Random thoughts of a rural farmer: Arrest this inflation monster!


According to a Citi news-room item, “a report by the World Bank has revealed that high inflation rates in 2022 pushed an overwhelming 850,000 Ghanaians into poverty”.

The report suggests “that the severe economic crisis in 2022 characterized by soaring inflation rates had devastating consequences on food security and poverty in the country”.

It goes on further to state that “the year -on year inflation surged from 14% to a staggering 54% between January and December, making it the highest inflation level seen since the early 2000s”.

This scary news item was enough to jolt me from my self- imposed hibernation to restart writing for the B & FT newspaper. I realized though, from my period of quietude, that hibernation produces renewed life for both the human species and our animal counterparts.

Humpty Dumpty (Mother Ghana) sat on a wall (went to sleep) and fell (into economic distress). All the king’s men are still at post but could not raise Humpty Dumpty (o nto the path of sustainable growth).  From 2000 to now 2023, we have not succeeded in taming inflation to desired levels.

If inflation has the capacity to cause such grave havoc as the above report depicts, then all hands must be on deck to arrest this inflation monster.

Given that we have humorously accepted that the highly enthusiastic IGP tried but could not arrest the downward spiral of the cedi’s value against other currencies, per a certain public official’s suggestion, perhaps we need new and innovative strategies to manage inflation going forward.  Let us allow the IGP to deal with his core functions and resource his outfit adequately for the impending general elections.

A charge to keep we collectively have…. to find alternatives to tone down galloping inflation to escape the havoc it is causing to local food prices, decreasing purchasing power, increased general cost of production which pushes a chunk of a hungry but unimaginative (probably lazy) population below the poverty line, in the midst of abundant vegetation and restless, leaderless youth.

Unlike a certain radio host who claims to know lots of economics and finance, I know just enough of the twin subjects to be able to determine when fiscal and monetary authorities are, by their respective posturing, pursuing policies which may not yield the desired objective of targetting inflation to spur production.

A peep into the risk management space leads us into the Event, Cause and Effect methodology of analyzing and proffering solutions to various risk issues.

Until we deal with the event (which is the galloping inflation,) fully appreciate the cause(s), which are myriad in this case but include corruption, weakened infrastructure base, and lack of prioritization, merely dealing with the effect (high prices, unemployment, inter alia) in a haphazard fashion will not yield the desired results.

The siloed approach toward inflation targetting, using mainly monetary variables, has so far not significantly produced desired outcomes. This calls for a multi-faceted approach, involving various state agencies in addressing the real factors inhibiting increased production of goods and services (supply constraints), the scarcities of which fuel inflation.

A fixation on the demand side of the equation, as we have demonstrated ad infinitum, is not a sufficient prescription for lowering inflation.

It is like attempting to strengthen internal security by focusing only on arming the security agencies to the teeth without community involvement, addressing soaring unemployment and sensitization against private militia.

We allow officials in the fiscal space to continue to spend as before, without consciously targetting improved production – especially of food, which forms a major piece of the basket of variables used in computing inflation, and other infrastructural enablers of productivity.

We cannot fight inflation by incessantly blaming a Governor whose monetary policy approach appears unsupported by other vehicles that promote growth and productivity, and which sit in the fiscal space.

It appears to this writer that the Governor and his team blame excess liquidity for the persistent high inflation. Consequently, the monetary authorities believe that increasing the prime rate to mop up the excess liquidity is the way to dampen this excess demand caused by excess money in circulation.

With most firms and households depending on bank borrowing for survival, the resultant high interest rates merely increase their cost of production and diminished output levels which drift into higher imports. This scenario repeatedly exacerbates inflationary tendencies from low output against rising demand.

Paradoxically, the fiscal authorities have not demonstrated any real effort to map the scarce revenues to align with expenditure with credible capacity to increase the GDP through re-prioritization.

Our elders have said that heavy rains are usually preceded by dark clouds and winds. By extension, the two immediate bye-elections frighten some of us to our bones that the perennial indiscipline associated with election years will be revisited – IMF conditionalities notwithstanding.

Economics and politics will soon get into the boxing ring to determine whose aspirations will take centre-stage come election 2024. Some of us will wait patiently to be scolded for crying “wolf”.

So, we end up in a situation where the widening budget deficit (created in part by over-invoiced and non-existent contracts, padded school enrolment to benefit from feeding grants and other forms of corruption) is continually plugged or financed by printing more currency (increasing the same excess liquidity we set out to tackle) and worsening an already precarious situation in a cyclical fashion.

The complementarity between fiscal and monetary policies can never be over- emphasized. The effectiveness of such synchronization flows directly into the determination of forex rates, among other variables.

Economics textbooks talk of the objectives of fiscal and monetary policy convergence toward the same objective of sanitizing the macro-economic environment. In this instance, lowering inflation is seen as reflecting the strength of the economy by providing certainty for economic decision-making.

We are reminded of a period in our economic history when some of us learnt, for the first time, of a Bank of Ghana Governor returning cheques drawn on public accounts held with the central bank.

While admitting that different scenarios and times require different solutions, we can never discount the role of fiscal discipline in stabilizing inflationary tendencies. In our part of the world, government remains the largest employer and purchaser of productive resources. Government therefore has a huge role to play in quelling excess demand and crowding out the private sector from borrowing at reasonable rates.

Parliamentarians joking with our votes? 

With such grim challenges unfolding each day, is it not nauseating to find elected representatives of the people spending precious time attempting to settle personal and partisan scores in the august house, with unnecessary absenteeism from their core functions?

Hardly does one hear of credible alternatives to deal with the myriad of issues confronting us, except blame-games which have little to do with the rapidity with which I change my shock absorbers from plying rugged roads crying for maintenance. There is a real fire on the mountain, and our representatives appear oblivious of the challenges.

How do we collectively strategize around how to return this country to the path of sustainable growth to elicit confidence in the economy? The uneasy calm (relatively stable exchange rates) we are experiencing from re-scheduling domestic and foreign debt does not absolve us from payments in the medium-term.

Is this spectre – youth unemployment and the mass exodus of professionals to other countries – not a weightier issue than the gymnastics being displayed before us as if we are preparing for some SRC elections where trifles are tolerated?

Enough respect to Sam George

Sam George earns my respect for his consistent, research-based arguments and eloquent presentations that culminated in passage of the anti-LGBTQI law. My earnest prayer and hope is that he will apply the same zeal to other equally important issues like managing the seemingly unsustainable national debt and other critical national issues with the same non-partisan approach.

He can his enhance his profile nationally and across the globe with his posturing on what he sincerely believes. It will help him if he channels his exuberance into loftier pursuits instead of the seeming penchant for instigating the youth toward violence, when appropriate dialogue in political discussions will work just as well.

Fertiliser subsidies removal

So finally, we have succumbed to pressures to remove fertiliser subsidies by conveniently blaming corruption in the distribution of this vital ingredient in food crop production.

If I were to be asked for an opinion on the efficacy of this policy, I would simply refer those who care to research into which country is the world’s greatest subsidies provider in the agriculture chain.

Yes, some congressmen in agriculture-dominated states of the US tweak subsidies and grants in their favour. But the champion of capitalism has not fully abandoned its massive agricultural subsidies in direct and indirect ways.

If we need to conserve funds, let us look critically at the FSHS policy in its current form. Let us review the Masloc policy regarding funding political cronies and tone down the ill-conceived Agenda 111 projects with the sole aim of winning elections.

Strange logic and truth playing out in the gender space

And it came to pass that Yvonne Nelson decided to let off steam by writing her memoirs in a book satirically titled ‘I am not Yvonne Nelson’.

I have thoroughly amused myself reading through various Facebook, radio, TV and newspaper commentaries that followed the book’s launch and the rhythmic rap response by the Sarkodie.

Ordinarily, what two consenting adults do behind closed doors and its aftermath should not be my concern, except the surprise revelation I gleaned from the banter showed that logic and truth could be gender-based!

Astonishingly, almost all the responses supporting Yvonne Nelson appeared to come from the female gender while the males tended to support their maestro – Sarkodie the ‘landlord’. Interestingly, neither party was touted as a hero even as the blame-game continues.  Human nature is complex indeed. I never thought that truth and logic could be relative!

Welcome to some warped logic. Upon reflection, Sarkodie now claims he hurriedly made the composition even without the knowledge of his managers. With such intense motivation to respond with that composition, we are now being told, wryly, that there was no intent to release the song but it was leaked. By whom and how? We are not told. Time heals wounds, so if upon reflection Sarkodie thinks he retaliated too strongly, it is only fair to come straight and apologise to spare us inconsistent explanations. After all, no one is infallible.

If I had a million dollars!

For a long time, I have watched with intense admiration how education has produced illustrious men and women in Asante Juaben, my previous district capital before the Ejisu Metropolitan Assembly was established.

If I had a million dollars, I would make the money talk loudly by emulating Dr. Adutwum, the education minister. I would pull down the over 60-year old structure housing the Kwamo MA JSS, my alma mater which has not seen any significant change since I completed the then-middle school some 50 years ago. In its stead, I would establish superstructures with emphasis on STEM education to   produce students to fill KNUST to the wonder of everyone in the district.

As a banker, a foundation with seed money lodged in a reputable bank instead of my bedroom would offer scholarships for tertiary education as part of a sustainable scheme to honour all the dedicated elementary school teachers who fired my zeal for higher education.

The writer is a Fellow of the Chartered Institute of Bankers, an adjunct Lecturer at the National Banking College and the Chartered Institute of Bankers, a farmer and the author of the ‘Risk Management in Banking’ textbook.

Email; [email protected]  Tel. 0244 324181

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