This article on wealth creation as the 4th Horizon for Ghana’s Growth is intended to seed a review of the options Ghana has to create an economic transformation and interrogate some ideas for the recovery, development and transformation of Ghana’s economy. A transformation that moves finance, people and jobs in selected sectors from low to high productivity and a sustained resilient growth trajectory.
We have always assumed that if we produce more we will earn more revenue, and with more revenue be able to look after our economy and citizens much better. But the proof of 66 years of independence is that more revenue does not necessarily lead to sustainable development that creates resilient wealth. The question then becomes why we have allowed this false paradigm – that revenue equals development equals wealth – to stand for so long.
If we look at agriculture in the last seven decades, we have paid much attention to production. However, private and public investments in technology, related sciences, agri-product branding, commercialising value-added agri-products, and developing global markets for the services and know-how built through the agriculture and agribusiness value chains have been insignificant and not sustained.
Consequently, agribusiness remains a daunting exercise and therefore a low priority in allocating resources. This is in stark contrast to the approaches successfully employed by Thailand, Indonesia, Vietnam and Malaysia which successfully used agri-products and tourism to power economic transformations.
Largely, revenues from cocoa exports, for example, have not gone into creating new industries; rather, apart from the allocations to scholarships, the billions of dollars Ghana has earned from exporting cocoa have been spent paying for recurrent expenditure – and in some cases on bare-faced corruption. Little wonder that the sector has failed to drive Ghana’s development.
Where do we find new ways to create industries from the agricultural supply chains in plantations, in storage, in value addition, in branding, marketing our food to the rest of the world and export market development? These have the potential to turn revenue into new industry-building investments that generate stable, better-paid jobs and medium-term wealth. Though mature, agribusiness could still be a source of long-term wealth. It is possible to maximise the residual value, earn significant surpluses and seed long-term growth in new industries.
The story of our heritage and creative industries is not much different. Revenues are mostly spent on low-value-adding activities, employing few people in the sector and maintaining structures. Very little has been invested in creative industries that help us tell our story better to a global audience and generate profits in the process.
I give you the example of The Lion King. The story of the Lion King originates from Southern Africa. Yet the story has been told to a global audience and commercialised by Hollywood. Hollywood has earned billions from films, merchandise, games, theatre products and animations. Southern Africa saw little of that money and creators of the theme song earned no royalties. So, what stories do we have that we can tell better using different formats that can fetch us billions in revenues beyond inviting people to visit Ghana? We can create new industries allied to the original base heritage and creative economy.
Now considering ICT, Ghana sits in the West African sub-region where we still have one of the best educational systems. We have the potential to leverage the brain-power of our academia and students, particularly in the relatively new areas of ICT and technology. Yet students from across the region who graduate from places like Ashesi University having developed ICT and technology solutions for Africa and the world leave yearly without the opportunity to register and build their ideas into businesses in Ghana.
Today, we are dependent on solutions created outside our region based on the needs of other societies and cultures. All governments have overtaxed and inhibited the growth of ICT and technology industries rather than incubating technology firms and ICT solutions relevant to the needs of our market, the daily realities of our citizens and solving global problems. It would be better to un-tax technology and demand that firms heavily reinvest their profits to stimulate new technology industries.
Why focus on wealth creation?
My view is that rather than pursue revenue as an end in itself, it is even more important to decide how we will invest revenue in new spheres of high-value enterprise to generate stable, high-quality revenue streams that bring resilience to the economy. I agree with the view that wealth creation means a sustainable acquisition and accumulation of resources to competitively generate relevant output and financial flows to attain national development goals that fulfil the needs of citizens without compromising the ability of future generations to meet their own needs. This sort of wealth creation indelibly improves the quality of life for all citizens.
Post-pandemic and debt default, there is an opening to reset the economy
Embracing wealth creation as the development model for Ghana is right for many reasons, including the recognition that:
- The days of one-size-fits-all solutions and exporting unprocessed cocoa, metals and fish, and a little processed and illegal timber are no longer viable in the new global economic paradigm. Ghana should embrace differentiated paths to its wealth creation goals, and managers of the economy must implement customised wealth creation strategies for selected industries.
- To remain relevant and competitive in global markets requires a diversified reservoir of intellectual property, patents, innovation and value-addition that is ‘Made-in-Ghana’.
- Sustainable profits and savings determine the pace of investments in human capital developments and innovations to create new anchor technologies that will maximise the speed, scale and longevity of economic transformation.
To paraphrase Dr. Seyram Kawor of the UCC: “No country borrows to develop. Borrowing must only supplement a country’s own accumulation of its own resources and revenues”. Therefore, amid global volatility, a fluctuating cedi, vanishing domestic savings and investments, and emptied national reserves we have to step back and urgently:
- Prioritise creating resilient wealth with robust buffers to contain major shocks.
- Determine a new vision for wealth creation, and
- Decide how to achieve material improvement and qualitative transformation for the benefit of citizens now and into the future.
Let me explain why.
Change is upon us – opportunities abound
As in Africa and the developing world, Ghana’s economy straddles centuries of economic revolution from the mechanisation of agriculture, the development of industry, the rise of services, and the knowledge-economy powered by communications, artificial intelligence, nanotechnology and biosciences.
Ghana’s economy is integrated with the global economy through global trade and financial markets, and the intertwining of our economy with these powerful economic systems opens up new opportunities for growth and wealth creation. Ghana has an opportunity in the coming decades to harmonise all four revolutions to accelerate economic transformation and wealth creation. There is no better time than now when we have been presented with the “historic opportunity to do so with the Africa Free Trade Continental Area”, to quote the World Bank.
Change is upon us – domestic dislocations
On the other hand, we have all witnessed worldwide economic disruptions since 2020 – and the slide of Ghana’s economy into an unprecedented economic abyss that we are beginning to understand began as early as 2018. The ongoing collapse and uncertainty generated continue to spook financial markets, slow investment and ultimately economic activity into the medium-term.
Perversely, if the global recovery continues to strengthen and policies to frame the new global economic order are normalised, an emerging economy such as Ghana can expect the process to expose its economy to external shocks and adverse spill-overs even as we strive to remain a viable player in key global economic systems – unless we build a more robust economy. Just as Winston Churchill advised, we should not waste this crisis. It is an opportunity to remodel the economy.
Change is upon us – future developments
Three major developments are predicted between now and 2040 in the November 2021 World Bank Country Economic Memorandum titled Ghana Rising: Accelerating Economic Transformation and Creating Jobs; (a) Ghana’s population will rise to 45 million; (b) six in every ten people will be less than 30 years old; and (c) about 10 million young Ghanaians will join the labour force and must be gainfully engaged. It notes that “Ghana faces an acute challenge of generating more and better jobs and has a ‘missing middle’ of employment in mid-productivity sectors”.
However, all is not lost. The report further acknowledged that Ghana has all it takes to continue being an economic development star if it takes the right steps to nurture growth and job creation despite debilitating effects of the pandemic. And I would add, even more critically restoring prudent economic management. Specifically, the World Bank highlighted:
- macroeconomic stability,
- financial sector development,
- technological transformation,
- fostering greater global integration; and I will add as a key point,
- restoring a robust governance architecture to underpin the four priorities
A walk down memory lane
In the post-World War II process of wealth creation, sub-Saharan Africa along with parts of the Middle East, the former Communist-Socialist bloc and Latin America lost ground in various degrees to winners like France, Germany, Japan, South Korea, Taiwan, Singapore and Hong Kong, and then Malaysia, Thailand, Indonesia and China.
Some heavily-endowed nations and regions mismanaged their blessings while countries with precious little became adept at sustainably acquiring and accumulating resources and improving the lives of their people indelibly. We know where Ghana fits in this picture.
Let us step briefly into 1957 to hear Victor Adams describe the hope and optimism for a better future when church bells rang across the city of Accra to signal the birth of modern Ghana to the e-newsletter UN Africa Renewal. He was in his home village of Shiashi, a suburb of the Ghanaian capital. Shiashi had no electricity, roads or piped water. There were only eight mud houses in the entire village.
Shiashi and its surrounding areas have since been transformed but signs of underdevelopment still abound, including poor sanitation, unpaved roads and makeshift homes. In a way, the story of Shiashi reflects Ghana’s uneven economic and social development over the years. A middle school student at the time of independence, Mr. Adams said: “Our country could have done better.” Many Ghanaians share that sentiment.
Ghana requires a new economic model to translate resources and revenues into resilient wealth creation.
Ghana cannot create wealth by just earning more money. If that were untrue we would be rich from over 100 years of cocoa, bauxite and gold exports alone. The economy needs a new paradigm wherein we consciously reserve portions of our earnings to invest in a continuous process of resource accumulation designed to create parallel streams of income through private industry and human capital investments. It cannot be a short-term activity. Secondly, wealth creation should have a clear intent to generate and distribute opportunities across all stages of prioritised value chains. This clarity is crucial for the quality of outcomes from the allocations of resources:
- for human and capital investments to produce a bigger economy
- to transform Ghana into a technology and innovation-driven economy
- to support domestic industrial growth, and
- to sustain resilient, long-term GDP growth.
Ghana as a developing country ought to be aggressive about developing opportunities through policymaking to attract investments. We must support innovation and productivity solutions that will enable the economy to generate wealth by attracting the spending and investments of both local and global consumers and investors. The “if we build it, they will come” approach of the Emirates is proof positive of the success of pursuing wealth creation as a national objective.
For too long greed and corruption, self-interest, political longevity, the desire for aggrandising power and social relevance have been the main obstacles undermining wealth creation in Ghana. These motivations end with erosion of citizens’ well-being. Unfortunately, commentary on intangible sources of wealth like the environment, innovation, intellectual assets, social order et cetera are underplayed and remain elusive in economic and sociological literature. And we dare not look to national glory and honour for inspiration. Yet these are what should strengthen the extent to which we produce sustained economic wealth and growth.
The alchemy of growth – the three horizons of growth
Sometimes being a late bloomer has its advantages. Once the consensus bakes in, Ghana will have a fresh canvas on which to define how to straddle the economic revolutions in agriculture, industry, services and the new knowledge industries and value chains.
- The first horizon should aim to shift the core of national revenues to agribusiness by rapidly expanding the scale, quality and performance of derivative industries that either add value to or innovate around previously raw or lightly processed agricultural products. It should shift targetted investments to increase their efficiency and productivity. The same logic should apply to value-added cultural exports, tourism products and other basic exports.
- The second horizon is the phase for selecting and resourcing emerging technological and innovation industries which should be at the core of the New Ghana economy. A successful strategy will create self-funding growth from entrepreneurial ventures that will generate substantial broad and long-term economic opportunities very quickly in the transformation cycle.
The transition to technology and innovation-driven industries requires three major shifts in culture, mind-set and focus as follows:
- The Shift in Culture
- Share the Vision and Culture of the Future
- Clearly define the strategic direction of the economy and society and get everyone deeply motivated by and committed to the journey to transform lives; not just change lifestyles.
- Highlight the new national values and end the culture of seeing the nation’s tolerance for mediocre leaders as infinite, and embrace a meritocracy. Demand changed behaviours to undergird the transformation agenda in terms of personal responsibility and being accountable.
- Build the right habits to be a self-sufficient economy. Emphasise sound economic principles such as moderating consumerism and cultivating a disciplined work-ethic, building competitive advantage across industries, low debt and buying Made-in-Ghana.
- The Shift in Mindset – Step out, Stand out
- Develop Ghana Inc. as an economic philosophy founded on discipline, keeping high standards and integrity; the protection of individual rights, property rights and the environment; and the supremacy of the rule of law.
- Build ecosystems to promote trade and relationships that reinforce our development and growth plans.
- Intensify partnerships in markets and knowledge that enable the economy to utilise natural and human resources more efficiently and effectively than before.
- Break from the socioeconomic and political norms in the African region. Articulate a bold, standout vision about what life, work and leisure in the New Ghana economy will be like.
- The Shift to Focus – Prioritise Investments
- Increase the savings rate in the economy and make generational investments in multiple, long-term income flows; and break the false belief that financial success is possible without a disciplined focus on raising the rates of savings, (re)investing and increasing the level of financial literacy and business skills. Ergo, put wealth creation above borrowing and creating unsustainable debt.
- Concentrate government spending on national priorities and human resources founded on broad consensus, not political initiatives and schemes that drive the cost of government but do not create value; do not waste national resources on short-term projects and conspicuous consumption in government.
- Decide more strategically whose money to use for what. Leverage the geopolitics of today. Blend the resources of private investors with those of emerging economies, the IMF and World Bank, China, India and the West in seeking financing to invest in skills, physical infrastructure and business development. Learn to Game and stop being Players.
- The third and farthest-looking horizon of wealth creation targets how to elongate long-term growth by leveraging exploratory investments in R&D; and deploying strategies and technologies to establish new agribusinesses, creative heritage knowledge and technological industries to secure five long-term fundamentals in the New Ghana economy, namely:
- Job creation through the radical transformation of the core sectors and transitioning of labour with new skills into new industries with higher productivity – especially innovation, ICT and business services. These more socially and geographically mobile workers also expand domestic trade, urbanisation and connectivity.
- Productivity growth, intensified innovation and entrepreneurship rates through domestic firms’ adoption of digital and complementary technologies to accelerate the economic transformation. To enable this change, The New Ghana will require radically improved micro-level infrastructure, Internet connectivity and investments in a wide range of digital skills to facilitate technology-adoption by firms.
- Inclusive private sector development that leverages domestic savings and financial resources to facilitate technology adoption, innovation and the expansion of local firms.
- Macro and fiscal stability, better natural resource management and smart, broad-based revenue mobilisation to generate revenues to fund reforms and economic transformation.
- Long-term inclusive growth that incentivises sustainable exploitation of natural resources, protects the environment and minimises the impact of climate change on households.
Leadership is everything
Leadership is indeed a crucial factor in the success and development of any country, Ghana included. It inspires and unites people, drives progress and economic growth, and makes positive changes in the lives of citizens happen. The underpinnings of Leadership are the Values of leaders that play a crucial role in determining the success of any country’s efforts toward wealth creation. The values held by Ghanaian leaders will significantly impact the country’s economic growth, job creation and development. For Ghana to achieve sustainable and inclusive economic growth, its leaders must exorcise the wicked torments of mismanagement, corruption and greed; and prioritise core values – the most needed of which are:
- Values
- Integrity: the self-confidence to act with honesty and transparency in all their dealings, whether in public or private sector roles to build trust and credibility with citizens, investors and other stakeholders.
- Accountability: the humility to take responsibility for their actions and answer to the people they serve. This means being willing to submit to tough questions, admit mistakes and take corrective action to secure the future.
- Attitudes
- Innovation: the forethought, anticipation and adaptation we sometimes describe as being Visionary. Add to that investing in research and development, entrepreneurship and the passion to promote creativity that changes lives in all aspects of society and all sectors of the economy. This ecosystem enables innovation, start-ups and small businesses to thrive.
- Behaviours
- Discipline: respect for the new social norms, the rule-of law and a respect for time.
- Inclusivity: investing in education and training for all citizens to ensure fair access to the benefits from economic growth for all segments of society; promoting gender equality and creating employment opportunities for marginalised groups.
- Sustainability: prioritising resilience from sustainable development practices, protecting natural resources, investing in renewable and green energy and the long-term aspects of economic growth while considering the impact of any policy on the environment, future generations and social cohesion. We cannot build sustainability in the New Ghana economy without building resilience in finance, supply chains, human capital and business models.
I set out to address five core areas that are critical for us to address and interrogate as we plan to move the Ghanaian economy from the chronic crisis periphery of global economic and trade systems toward the core as follows:
- ending the false paradigm – that revenue equals development equals wealth
- selecting and investing in new high-value enterprise that bring resilience to the economy
- building savings to invest in private industry and human capital to create parallel streams of income, resource accumulation and investments
- defining how to straddle the economic revolutions in agriculture, industry, services and knowledge industries, and
- the importance of leadership values, attitudes and behaviours as the core underpinning for the change.
Certainly, all is not lost.
Wealth creation as the 4th Horizon of Ghana’s Development is a viable, credible, economic objective, and I recommend further discourse on this.
>>>The author is the Managing Partner of Ishmael Yamson & Associates, a firm of Management Consultants & Investor Advisors. Ishmael Yamson & Associates hosted its annual Business Roundtable in May on the theme Wealth Creation: The 4th Horizon of Ghana’s Growth
