The next Mahama gov’t, the three (3) Shift Economy and the Domestic Debt Exchange Programme

By Kwesi Atuahene
Article The next Mahama govt, the three 3 Shift Economy and the Domestic Debt Exchange Programme
JAN 24, 2023 LISTEN

It’s been four decades since the despair of the “Ghana must go” generation, many of the victims who were below fifteen (15) years then, are today victims of the domestic debt exchange programme under the leadership of President Nana Addo.

Sincerely, every Ghanaian currently living in Ghana, knows who is our next president and which political party will form the next government, those who do not know are simply in a state of denial. The NDC has always been the alternative to the NPP and perhaps vice versa.

In line with article 36 (1) of the 1992 constitution, the state is mandated to take all necessary measures to ensure that the national economy is managed in such a manner as to maximize the rate of economic development and to sure the maximum welfare, freedom and happiness of every Ghanaian.

I foresee the next gov’t, aggressively promoting and protecting indigenous Ghanaian businesses to ensure greater Ghanaian ownership of the commanding heights of the economy, such as banking, insurance, construction, telecommunications, the extractive sector, energy and international trade.

Local economic development must be the bedrock of our national development strategy. The NDC must ensure that every district and community in Ghana participate fully in national development and benefits according to its local economic development. Importantly, the NDC must collaborate with the private sector to establish agro–processing factories across the country based on regional comparative advantage.

To promote private sector development and make the Ghanaian industry internationally competitive, and to protect consumer interests and safety and enact the National Competitive Law and Consumer Protection Law, which will support the establishment of the Consumer Protection Council.

Despite Ghana’s small market size of only 32 million and a per capita income of $2200, there should be aggressive promotion of exports to increase the demand for labor. However, the current domestic debt exchange programme will have serious impact on Mahama’s dream of three shift economy.

After all the excessive expenditure on the banking sector clean up by the current government, four Ghanaian banks are feared to be highly exposed as government pursue an aggressive debt exchange programme to balance off its books and secure a US $ 3 billion bailout from the IMF.

The banks, three indigenous and one multinational, have overly been overstretched due to their over exposure to government debt securities as a major source of “safe investments”.

Many banking sector analysts have revealed that although all the 23 banks in the country are exposed due to the ongoing debt exchange programme, the four banks, however, are in distressed state.

According to C-Nergy Ghana, an investment advisory firm, the four banks had an average of 54 per cent share of their assets specifically invested in bonds, thereby exposing them badly.

The banking sector is the most dominant investor in Government of Ghana (GoG) debt instruments, a phenomenon induced by both regulatory and market economics.

In 2017, only GH¢10 billion worth of GoG issued debt securities was held by the banks. As of 2021, banks held over GH¢55 billion in GoG debt securities, representing almost 30 per cent of total banking industry assets.

Of this amount, about 80 per cent were in bonds. Data available indicate that interest income largely dominated by interest payment on government securities is the primary source of revenue for banks in the country. In 2021, about 65 per cent of the interest revenues of banks were generated from investments in securities. It is quite clear that many local businesses will be affected.

The next Mahama gov’t, dream of starting a three–shift economy to deepen manufacturing and increase employment but what could be the step-by-step procedure to follow to enable this idea becomes a reality.

Urgently, the NDC in 2025 must diversify the current situation of dependence on few commodities such as crude oil, minerals and agricultural production to a broader range of sources of production, employment, trade, revenues and expenditure. Setting up government farms that operate 24 hours, 7 days weekly to produce crops that attract international consumption could be a perfect starting point.