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06.04.2010 News

Addressing Ghana's housing & job creation challenge (final)

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Addressing Ghana's housing  job creation challenge final
06.04.2010 LISTEN

• Continued from Thursday, April 1, 2010
But the real source of value is neither the money, nor the raw materials, nor the products produced from them, but mankinds ability to figure out the nature of the universe, and to intervene to create what had not existed previously.

Human creativity is the source of wealth, while money is a mere convenience, a way to exchange wealth created elsewhere - a challenge to our knowledge and innovation economy. These issues in the productive sector can be turned around, if we set aside our fantasies about money and return to the physical economy.

MONEY AND CREDIT
The worst thing we can do is to allow ourselves to be held hostage about money. Money should not be confused with wealth. Money is just a tool for measuring the amount of wealth and success a person or nation has attained.

Wealth has always existed whereas money has not. In this world, it is possible to be wealthy, have a lot of goods or mineral wealth, but yet be without money. Wealth is the value of the assets owned by a person, community or a State.

My research at the Minerals Commission, Geological Services Department and other sources indicates that Ghana has mineral wealth with gross value in excess of US$1,000 billion. This is a strong security to mitigate against any venture we undertake.

It comprises Gold - $350billion; Iron ore - $250 billion; Bauxite $250 billion; Oil and Gas $150 billion, etc. This is besides other reserves of economic value in limestone, kaolin, clay, silica sand, granite, salt, manganese, etc.

The exploitation of these raw materials will invariably lead to the establishment of several downstream industries, and value addition in itself creates tremendous wealth and several multiplying effects in the economy.

Why should foreign companies use our discovered assets as security for loans, develop them and give us 10 percent, when we can do the same, and take our 100 percent? We need to reverse this investment regime. It may have happened for the first and second round of investments, but should not be the working blue print.

Another way of creating wealth is to develop a credit system. We must improve and enforce trust among ourselves; people must be what they say they are. If we do not know ourselves, we cannot solve our problems, we cannot create more money.

This is the basis of a viable credit system. Without an efficient credit system, we cannot meet our development needs. We must enact a National Credit Act to give legal basis to the system. Ghana is also poor because a large number of its populace is in the informal sector almost 80 percent. Poverty is an informal sector phenomenon.

Out of an adult population of 12 million, Ghana has only 1.2 million bank account holders (a ratio of 10%) compared to Nigerias 23 million banks accounts holders among an adult population of 70 million, (more than 33%). In most emerging countries, the ratio is close to 100 percent. We cannot brand the country as financial hub of West Africa with this trend.

It is useful to tailor instruments for the informal sector but our ultimate aim is to move the entire population to the formal sector; drivers, farmers, house helps, construction workers, etc. Then their assets too, houses, cars, land, businesses, etc. all represented in a property document that is the visible sign of a vast hidden process that connects to the rest of the economy. Elsewhere, they are used as collateral for credit.

It is about better identification and the State must create incentives to make this happen, through attractive social security schemes, credit and housing investment. This principle is well laid out in Hernando De Sotos book The Mystery of Capital.

Naill Ferguson, author of The Ascent of Money also said money, being a medium of exchange is about trust trust in the person paying the money, trust in the central bank issuing the money, trust in the commercial bank that issued the check. Money is not a metal, it is trust inscribed, and it doesnt matter what is inscribed on, paper, silver, clay, screed, electronic, provided the recipient believes in it.

Trust is what Ghanaians, ordinary citizens and business leaders need today as the global economy makes us more and more reliant on strangers to carry on with our business. According to Stephen Covey in his book The Speed of Trust, trusted people and organizations do things better, faster and at a lower cost.

The British Prime Minister Mr. Gordon Brown, in the heat of the financial crisis last year said the Latin word for Credit is the same as the Latin for Belief or Trust. Therefore if we want to develop credit, we must improve trust among ourselves, trust by the State and trust by Corporate Ghana.

The National ID system is probably the most important programme in Ghana today and could help improve trust among ourselves. Ghana is about the only country in Africa without a national ID system.

It is not surprising interest rates in Ghana are the highest in Africa. National ID must underpin everything we do. Unfortunately, registration is in its fourth year and only half of all regions are covered. We must make conscious effort to make it succeed.

CONCLUSIONS
An effort to solve our housing challenge could turn up to be Ghanas own home grown solution to the financial crisis an ideal economic stimulus package. All over the world, the housing and real estate industries are the backbone of the economic transformation of nations.

Indeed the value-addition nature of the housing sector can help to capitalize the private sector and increase the credit base of the banking and insurance sectors.

Currently, a housing demand of 1 million units needs to be built, and might double to 2 million within the next decade. There are new ways of solving the problem that we need to exploit.

Albert Einstein said we cannot do the same thing over and expect different results. We need to rise above current ways to solve problems. We cannot develop holding on to the same ideas.

The housing problem can be solved, but not the way we propose to do with the Korea deal. I believe the Koreans would better serve Ghanas needs by helping us address the Railway and Energy sectors. As the Germans did to their railway sector and the French and Canadians to the nuclear programme, any arrangement should be based on technology transfer arrangements.

We must develop more growth centers
Ghana has crossed the 50 percent urbanization mark this year and for the first time, more people are living in urban areas than rural areas. In anticipation of urbanization and household growth, the best way of addressing the housing crisis is to develop new growth centers and rejuvenate existing towns and cities.

Housing involves a package of services, including the land, services, public facilities, the structures, recreational facilities, institutions, etc. all located in towns and cities.

We need to finalize the Shelter policy and create new housing laws and institutions such as National Housing Authority, Real Estate Act, Integrated Iron and Steel Authority, Cement Authority, Integrated Aluminium Authority, etc.

We must take advantage of new ways of addressing housing and plan our cities well, strengthen the Town and Country Planning Department, build new cities, do away with conflicting planning laws; cf. Town Planning Ordinance CAP 84, Local Government Act - Act 462 and NDPC Act 480.

China has planned and modelled out 220 cities of one million population each that will be built by 2030 and we must use similar strategies to develop our cities.

Well-designed cities promote the business cycle and provide the attraction and formal systems to mobilize funds to undertake more infrastructure investments.

Firms prefer to locate in livable cities because of increased efficiencies in output and trade. Cities also help to integrate national economies with the rural economy.

One of such cities planned in Ghana is the Western Corridor City project. Ghana has the land that must be developed, materials to be mined, people who want to work, professionals who can innovate and credit systems to be developed. We have everything.

And the recent discovery of oil and gas offers the opportunity to develop a fresh range of industries, including plastics, cement, bitumen and fertilizer. Yes, fertilizer is also important since a sound agricultural foundation is a sine quo non for an irreversible industrial takeoff.

The nations infrastructure is crumbling; a silent water and energy crisis is taking place, waste management, etc. are in disarray. Every day as I watch TV3 and Metro TV and see the state of infrastructure in our public hospitals, schools, police stations, prisons, etc. I feel this country is gearing for major crisis unless something drastic is done.

We need to attempt measures like what are described above. There are other challenges in forest degradation, dwindling water resources, traffic congestion, soil degradation, rural urban migration, etc. that needs to be addressed too. Any of these issues poses an imminent threat to our nation state.

The state of our water resources is particularly scary as deforestation, urbanization, galamsey and climate change continue to pose challenges. In an industrializing environment, the demand for fresh water increases to meet the needs of new factories, expanded agriculture, accelerated population densities in industrial towns and cities, and expected higher living standards.

Giant problems require giant solutions. We must think big if we want to thrive, and we must think long term. We must take bold and courageous decisions and get rid of fear.

If we plan holistically, we realize the solutions are much inter-related, and may not require as much as we might think. We need to craft appropriate spider-web economic strategy to solve them.

Technology and knowledge
There is no better time to develop as technology and knowledge has made things easier. At the time of the Industrial Revolution, the Europeans did not know a fraction of what we know today. Yet they made it.

The mineral industry - a trillion dollar value - can play a significant role in realizing Ghanas recovery. But every part of this sweet land has its strengths. Even Bongo, the poorest district in Ghana has beautiful green flat landscapes with stunning natural granite outcrops ideal for recreation and tourism.

There is a great danger in our continued reliance on external partners for our living. We need to take matters in our own hands. The problems did not start now. They started decades ago. Thus similarly, we do not have to make decisions on the basis of now, we have to think of the future.

We must start with what we have - our people. We never know how far we can go until we start. Franklin D. Roosevelt, the thirty-second US President said it is reasonable to take a method and try it. If it fails, we must admit it frankly and try another. But above all, we must try something. If previous methods failed, there is always room to try others.

The East Asian miracle was caused by leaders who made bold and courageous decisions, who when they realized that something was not working, quickly got back with their technocrats and redesigned to make them work.

I hope this helps as we move our Nation forward in the right direction.

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