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$1,000 will not make Ghana middle-income -Economist advises government

By (ghanaian-chronicle)

Barely one month after the government unveiled the draft of a 10-year development plan that is supposed to make Ghana a middle income country with a per capita income of US$1,000 by 2016, a prominent economist has advised the government to reconsider the figure and focus instead on human development as a means to improving living standards in Ghana.

In an interview with The Business Chronicle last week, Dr. Nii Moi Thompson explained that the government's medium-term development plan, the Growth and Poverty Reduction Strategy (GPRS2) quotes the World Bank figure of US$965 as the “line” which separates low income countries from middle income ones.

He said on the basis of that measure, “even countries earning US$1,000 per capita today are only US$35 removed from being low income, how much more $1,000 in 10 years.”

The eminent economist noted that US$1,000 in 10 years at a “conservative” international inflation rate of 3.5% would be worth “only about US$710 in today's prices”. He said this is lower than the US$965, which means that even if Ghana attains the $1,000 in 2016, it will still be a low-income country.

Dr. Thompson said for Ghana to be at the “threshold of middle income status” in 10 years, the country's per capita income will have to be about US$1,333.00 in 2016, but, he said, “this will put us as the low extreme of low-middle income. The difference will be marginal.”

He however advised government to worry less about per capita income and concentrate instead on human development issues, such as education and training. He pointed out that part of the reason Ghana's per capita income remains low is that majority of the labour force are either illiterate or semi-literate, adding that a well-educated labour force will lead to increased productivity, higher incomes, and a fall in poverty.

“Let the government focus on education, training and productivity and income levels will take care of themselves,” he explained.

Dr. Thompson cited Gabon, as an example that middle income status alone will not lead to poverty reduction. He said the country's per capita income of $5,000 is about 10 times the per capita income of Ghana, but life expectancy there is “roughly the same as in Ghana.”

On the current energy crisis, Dr. Thompson said the time had come for us to “talk less about macroeconomics and macro-stability and deal more with institutional economics, which covers issues of leadership and how they affect economic management and national development.”

He said the energy crisis was created by a “leadership crisis at all levels of government, from the presidency to the ministerial level to the level of technocrats,” adding that “the president seems to be missing in action in this our hour of need.”

He urged the president to “take charge” by setting up a “war room” at the Castle and directing solutions to the crisis. “The public needs to see that the president cares and he's in charge, not detached,” he said, adding that how leaders deal with crises often define the legacies they leave behind.

Asked to elaborate his views on how the president has handled the energy crisis so far, Dr. Thompson accused the president of being insensitive to the plight of Ghanaians.

He asked: “What is the point of having lunch with the Queen in far away England and having it broadcast all day long on national TV at a time when some people don't have electricity to run their business much less watch TV? Is it to show how the president and his entourage were enjoying themselves while we were sweating it out here, literally,” the frustrated economist asked. He described the event as “tasteless and unfortunate” and said he hopes that the president's handlers will be “more sensitive to our sufferings in the future.”

He said a key element of good leadership is “empathy” or “the willingness of leaders to identify with the suffering of their people and work with them for solutions”. When empathy is absent, “leadership becomes self-serving and counter-productive” he added.

Dr. Thompson, who is also a vocal critic of “cabinet reshuffles”, urged the president to learn from what is happening in the energy sector, which has had four ministers in six years and “promote a culture of stability in political appointments.”

The prominent economist said a new minister every one-and-a-half months “is unhealthy and disruptive” and makes it difficult for ministers to provide the kind of long-term leadership needed by their subordinates and their ministries.

He said it takes time for new leaders to understand the institutions they head and provide the needed leadership, so that if ministers are moved around “haphazardly” even before they have fully acquainted themselves with their ministries, those ministries suffer.

“Unless a minister is involved in corruption or is grossly incompetent, leave them alone and let them work,” he advised the president.