In what appears to be a rejoinder to critics who dared him to break his silence on the state of the economy, Ghana’s Vice President, Dr. Mahamudu Bawumai, on April 7, 2022, admitted the fundamental challenges facing the economy, partly due to the significant global economic slowdown. He, however, assured Ghanaians that despite the challenges, all is not lost.
Dr. Bawumia outlined several measures to resuscitate the economy, key among them being the agenda to transform the economy from its current old structure since 1957 to a ‘new economy’. According to Dr. Bawumia, virtually every government in Ghana’s history saw the need to change the structure of the economy through diversification and by shifting from the production of raw materials to value addition.
The Vice President points out that changing the structure of our economy, though, will not happen overnight. Nonetheless, economic transformation remains a priority for government if Ghana is to reduce import dependency, expand the economy, create jobs, increase exports, and support the value of our currency.
The Vice President did not highlight reasons why past governments failed to transform the structure of the economy, but in my view the inaction can be attributed to poor economic planning and implementation, mostly blamed on military interventions. Besides, the few civilian governments Ghana has had since 1957 have failed to continue with the economic policies and visions of their predecessors.
Despite the relative stability of the Fourth Republic, the five governments that have rotated between the New Patriotic Party (NPP) and the National Democratic Congress (NDC) have based the country’s development on their party manifestoes. The use of party manifestoes as policy guidelines explains why Ghana does not have a long-term economic and social transformation vision. So, every four or eight years when government changes hands, Ghanaians are compelled to live with no clearcut vision of where the economy is heading. This raises questions on the relevance of the National Development Planning Commission, a state institution charged with charting the path for Ghana’s economy journey.
Nonetheless, Dr. Bawumia outlined the policy guidelines under the ‘Ghana Beyond Aid’ agenda for economic transformation. Below is the list of interventions in the agricultural sector:
- Planting for Food and Jobs to increase agricultural output for agro processing and food sufficiency.
- The Tono dam, and the Left and Right banks of Kpong dam rehabilitated to provide 13,190 hectares of additional irrigable land for rice and vegetable cultivation.
- 80 warehouses have been constructed with a combined storage capacity of 80,000 metric tonnes to provide storage and reduce post-harvest losses.
- Reforms in the cocoa sector, including hand pollination, has resulted in the highest ever cocoa production (1,047,385 tonnes) during the 2020/2021 cocoa season.
Industrialisation
Dr. Bawumia said policy has made a significant impact on the manufacturing sector. Currently, 106 factories have been completed and are operational, and 148 factories are under construction. This represents the largest number of factories established under a government programme since independence, according to him.
Automotive Industry
He further disclosed that under the facilitation for the assembling of cars in Ghana Volkswagen, Suzuki, Sino Truck, Peugeot, Toyota and recently Nissan, have established assembly plants in Ghana. KIA, Hyundai and Renault are also on course to start production in Ghana this year. In addition, Ghana’s indigenous car manufacturing company, Kantanka has received incentives to increase its production.
Along the development of the automotive industry is the investment in the integrated bauxite and aluminum industry. Dr. Bawumia disclosed that a wholly-own Ghanaian company, Rocksure International, has started work to develop the Nyinahin-Mpassaso hills and construct an aluminum refinery.
Besides, government, through Exim Bank, has committed US$60million to support the local pharmaceutical industry, with 75% of the approved amount already released to various pharmaceutical companies, according to him. In fact, the pharmaceutical industry is one sector Ghana potentially has the competitive advantage in West Africa, for which government should channel its commitment to vitalising the sector.
As stated earlier, these interventions may well be what Ghana needs to resuscitate our economy; but my fear is that once these interventions are not within a broader national development framework, the economy will be back to square one if power changes hands. In fact, the speed and ease with which new governments dismantle ongoing projects of their predecessors is Ghana’s biggest economic challenge.
Knowledge economy
Countries hoping to transform to new economies must invest in intellectual capital. To become a key player in the new economy, Ghana needs to develop her intellectual capital as a strategic factor of production. The agenda is to empower future generations with the practical problem-solving skills to make decisions or take actions that are important for the future of the country. In this regard government’s commitment to free secondary, TVET and STEM education is a step in the right direction. The pace of global change is so rapid that Ghana cannot afford to remain uncompetitive and unproductive.
Digital economy
The digital economy refers to economic activity that uses electronic communication and digital technologies to provide goods and services. Emerging economies across the world are seriously industrialising, joining the digital revolution of boundless information and seamless electronic commerce.
Information is becoming readily available around the globe at an unprecedented pace. In other words, the Internet technology is changing the fundamental nature of doing business and competition. In response to the enormous opportunities the digital technology offers individuals, companies and the country, government appears to have made prudent decisions to invest in the internet and broadband technology.
In his speech, Dr. Bawumia alluded to his government’s decision in 2017 to build a new digital system as a springboard to transform the economy. Some of the key digital systems achieved so far include the issuance of biometric national ID cards to both Ghanaians and non- Ghanaians with resident permit. So far, 15.9million people have been enrolled on the Ghana card by the National Identification Authority (NIA).
This was followed by the ‘Property Address System for Ghana’. Prior to the institutionalisation of the National Address System, a civilised country Ghana had no working address system. This is one of the key reasons why banks were reluctant to grants loans to individuals, since they could not be traced to permanent locations. But with the GPS technology every square inch of land in Ghana has been captured. So far, The Land Use and Spatial Planning Authority (LUSPA) has provided unique addresses for 7.5million properties in Ghana along with street names and house numbers.
Promoting financial inclusion
Another significant milestone is the operationalisation of the Mobile money interoperability ((MMI). As a result, everybody with mobile phone can transfer money seamlessly across different mobile money providers and between bank accounts and mobile wallets. Ordinary people now use the tool for buying and selling goods and services. Additionally, the MMI has made it possible for everyone to own a bank account.
The figures indicate that 90 percent of Ghanaians now have bank accounts or mobile money accounts. According to Dr. Bawumia, at the end of 2016, total cumulative value of mobile money transactions was GH¢78.5billion; however, due to MMI, the cumulative value of mobile money transactions reached GH¢978.3billion in 2021. “We have practically solved the problem of financial exclusion in Ghana”, Dr. Bawumia said.
Digitalisation and public service delivery
One significant achievement of digitalisation, according to Dr. Bawumia, is the improvement in public service delivery and the reduction in corruption through minimising human contact.
Passport Office
One of the sectors that attracted headlines for corruption, favouritism and nepotism was the Passport Office. However, with digitization, the average turnaround time for the acquisition of passports has reduced significantly. Currently, Ghanaians can apply for passports online, which can also be delivered at digital addresses through courier services. The modernisation and digitisation of the passport application process has resulted to a quantum increase in the number of passports processed annually.
In 2017 the passport office processed a total of 16,232 applications with revenue of GH¢1.1m, while in 2021, the Passport Office received and processed 498,963 online passport applications, with a total revenue of GH¢56.7m. Digitisation has, thus, dealt a severe blow to corruption at the Passport Office. Obviously the speed in processing and issuing passports has yielded higher revenue for the state, a chunk of which would have gone into private pockets.
Dr. Bawumia further noted that the digitalisation also reduced the bureaucracy and the associated corrupt practices in the clearing of goods at Ghana’s ports. Hitherto, importers underwent harrowing experiences at the ports. “The introduction of a paperless port system has reduced several layers and simplified the process, reduced the time needed to clear goods and the avenues for corruption, and increased efficiencies and revenue mobilisation at the ports”, says the Vice President.
DVLA
Another hotspot for bureaucracy and corruption was the DVLA, which offers Driver Licensing and Vehicle Registration related services. Due to essential services it delivers, it was obvious that DVLA would be a candidate for digitalisation. Dr. Bawumia disclosed that with the digitalisation of the drivers’ licenses in 2019, the DVLA recorded an increase in service by 109% in 2020. Comparatively, while the DVLA generated an average revenue of GH¢71.5million in the four years (2013-2016) prior to digitisation, its average reached GH¢168.4million in the four years (2017-2020) with digitisation.
Motor Insurance
The National Insurance Commission has also implemented the Motor Insurance Database to curb the use of fake motor insurance stickers plying our roads. Digitalisation has introduced key security features, which have been synchronised with a national database, and can be accessed simply with any mobile phone by the police.
As a result of the innovation, the growth of the motor insurance industry increased from 19% in 2019 to 37% in 2020, and 26% in 2021. The value of the business undertaken increased from GH¢566million in 2017 to GH¢1.165billion in 2021. “Thus, digitisation has dealt a severe blow to corruption in the insurance industry, with no room for fake insurance certificates”, says Dr. Bawumia.
The benefits of digitalisation are so enormous that no country that aspires to be globally relevant and competitive can afford to ignore the evolving technology. Some of the benefits include: multiplicity and choice of information, reduction in cost of doing business, lower barriers to entry, and enables people to work from home, among others.
