It is time for us as a nation to reflect on our economic challenges and move beyond problem analysis to finding innovative, practical and lasting solutions to the problems. The socio-economic worms that are the cancer in our society must be treated properly. Our economic turbulence treatment lies within the country and we need decisive moves to be out of this nail biting situation. This therefore calls for strenuous efforts from the government of Ghana (GoG) and its people as a whole.
First and foremost, the walloping and ‘ballooning’ wage bill representing 57 percent as a share of government tax revenue as of 2013 (Ministry of Finance, GoG Policy Statement April 2014) haunts the economy and should be redeemed. Government should cut salaries of some public workers in order to reduce the wage bill. However, all workers on government payroll should be put under biometric registration system followed by a move on headcount. Any deceit posed by administrators or workers in this regard should not go unpunished. However, retrenchment will not be an effective move because of the issue of ‘ghost names’ that beset government payroll. Hardly will retrenchment capture ‘ghost names’ and therefore becomes ineffective or counterproductive in this case. So the measure now is to cut the salaries of public workers.
Fiscal discipline on the part of government is a factor that needs to take a stance. Government should live within its means and budget constraints. Tight fiscal policy-reduction in government expenditure and/or increases in taxes-is a good move to help curb the fiscal imbalance and reduce interest rates. Broaden the tax base, plugging leakages and hone smooth tax collection. And deem it necessary to cancel all unproductive expenditures.
The autonomy of the Bank of Ghana (BoG) should be strengthened to conduct monitory policies freely. Appropriate monitory policies should be the shadow of the Bank of Ghana and inflation targeting should not be downplayed and must be effective. The Bank of Ghana should pursue expansionary monetary policy (Quantitative easing) to support the tight fiscal policy pursued by the government. This is because the tight fiscal policy will lead to a fall in output but the expansionary monetary policy will increase output at least back to the initial stage and further reduce interest rate. The reduction in interest rate will lead to increase in investment and ripple through the economy. However the Bank of Ghana should be able to stem the cost of the quantitative easing which is inflation and therefore concentrate on the ultimate goal of the policy pursued.
Increase in economic growth is another factor that needs to be considered much. Increase in Savings, investment and human resource development together with growth inducing environment will help us achieve a higher economic growth rate. This will lead to job creation and lay the foundation for economic development. The government must also take a serious look at the factors that affect economic growth such as capital, labour, political factors and institutions. Feasibility studies and accurate litmus test must be done on all government policies before its implementation. Monitoring and evaluating of policies should be done periodically.
Woefully, there is a high level of imported content in local production and high preference for imported finished goods resulting in an excess demand of foreign currencies such as US Dollar, and other things being equal, a decline in the value of our currency (Cedi). This therefore calls for effective import restriction but the authority responsible has to do feasibility studies of import restrictions and shape its direct and indirect impact on the economy to avert it being counterproductive. Ghanaians must be encouraged to use made in Ghana goods. Diversifying the export base and adding value to the exported goods will help increase the demand for the Cedi in the foreign exchange market and hence appreciation of its value.
The service sector needs strict supervision and institutions beset with corruption must be dealt accordingly. The unparalleled plunder of public purse by individuals, parastatals and other institutions must be quelled and does not go scot-free. Another sector that needs proper diagnosis is the health sector and strenuous efforts should be taken to address the health needs of Ghanaians. The medium term measures put in place by the government to deal with the energy crisis should yield the desire results. Government must a have long term plan such as harnessing other sources of power generation and to increase energy supply. Energy consumption efficiency or reduction of energy intensity should be the short term measure. These measures when ‘germinate’ well will help prop up the Ghanaian economy.
Another sector that needs to be revamped and reinvigorated is the agriculture sector. Government should put adequate measures in place to increase the level of technology in the sector. The Comprehensive Africa Agriculture Development Programme (CAADP) adopted in the African Union (AU) summit ten years ago and nations promising to allocate at least 10 percent of their national budgets to agriculture aiming to achieve at least 6 percent agriculture growth annually (New African Magazine March 2014) should take effect in Ghana. And government must ensure that all the sub-sectors of agriculture sector contribute immensely to Real GDP growth and make farming more sustainable and resilient to climate change.
Furthermore, government should reinvigorate the weak state owned enterprises to process raw materials and help create employment avenues especially for the youth. The growing unemployment among school leavers need measures such as improving upon vocational and technical training and enhance entrepreneurship skills among the youth. Government should relate and cooperate well with non-governmental organizations and donors to provide funds of which part could be used to help unemployed school leavers who are innovative and business minded and place interest and taxes on that move.
We must as a nation have medium-long term economic development plans that will embrace our natural resources (E.g. oil), mining sector and agriculture sector and other areas of much importance. There should be a constitutional force that binds preceding governments to these economic development plans and also continue development projects that were undertaken by the previous government. All in all, government efforts must bring forth macroeconomic stability and political stability to enhance investors’ confidence in the economy.
Finally, the core move that many scholars have set down in the pursuit of success and wealth creation is positive attitudinal change which constitutes about 60 percent of our achievements in all fields of Endeavour (Michael Agyekum Addo,Seven Principles of Wealth Creation And Success). The whole nation needs psychological, political, economical, social and emotional overhauling. We need attitudinal change in all departments of life that will put us to work and rebuild the nation. Together, Ghana’s economy will be on a sound footing.
Written by: Salifu Abdul Kadir (0503503469/0548037522)