The novel coronavirus pandemic has presented us an opportunity to transform our economy as we recover from its ravaging consequences. It is an undeniable fact that kick starting our economy will not be an easy mission considering the structure of our economy.
According to the Ghana Statistical Service Business (GSS) Tracker Survey, more than 770,000 workers have had their salaries slashed by their employers since the pandemic commenced in March 2020.
The survey further noted that more than half of firms interviewed reported a deterioration in their cash flows. In response to this, various measures have been implemented by government to mitigate the impact of the virus. Government’s recent assurance to vaccinate about 20 million Ghanaians against the virus has also come as a relief to Ghanaians.
However, dealing with the pandemic is as crucial as jump starting the economy as we exit from this global catastrophe. Many pundits have noted that our economic recovery process should be all inclusive and offer equal opportunities for all and sundry. Against this backdrop, this paper discusses possible ways Ghana can ensure inclusive economic post-Covid-19 recovery. The discussion is centered on strategies for Ghana’s economic recovery in the context of three characteristics of an inclusive economy – economic growth, stable policy environment and natural resource sustainability.
Key Ingredients
Economic Growth
The International Monetary Fund projects Ghana’s growth rate to record 4.2% by the end of 2021. Reasons cited by the Fund generally reflect expectations from the global vaccination against Covid-19 and later additional recovery support policies. The projection is good for our economy. It could serve as an attractive indicator for investors in their decision making to invest in Ghana.
However, in this discussion, we move away from this usual measurement of economic growth using GDP. Three related dimensions can be the focus as our growth indictors: increasing good job and work opportunities; improvements in material well-being and economic transformation for the betterment of all. Indeed, job creation stands out as the primary indicator among these growth dimensions which could propel the other indicators to enhance economic growth.
Prior to the COVID-19 pandemic, Ghana was experiencing an upward growth trajectory (6.3% in 2018 to 7.0% in 2019). However, the growth impact on employment generation was nothing to write home about. Some experts believe that the situation is due to the source of growth which is the Oil and Gas Sector. The sector by nature is capital intensive hence unable to churn out more jobs, thus rendering Ghana’s growth exclusive.
In this regard, it is important for government to channel revenue from this booming sector to other sectors (Eg: Agriculture and Manufacturing Sectors) capable of generating more jobs for the teeming Ghanaian youth. Creating jobs for Ghanaians hopefully will lead to an increase in income generation hence improvement in the material well-being of people. Government must also intensify its digitalization agenda especially in these job generating sectors to attract the youth into these sectors. This will help to enhance the economic transformation of this country.
Stable Policy Environment
Ghanaians should be able to have a significant degree of confidence about the prospects of the economy. That confidence should manifest in the number of local investments in production. This can only be realized when government ensures certainty and continuity in the policies it implement.
Over the years, we have experienced lack of policy stability and continuity especially during a change of government. A clear manifestation of this issue has to do with the numerous abandoned projects we see whenever a new government is formed. It behoves on us to define the specific economic model to run our economy. Singapore’s model of economic development was anchored on a strong government interventionist approach rather than a free market approach. Same approach was adopted by some Asian countries before opening up for market forces competition.
Today, these countries have all transitioned from developing to a developed status. It is time for us to change the way we run our economy. We need an economic model that will be nationally acceptable, non-partisan and suitable to smoothly run our economy. The free market economic policy always trumpeted by the Bretton-Woods institutions has not worked for developing countries like Ghana. The policy often produces market failures hence promoting economic exclusion.
On the contrary, it can be realized that many advanced countries today started with a state-led strategy before opening up for free-market economy. As such, it is time we have an inclusive national policy on how to run the economy. The continues policy changes every 4 or 8 years is not helping this country.
The national policy should be formulated based on consensus and anchored on an economic model with a well-defined philosophical background. Perhaps this Keynesian philosophy which supports a more state-led economy initially adopted by today’s advanced countries could be the game changer for us. It will serve as the basic philosophical background through which all public policies are formulated and implemented. This will ensure policy stability and continuity irrespective of a change in government.
Natural Resource Sustainability
Finally, Ghana is endowed with a lot of natural resources but many are depleting. It is quite worrying and if care is not taken our environment will lose all the gift nature has given us. We must ensure the sustainability of our resources by preserving or restoring its ability to supports human well-being. Government’s recent war against illegal mining was a step in the right direction.
However, it seems the momentum has diminished as cases of such activities keep on recurring. We need to crack the whip on people engaged in such activities. Our security agencies should be up and doing in preventing this illegal activity. In addition, climate change issues should also be of concern to us. We cannot ignore the effects of greenhouse gas emissions from our factories and vehicles to our environment. Government must pay particular attention to the strategic direction under the National Climate Change Policy.
Furthermore, many experts have questioned why our economy continue to depend on foreign assistance despite our vast natural resource. Perhaps the dependency mind set our leaders formed during the time with our colonial masters could account for this situation. It is quite appalling as government consistently borrow to complement our low revenue generation. Why is Ghana so poor yet rich underneath the soil? It is obvious that we are not managing our natural resources well. We are still giving out concessions to foreign oil companies to extract our oil while we receive just royalties.
Meanwhile, other oil rich countries such as Norway and Saudi Arabia have all adopted service contracts to own and sell the crude oil and then pay back the oil extracting companies for service rendered. Ghana cannot still rely on this dependency strategy to develop an inclusive economy. It is time we change our approach in managing our natural resources. We must adopt more beneficial oil contracts such as the service contract for Ghana to own greater portion of our oil revenue. We cannot still give away our black gold and remain poor!
Conclusion
In brief, inclusive economic growth does not come by chance. It calls for a more concerted effort from all stakeholders irrespective of their status. As such, all hands must be on deck as we start re-building our economy out of the woods of the Covid-19 pandemic.
Indeed, the private sector is the engine of growth. Nevertheless, government must lead this crusade to make our economy fully inclusive. Government should not only be concerned about our growth figures but also the number of jobs created as a result.
Furthermore, it is time we define our own model to run the economy. This will guide us in policy formulation and implementation. Lastly, we must also change the way we manage our natural resources to benefit the citizenry and not foreign investors. Concessional contracts should not be part of our strategies henceforth.
>>>The writer is a Research Assistant at the Institute of Economic Affairs (IEA). He can be reached on [email protected], [email protected]
