019 report is based on data current up to 2018 while the 2017 report is based on data current up to 2016.

Accordingly, to gauge the performance of the Nana Addo’s government since assuming office, the reports to look at are the 2018 and the just released 2019 issues (that gives you 2017 and 2018 performances respectively). In the same vain, to assess where the Mahama administration left off, one has to look at the 2016 and 2017 reports to see 2015 and 2016 performances. The table below presents a vivid comparison of Ghana’s performance from 2015 through 2018.

In 2015, the Mahama government ranked 114th. They improved on this to 108th in 2016 before leaving office i.e. up by 6 places. In Akufo-Addo/Bawumia’s first year (2017), Ghana fell 12 places to 120th. Indeed, among the 10 indicators used for the ranking, Ghana only improved in one i.e. 1 over 10. This year, they dug themselves out to 114th. This improvement does not even take Ghana back to where the Mahama administration left off. So what is the cacophony around this ranking about?

Indeed, the most critical, in my view, among the 10 indicators is the GETTING CREDIT. This measures the ability of businesses including startups to raise credit to fund operations and expansion. In fact, this should form the cardinal driver of every government’s economic management, especially those that claim to be private-sector driven.

In 2017, Ghana fell in the ranking for this indicator to 55th from 44th in 2016. Again, this year, we fell from 55th to 73rd. This is confirmed by the Bank of Ghana’s own Banking Sector Report which shows that credit to private Sector fell from 17.2% in 2016 to 14.7% in 2018. This explains why businesses are struggling to stay afloat. As such, how can any honest observer claim that this is an improvement on President Mahama’s record?

If the ordinary man/woman on the street makes this claim, that is pardonable because we can attribute their assertion to ignorance. However, when the President of the Nation is peddling such half-truths, it leaves much to be desired because he should know better. When everyone is suffering and business are on their knees, propaganda such as this (being peddled left, right, center by this government) only come across as desperate and insensitive to the plight of our people.

End of part 1