Mr. President, let me join the teeming Ghanaians to congratulate you on your elevation to the high office our land. An office you so much admire and have toiled for…. Once more, congratulations!
There is news for you. One is bitter and the other is sour. Which will you love to listen to first? Haven’t survived several elections, it is likely that you are used to hearing the bad news before the good one… so this piece will follow the same pattern by first relating the bad news and douse it with the good one. It is sweet that way.
Mr. President, this news is meant for your finance minister, but since you are the one who has been entrusted with the mandate to rule Ghana, it is good to pass it to you and forwarded to him. So here we go with the sad news…
Ghana’s debt stock…
Our country has huge debt stock. Estimates put it at 70% of GDP. The natural result of this is high interest payment and only a small room to raise funds to honor recurrent obligations. Over the years, the argument has been how to reduce our debt levels. That is only one of the ways that the problem can be solved. Other ways to address our debt level is to increase our GDP and also increase government’s revenue base so as to make the debt levels insignificant. No country in modern times has developed without an amount of debt. What is necessary is the levels of it as to whether it is reasonable or not. The incoming finance minister must restructure our current debts with two things in mind, longer durations and lower rates of interest. This will afford you room to develop the country.
Fluctuating Currency…
Our currency has not been stable. It wobbles anytime there is a slight shock in commodity prices. Such a currency does not give anyone the confidence to invest in this country and this is another challenge your finance minister must address with urgency. We have heavily relied on primary products as our sources of revenue. Whilst at that we have imported virtually everything from outside the shores of this country. With such an attitude, the currency is subject to dancing ‘’Kpalogo” and inflicting pain on the citizenry. We need a paradigm shift! This shift in paradigm will surely come with some pain, but it is good to preserve the future by scarifying something in the present. You must task your appointees to critically examine our imports and do away with the non-essentials and those that we can easily grow or produce at home. In the medium to long term, we should do some value addition to our primary commodities. There are other avenues to rake in foreign exchange. The power sector is one of those areas. We should work to increase our sources of power and we can easily export power to our neighbors to make foreign exchange to enhance the strength of our currency.
High Interest Rates…
High Interest Rates…
As a country we have several reasons to believe that private enterprises are the sure way to develop a nation. This even goes beyond believe and is actually in our make up as it seems we are capitalist in nature. We have however stifled all private enterprises of the necessary oil for growth-cheap funds. Currently, government is borrowing at 26% per annum. The simple question is, who will dare take any risk if the risk free rate is 26% per annum. Governments have crowded out the private sector and yet crying for increased revenue. Today, banks and other financial institutions find solace in investing in government instruments than giving credit to businesses and households. This is another economic problem your finance minister must resolve if you are to impact lives and businesses. It is an easy mathematics if not economics of it that when businesses have funds they are able to generate adequate profit which will give government good revenues. Without this kind of revenue generation for government, the vicious cycles of government borrowing expensive and crowding out the private sector will continue and this will lead to low revenues for government to carry out developmental projects. It is on record that the banks who are performing highly in the country did heavy investments in government instruments (this phenomenon has been captured in this magazine in past articles). This trend is not sustainable for the country’s development. To have the desired impact your Finance Minister must as a matter of urgency reduce government borrowing rates to as low as a single digit. This will be audacious but it is what will spur the country’s growth.
A subsidized economy…
There is an assertion that our economy is heavily subsidized. If this is true, then we are eating into the future and denying the next generations the necessary resources to grow. Subsidy in itself may not be bad if channeled into the right sectors of the economy to ensure poverty alleviation. Your Excellency your finance minister must critically examine each subsidy and justify its existence. Putting subsidies where they ought not to be will only produce a ‘lazy’ citizenry and also unbridled corruption. We must carefully scrutinize our subsidies and access their value for money. Those who fail the critical test of economy, efficiency and effectiveness must be scrapped.
A gaping infrastructure gap…
There is a huge infrastructure gap that must be filled. It is not acceptable that there are still communities within the greater Accra region that are not easily accessible. But it requires revenue to build the infrastructure needed. Improving on the street naming exercise by your predecessor and taxing various housing units the appropriate rates could help bring the necessary funds to bring good access roads to their communities. No responsible citizen should cry because you have taxed them to give them accessible roads to their houses.
Extreme Poverty…
Your Excellency our people are suffering from extreme poverty and this is another daunting task that your finance minister will face. How he handles this, I cannot say but there must be clear objective to empower people mentally and economically. This must be in such a way that individuals must believe they can change their personal situation and the systems must also be there to reward anyone who dares. No government should pay people to be lazy but government must make sure everyone has fair opportunity to grow. Growing the economy and providing necessary conditions for private businesses to grow is one sure way of alleviating poverty.
Mr. President, it is assumed that occupying the highest office of our homeland is the greatest joy there is but the sad news is that you are faced with so much challenges that you must also bear in mind that there is no sweetness here….
But there is good news… and the good news is you have been entrusted with the assets and liabilities of this huge fortress called Ghana and with the right leadership you can do the unimaginable… that is the good news and this singular good news surpasses any bad news so far… The ball is clearly in the court of you and your finance Minister. I wish you well and all the very best!