It will take bold reforms, backed by strong political will, to transform the economy’s dwindling fortunes, Dr. Sam Ankrah, President of Africa Investment Group, has said
He said the economy’s outlook is bleak, but added that strong political will to implement bold actions such as sanitising government payroll, significant expenditure cuts and critical review of political manifesto policies, among others, would reverse the malaise and send positive signals to the investor community.
“Any reviews, cuts, restructuring or even critical appointments which will have a positive impact on the economy, will attract investors’ interest. It will signal seriousness to the market of wanting to properly address the deficiencies,” he said.
He further stated that in addition to a significant reduction in government expenditure by permanent cuts, patronage of made-in-Ghana products and policies to incentivise such patronage, as well as strict control of the budget and deficit overruns, could return the economy to growth path sooner than later.
Dr. Ankrah, a fellow of the Chartered Institute of Economists – Ghana, who was asked how the economy could be rebooted, emphasised that it will take strong political commitment to achieve this, adding: “It will require strong political will which we haven’t been seeing”.
He maintained that manifesto policies will have to be reviewed critically for viability and sustainability. Government payroll and other expenditures will also need to be slashed considerably, if a turnaround is to be achieved.
The domestic economy, according to many analysts and rating agencies, is experiencing one of its worst economic crises in decades, after been ripped apart by COVID-19, leading to higher-than-expected public expenditure against falling revenues since 2020.
The import dependent nature of the economy, means it has also been badly affected by the ongoing Russian-Ukraine war, with pump prices of fuels reaching heights not seen in many decades, leading to rising cost of living and anxiety.
As a result, the cedi has lost nearly 20 percent of its value against the United States dollar since the turn of this year alone. Inflation, meanwhile, driven by skyrocketing transport and food prices hit 19.4 last month on year-on-year basis, the highest since September 2016.
Government, under pressure for bold action to breathe new life into the economy and return it to growth path, has flirted between new taxes and cutting down public expenditure.
While the latter option, whose impact is yet to be felt, has been widely applauded, many market watchers hold the view that by introducing a new tax – the E-levy of 1.5 percent on electronic transaction – in these crunch times, is unduly burdening Ghanaians.
While government blames the current crises on the pandemic and the ongoing Russian-Ukraine war, Dr. Ankrah argues that these two are only the exacerbating factors.
He said: “Uncontrolled borrowing to pay for recent and recurrent expenditure, and not so good economic management are the real causes”, he said.
The investment banker, however, believes all hope is not lost yet, saying: “There will be a need to do a wholesale divestment of non-core activity. If it has nothing to do with key infrastructure or human capital development, we should consider ditching it”.
