Whether you are a hypnotized votary of Rawlings or an inordinate despiser of him or not, the fact still remains that it was during his administration that the value of the cedi was for the first time allowed to be determined by market forces. Whatever your sentiments about Rawlings, yet another crowning achievement of his era was the introduction of capital markets to Ghana.
Whether one sycophantically adulates or fanatically hates Kufour or not the fact still remains that it is under his watch that the cedi has not only stabilized but appreciated, albeit imperceptibly. Minute though the appreciation, Kufour Administration nevertheless has every right to deservingly take credit for the status of our national currency. The government has shown uncharacteristic discipline in not rushing to the central bank with reckless abandon to borrow funds (to print more cedis). Besides the discipline, the government has also displayed a lot of courage to declare Ghana a 'highly indebted poor country'. Morally repulsive to some us at the initial stages, that HIPC move has been a source of fillip to the nation's finances.
It is needless to state that the ebullient influx of foreign exchange by Ghanaians in the Diaspora has substantially contributed to shore up the national currency. It is pertinent to state with all the emphasis it deserves that Kufour Administration has absolutely no control over the ever-flowing stream of foreign currency from those in the Diaspora into the national economy. Here also, it was under Rawlings that the age-old practice of the suffocating foreign exchange regime was jettisoned.
The stability of the national currency (now sound money) is not an end in itself; it's a means to end. What should be the end of a competent government in a developing country like ours? The fundamental end is to develop and grow the economy with little inflation (a period of rising prices) thereby raising the standard of living of the general citizenry. For the average Adzei from La who daily rides trotro to eke out a living at Ministries (the administrative district of the capital) to experience the positive impact of the stabilized cedi, Ghana must produce more goods and services at competitive prices for both the local and the foreign markets.
Because of the bottlenecks that exist in our economy now, we produce inefficiently. The inefficient production translates into high total costs. Though wages and salaries in Ghana when compared globally are low, the productivity of Ghana labor is exceedingly low. The low productivity (the quantity of output produced by a given quantity of labor input) of labor does not make labor cost in Ghana cheap as one would have foreign direct investors to believe. Productivity measures the value of output relative to the resources used to produce it. It is closely related to well-being. The more productive we are, the more efficiently we are using our resources, because we can generate more output from the same quantity of input. For employees, this can mean higher incomes and higher living standards. For business, it can mean more output with the same inputs, and therefore more profit or more resources to invest in growth and the ability to remain competitive in national or global market. Though the government has minimal direct role in improving the efficiency of individual private and statutory corporations, it has a gargantuan responsibility in increasing productivity in the general economy.
Two key factors that do affect productivity are advances in technology and improvements in education and training. The government has no control in the advancement of technology, but it has strategic, fundamental and onerous responsibility in improvement of education. For the way forward therefore for the economy to make further gains in material standard of living, the government must continue to invest in the appropriate education and training. Firms must also continue to invest in new technology. The inefficiencies in the economy are not arguably solely attributable to laziness. Our inefficiency is mainly culturally driven and due to our style of management. Most Ghanaian employees consider their employers as exploiters to be fairly targeted for cheating. The Ghanaian employee does not only sincerely believe he/she is doing a favor to his employer but the employer owes her a living as well. This attitudinal cancer is pervasive. It is more flagrantly displayed by our political leaders who consider jobs as entitlements.
Another key player in raising productivity is our trade unions. The leadership of the trade union must not only be obsessed with organizing strikes and negotiating for higher pays and benefits. The leadership must also exert every influence in increasing productivity.
Though the government contribution to improvement of productivity is through education and training of the citizenry, it additionally has to give incentives to banks to finance the acquisition of technology. Government should guarantee loans of Ghanaian businesses to acquire new technology to improve productivity. The Ghanaian banking sector as it currently operates is anachronistic. It is the only banking sector that I am aware of that levies monthly fees on saving accounts. Banks in Ghana are not innovative.
Much as the government cannot directly improve or initiate policies to fundamentally improve efficiency in private businesses it can help by limiting the unfettered importation of goods that are locally produced or manufactured. Because Ghana has become the ward of the International Monetary Fund (IMF) and the World Bank, our government is immorally swallowing every prescription of these institutions without the faintest murmur. Our leaders are ever ready to grotesquely be subservient to these institutions. We are thus consequently witnessing helplessly the death of vital local industries as exemplified in the textile industry. The government should levy prohibitive duties for a specific stated period on imported fabrics that compete with local products. The writer is aware that such heavy custom duty could engender smuggling and deepened further the cancer of corruption in the country. It is arguable that protection of local industries through prohibitive custom duties is better in the long run than to witness the untoward demise of local industries. Prohibitive custom duties should be for a specified period for the domestic industries to learn how to stand and start walking, if not running.
Until quite recently, most Ghanaians were unfamiliar with treasury bills and bonds. Now many invest in those short term instruments. What that signifies is that given proper education, Ghanaians would abandon old traditions and bet on new ones. The reader needs not be reminded that cultivation of cocoa was once an exotic concept in Ghana. Ghanaians need to understand the operations of the capital market and be given incentives to invest in them. Incentives could be tax exemptions for individual citizens who invest in these short term instruments for a specified period. With open capital markets, the easier it is for people to find financial backing and succeed in their entrepreneurial ventures.
We now have sound money; we have fledgling capital market; we have government that is determined to hold inflation in check; it is now time to encourage production by targeting industries that Ghana has comparative advantage. So far the NPP Administration choice of industry is tourism and the export of non-traditional exports like cassava, pineapple and yam etc. Though the potential in these sectors is great when it comes to tourism, we cannot make headway with filthy choking us. A relative of mine traveled to Ghana with an American friend. The American spent more of his time collecting trash at La Pleasure Beach than swimming. It is shameful that our president would travel to the USA to promote Ghana as a tourism destination when mosquitoes are driving tourists away from La Pleasure Beach and the Trade Fair Site. One does not have to be a space scientist to combat preying mosquitoes.
But with our characteristic gaudy distortion of priorities we would rather take up a loan to build a presidential palace. The very idea of presidential palace now is enough to arouse an intense moral indignation in the breast of every virtuous Ghanaian. But alas what should one expect from an administration dominated be effete Asantes, the architects of gaudy ostentatious living in Ghana.
As already indicated, the ebullient influx of foreign funds to Ghana from those in the Diaspora has contributed immensely in shoring up the cedi. So far most of the inflow is targeted for consumption, construction of mansions (no wonder our president also needs a palace) and meeting of funeral expenses. We can learn from the Chinese, 75% of investments in “Communist” China are attributable to expatriate Chinese. Chinese and Indian expatriates are the engines behind the growth of their economies. Our government should endeavor to come out with policies and systems that could encourage Ghanaians to invest in the domestic economy. I introduced many Ghanaians sometime ago to the shares of Ghana Commercial Bank when it went public for the first time. The lessons I learned then was that with proper education and promotion, Ghanaian could invest in bonds and bills floated by the national government. Views expressed by the author(s) do not necessarily reflect those of GhanaHomePage.