Naturally, every politician wants to trumpet their achievements while in office so that the electorate from whom he obtained his mandate would look favorably on him as opposed to the other politician in the other party.
It comes as no surprise, therefore when the current President affirmed that “the first order of the day for his administration was to get the fundamentals of the economy right, a prerequisite for realizing the vision of Ghana becoming an industrialized country”. This was when he spoke at the 5th Financial Times Africa Summit on Monday, on 8th October 2018.
He went on to give apparently solid credentials including the fact that his government has managed to reduce inflation from 15.4% in 2016 to 9.9% today, with a moderation in the cost of borrowing to boot. The fiscal deficit has also been reduced from 9.3% in 2016 to 5.9% in 2017, with a projected 4.5% deficit this year, 2018. He continued “ indeed the Ghanaian economy whose growth rate stood at 3.6% in 2016 , the lowest in two decades, grew by 8.5% in 2017 , and is expected to grow in 2018 , by 8.3%, which , according to the IMF, would make it one of the fastest growing economies in the world this year. “
The above are certainly glowing achievements as per the president and would be welcomed by majority of the intelligentsia. The stark reality is that these are statistical indices understood by only a small section of the electorate. It has also been said that “ statistics are like bikinis, what they conceal are far more important than what they reveal” The majority who have the final decision to make on whether the government has “done well or otherwise” hardly care a hoot about the statistics.
It is also instructive to remind ourselves that statistics have a way of painting scenarios which may be interpreted narrowly depending on who is conducting the interpretation and their peculiar biases towards certain indices. For instance, if Ghana’s economic growth clocks the much touted 8.3% by the end of December 2018 as forecasted, it does not in any way mean that Ghanaians’ economic and social circumstances have suddenly surpassed that of say the UK which for the sake of argument, ends the 2018 year on say a 3.5% growth rate. It all depends on the base from which the statistics have been drawn and the parameters which formed the basis of the computations.
Whereas even a 1% growth in an industrialized economy could absorb hundreds of thousands of unemployed persons, an 8% growth in an LDC could still have little impact on unemployment, for instance. It would be fallacious, therefore to suggest that the LDC’s economy has surpassed that of the advanced country on account of the lift in this economic index alone.
The argument here is not to deflate or ignore the efficacy of statistical indices in comparisons between countries or different periods in a country’s history. In spite of the limitations, at least, statistics provide benchmarks upon which decisions could be taken. Other things being equal, at least a stable macro-economic framework has the potential to induce further growth. Economic agents are enabled to gauge the risk spectrum and therefore make decisions to invest further or shrink their investments in line with the direction of key statistical indices. When Ghana’s country risk rating improves from” B- to B with a stable outlook”, politicians would tout how well they have managed the economy, just as multi-national firms would decide to invest in the country or reduce existing investments.
Placed in the context of the electorate, however, one observes that these positive indices do not always determine voting patterns. This observation largely depends on the level of literacy prevalent in a country and also how the press perceives things and use their might to sway popular thinking, at least in the short term. The situation becomes even murkier when the electorate is whipped into short term inclinations by politicians eager to obtain votes, irrespective of the long term implications of popular decisions.
The United States is trumpeting its current 3.7% unemployment rate as the lowest in 48 years. Only time will tell what the repercussions will be when other trading partners begin to revise their notes in response to the “America First mantra”.
A cynical opposition member in Ghana for instance, may say that Nana Addo’s economic indices are good, but they have come at the cost of a freeze in employment, suspended road and other infrastructural development, reduced capacity to tackle urban sanitation and insecurity among others. Suddenly even inflation targeting becomes a monster to this opposition sympathizer as if a long period of hyper inflation is rather preferable. The opposition may also alert the electorate to how these indices would pan out after the products of the free secondary school education join the not too strong employment market soon.
It is interesting to note that this phenomenon can prevail in even otherwise strong democracies with relatively higher literacy rates and vibrant media establishments like the United Kingdom and the USA. Recent elections in the US attest to this as also was the referendum on Brexit. Interestingly, in each of these scenarios, various statistical concepts have underpinned the choices made by the electorate, only for them to realize “how wrong they were” in not going beyond the icy statistics.
An old man told me some years ago that Dr. Kwame Nkrumah said after his overthrow that if he knew Ghanaians were so short- sighted, he would have connected pipes flowing with milk into individual homes. Without being partisan, one can honestly pinpoint the enormous economic and social improvements that existed shortly before his overthrow. As far as statistical indices were concerned, however, Ghana was scales above several other developing countries in terms of GDP, literacy rates, employment rates, infrastructural development and other salient economic and social performance indicators.
Yet, I recall with pain now how the late visionary president and his policies were bastardized and how as children we were made to see Dr. Nkrumah as the “worst thing that ever happened to this country”.
I write this piece therefore in the context of the limitation of statistical indices and how the electorate may vote in direct opposite to what they “feel or have been made to feel by other political actors and their media cohorts, irrespective of what the statistics portray”.
It is therefore not surprising to find that while the current president believes sincerely that he is on course to setting the agenda for economic prosperity into the future, the electorate may not have “seen or heard of any tall man harvesting palm fruits above them- to wit,- yentee se Dogo be renu abe”, in Akan parlance . What the politician may consider reality is therefore not the same as what the electorate perceives, depending on how or what they feel in their pockets.
Such sentiments drive the “unfortunate” politician into focusing on just short term aspirations to the detriment of long term growth. Even the structure of our banking terrain which should be the catalyst for long term growth suffers from this short term orientation where the bulk of deposits sit in the one-to- six months bracket and stifle banks’ ability to engage in long term funding for infrastructure, shipping and aviation, industrialization, oil and gas development, inter alia.
Perhaps, the four year term of government under the current constitution feeds into this myopic short term inclinations and makes one wonder whether we should not consider extending the term to two periods of seven year durations. I would not be surprised to hear that if the politician is given two 10-year terms, he would still make excuses, as we have seen in Zimbabwe, Cameroon and Uganda.
The experiences of other countries like China, the Asian Tigers and even Rwanda should however convince us that there is merit in having long terms for governments to help them shift from their short term inclinations to really develop this nation beyond perpetual aid. Of course long term governance alone is not the panacea for growth. It must be accompanied by some change in our understanding of democracy, which must go with responsible opposition, discipline, civic responsibilities and accountability across board.
Perhaps it is not too late to remind politicians that economic indices are good, but unless these translate into improved well being and social inclusion, especially in the employment space, they would continue to be baffled by what the electorate perceives to be meeting their aspirations and how voting patterns may swing. If care is not taken, the electorate would unconsciously push the politicians into concentrating on construction of market stalls and other petty projects that may be visible but contribute little to our long term growth.
Politicians must go beyond the statistics if they care about their fortunes in the next elections because those who appreciate the statistics are few and cannot swing the votes beyond the 50 plus 1% threshold they need so badly.
The writer is a Fellow of the Chartered Institute of Bankers and an adjunct lecturer at the National Banking College, a farmer, and the author of “Risk Management in Banking” textbook. Email; email@example.com