…how our refusal to learn from history has condemned us to a perpetual cycle of under-dev’t
Several years ago, while studying psychology for my undergraduate degree I learnt about a concept known as ‘operant conditioning’. Essentially, operant conditioning uses rewards and punishments to alter behaviour – on the basic premise that actions which are rewarded are likely to be repeated and those which are punished are likely to be abandoned. Operant conditioning underscores the importance of history in shaping human behaviour by giving insight into how intelligent beings actively alter their conduct to avoid the negative consequences they have previously associated with certain actions.
As a theory, operant conditioning lends credibility to the aphorism that “those that fail to learn from history are doomed to repeat it”; and when I consider the sorry state of our national economy and political governance, I find that this maxim rings especially true for Ghanaians. I will illustrate how failing to learn from history is among the main causes of Ghana’s developmental woes by exploring 2 general themes: enactment of legislation and political governance.
Enactment of legislation
I spent the first few minutes after I wrote down this theme struggling over why I should not have named it ‘the re-enactment of already existing legislation after failing to enforce the existing legislation’, because that is actually what the problem is. Before I became a lawyer, I thought we had only one national problem as Ghanaians – related to punctuality and the concept of ‘GMT’ or ‘Ghanaman time’. After studying law, I realised that the real national disease plaguing Ghanaians is not our tardiness but our insistence on solving our problems through the enactment of new legislation when the mischief we seek to cure would be non-existent if we simply enforced existing laws. You don’t believe me? Well, consider the examples below.
- Sometime in July, parliament enacted the Contract (Amendment) bill, 2022 (the Contract Act Amendment). According to the report of the Parliamentary Committee on Constitutional, Legal and Parliamentary Affairs dated June 2023, enactment of the Contract Act Amendment was justified because the Contract Act, 1960 (Act 25) did not provide for the persons who are authorised to enter into contracts on behalf of government. Consequently, persons in authority were entering into contracts without the knowledge or authorisation of their sector ministers (who are vested with overall responsibility and the executive mandate for the relevant sectors).
As usual, the media was awash with choreographed reportage hailing the Contract Act Amendment as being necessary to plug this loophole in the law by clearly defining the persons who are qualified to enter into contracts on behalf of the state. I mean, such legislation is required for good order in the execution and administration of public sector contracts and if the mischief exists then the Attorney-General’s department is right to draft, and Parliament is well within its right to pass, legislation to cure this mischief…right?
No reasonable person could disagree with this – that is, of course, until the person considers section 20 of the State Property and Contracts Act, 1960 (C.A. 6), which provides that: “The Minister responsible for a subject or department, any other person authorised by the Minister, may execute a contract for and on behalf of the Republic on a matter falling within the Minister’s portfolio”. In other words, the State Property and Contracts Act, 1960, already addresses the mischief the Contract Act Amendment has been passed to cure; yet somehow it is not being enforced, and the fact of its existence was completely missed by the Attorney-General’s Department and parliament.
- The Bank of Ghana’s 2022 annual report and financial statements have sparked intense public debates and been a subject of controversy for the past few weeks. The reason? The Bank of Ghana reported a loss of GH¢60.8billion, which resulted in an overall negative equity of GHS 55.1 billion. The public discourse surrounding the annual report has brought to the forefront the fact that the Bank of Ghana purchased a GH¢10billion COVID-19 bond from government in 2020, and provided an overdraft for government to facilitate its expenditure during the 2022 fiscal year.
These actions are disturbing because conventional wisdom indicates that unrestricted central bank financing of government budgets is a chronic source of inflation. In fact, this view has led many countries to reform their central bank legislation in order to restrict such practices, and the International Monetary Fund has observed that ‘limiting such financing is critical for building central bank credibility, which is a key ingredient for achieving monetary policy effectiveness’.
Considering that (according to the Bank of Ghana itself) inflation rose from an average of 12.62% at the end of December 2021 to 54.14% as at year-end 2022 – and increasing the monetary policy rate is the main tool the Bank of Ghana has been deploying in its attempts to curb inflation (by the way, the monetary policy rate has shot up from about 14.5% in January 2022 to 29.5% as at the time I wrote this), any objective observer would be concerned about the Bank of Ghana’s financing of government’s expenses.
It therefore came as no surprise to me when the media reported that the International Monetary Fund (IMF) was (as one of the prior actions for accessing support from it) requiring the Bank of Ghana to sign a memorandum of understanding with government under which both parties committed to 0% central bank financing. Further, media reports suggest that new legislation must and will soon be enacted to restrict central bank financing and strengthen the Bank of Ghana’s independence.
Again, this sounds like good news – a cure to the mischief that may have contributed to the severe inflation which has afflicted the economy. But do we really need new legislation for this purpose? The Bank of Ghana is regulated by the Bank of Ghana Act, 2002 (Act 612) (the BoG Act). In respect of central bank financing government, section 30(1) of the BoG Act authorises the Bank of Ghana to finance government through temporary advances and loans or by purchasing Treasury bills or other securities representing government obligations directly from government.
It is interesting to note that section 30(2) of the BoG Act initially limited the total of loans, advances, Treasury bills and other securities purchased, together with the money borrowed by government from other banking institutions and the public at the close of a financial year to a maximum of 10% of government’s total revenue during the fiscal year in which the advances were made.
However, when widening current account and budget deficits, rampant inflation and a depreciating currency led Ghana to turn to the IMF for help in stabilising the economy in 2015, the IMF programme required the Bank of Ghana and government to implement certain changes. Those changes included the execution of a loan and fiscal agency memorandum of understanding, under which the Bank of Ghana and government agreed that gross credit from the Bank of Ghana to government would not exceed 5% of government’s total domestic revenue in 2014; and that there would be 0% central government financing from 2016 (sounds familiar, doesn’t it?).
The following year, the BoG Act was modified through enactment of the Bank of Ghana (Amendment) Act, 2016 (Act 918) (the BoG Amendment Act). The rationale for enacting the BoG Amendment Act included strengthening the Bank of Ghana’s independence and limiting central bank financing of government. In this regard, section 30(2) of the BoG Act was amended to provide that ‘the total loans, advances, purchases of Treasury bills and other securities shall not at anytime exceed 5% of the total revenue of the previous fiscal year’. The BoG Act Amendment further requires Bank of Ghana Governor to notify the Minister of Finance and parliament upon attainment of the 5% limit – after which the Minister of Finance must report to parliament on the remedial measures taken.
To underscore the temporary nature of such advances, the BoG Act (as amended) requires government to repay monies lent to it by the Bank of Ghana within 3 months after grant of the advance; and prohibits the Bank of Ghana from making further advances in a subsequent financial year until government repays the debt. The BoG Act Amendment also provides that except as provided in the 1992 Constitution of Ghana, “…the Bank of Ghana shall not be subject to the direction or control of any person or authority in the performance of its functions”.
Going by restrictions in the BoG Act (as amended), the overdraft that the Bank of Ghana provided to government in 2022 should not have exceeded GH¢3.5billion (based on the Bank of Ghana’s report on yearly government fiscal operations, which states that government’s total revenue and grants for 2022 was approximately GH¢70billion). However, notwithstanding the sound legal restrictions stated above, according to the Bank of Ghana itself, it had provided government with an aggregate overdraft of GH¢25.6billion as at October 2022.
This figure did not take into account the already outstanding COVID-19 bond of GH¢10billion the Bank of Ghana purchased from government in 2020 (even though the fact that the COVID-19 bond was still outstanding alone should have prohibited the Bank of Ghana from giving any additional loans to government under section 30(3) of the amended BoG Act). In doing so, neither the Minister of Finance nor the Governor complied with their obligations under section 30(7) of the amended BoG Act to inform parliament that they had hit the 5% debt ceiling.
Government and the Bank of Ghana have tried to defend their actions by relying on section 30(6) of the amended BoG Act, which empowers the Bank of Ghana Governor, the Minister of Finance and the Controller and Accountant-General to (in the event of any emergency) meet to decide the limit of government’s central bank borrowing and requires the Minister of Finance to submit a report on the issue to parliament within 7 sitting days.
This disingenuous defence lacks legal vitality because section 30(6) and section 30(7) are entirely different; section 30(6) existed in the original version of the BoG Act, while section 30(7) is one of the novel provisions that was introduced through the BoG Act Amendment to strengthen monetary policy and limit central bank financing of budget deficits through parliamentary oversight.
The Minister of Finance did submit a report dated 27 May 2020 to parliament, informing it that the Bank of Ghana Governor, Minister of Finance and the Controller and Accountant-General had triggered the emergency financing provisions under section 30(6) of the BoG Act to launch a GH¢10billion COVID-19 relief bond programme because of the COVID-19 pandemic.
However, neither the Minister of Finance nor Bank of Ghana Governor notified parliament at any point that the 5% limit had been reached as required under section 30(7) of the amended BoG Act; and if a new limit was set pursuant to section 30(6) of the amended BoG Act, neither the Bank of Ghana Governor nor the Minister of Finance communicated the new limit, setting the stage for government to continue borrowing funds from the Bank of Ghana without any restriction.
It is amazing to think that the Ministry of Finance, which requested emergency support of GH¢10billion (i.e. more than US$1.5billion at that time) from the Bank of Ghana in May 2020 because (as it reported to parliament) the COVID-19 pandemic was “…posing significant challenges to the fiscal operations of government, and more generally implementation of the 2020 Budget through shortfalls in revenues, additional emergency spending, and tight financing conditions”; and was (by a letter dated 29 October 2020) able to request the Controller and Accountant-General to release the GH¢ equivalent of US$25million “…as seed money to the National Cathedral Secretariat to enable the commencement of planned activities”, even though no specific allocation had been disclosed for financing the national cathedral in the 2020 budget.
In the same manner, the Ministry of Finance (by a letter dated 31 March 2022) requested the Controller and Accountant-General to release GH¢25million “…as additional seed money to the National Cathedral Secretariat for construction of the National Cathedral…” even though no specific allocation had been disclosed for financing the national cathedral in the 2022 budget and in spite of the fact that (according to the Bank of Ghana’s press statement issued on 9 August 2023), concerns that the already expansionary nature of the 2022 budget “triggered a liquidity crisis, spilling over into a balance of payments crisis” – and “the Bank of Ghana had to step in to arrest a major economic and social crisis”.
The result? According to the Bank of Ghana’s press statement dated 9 August 2023: “In 2 months, the Bank of Ghana lost US$500million in reserves and built a significant overdraft with government as a result of the auction failures. It became clear that Ghana was on a path that was unsustainable, and government had to approach the IMF for support in July 2022”.
- I could go on and on with examples, but that would only make this article longer than it needs to be. The scourge of Galamsey or illegal small-scale mining will be my final illustration. Small-scale mining has been regulated since at least 2006, when the Minerals and Mining Act, 2006 (Act 703) (the Minerals and Mining Act) was introduced. The Minerals and Mining Act reserves small-scale mining operations for Ghanaians aged 18 years and above who have been duly registered by the Minerals Commission; and requires such licenced small-scale miners to (i) win, mine and produce minerals by an effective and efficient method; (ii) observe good mining practices, health and safety rules; and (iii) pay due regard to protection of the environment during mining operations.
Initially, engaging in small-scale mining operations without a valid licence was a criminal offence punishable by a minimum fine of GH¢12,000 and/or imprisonment for a term of up to 3 years. Somehow, it was made to appear that these punishments were not stiff enough; so in 2015, the Minerals and Mining Act was updated through enactment of the Minerals and Mining Act, 2015 (Act 900). Act 900 increased the penalty for engaging in unlicenced small-scale mining operations to a maximum fine of GH¢36,000 (notice how we moved from a minimum of GH¢12,000 to a maximum of GH¢36,000 in the search for “stiffer punishments”?) and/or a term of imprisonment of up to 5 years.
Act 900 did not stop there. It subjected foreigners who undertake unlicenced small scale mining operations to a fine of between GH¢360,000 to GH¢3.6million, and/or a term of imprisonment of up to 20 years. Ghanaians who employed foreigners in their unlicensed small scale mining operations were also not spared. They were made liable to a fine of between GH¢24,000 and GH¢240,000 and/or a term of imprisonment of between 5 to 10 years.
Further, any equipment that was proven to have been used in or associated with the commission of these offence, and any products derived from the offences, were liable to be seized and kept by the police – regardless of ownership of the equipment or product – and could be forfeited to the state.
It was on the back of the stiffer regime introduced by Act 900 that Aisha Huang and 4 others were arraigned before court in May 2017. Aisha Huang was charged with 3 counts of undertaking illegal small-scale mining operations. In a bizarre twist of events, the Attorney-General entered a nolle prosequi in the matter by December of the next year, effectively bringing an end to the criminal proceedings.
Media reports then suggested that immediately after the court proceedings, immigration officers processed the 5 previously accused persons and airlifted them out of Ghana. The turbidity of our water-bodies increased after these events, signalling that failure to crack the whip on an alleged Galamsey mogul had buoyed the Galamsey community.
The very next year, the Executive – whose mandate it is to enforce our laws – was back in parliament seeking a further amendment of the Minerals and Mining Act. This resulted in the Minerals and Mining (Amendment) Act of 2019 (Act 995), which increased the penalty for engaging in illegal small-scale mining operations to a fine of between GH¢120,000 and GH¢180,000 and/or a term of imprisonment of between 15 years and 25 years. The penalty for non-Ghanaians was increased to a fine of between GH¢1.2million and GH¢4.2million and/or a term of imprisonment of between 20 years to 25 years.
Act 995 further states that where a non-Ghanaian who has been found guilty of engaging in illegal small scale mining is liable to deportation, that person must when sentenced to a term of imprisonment serve the full sentence before being deported. Sure enough, the media was beaming with positive outlooks after Act 995 was passed.
The president was reported to believe that the new law would drastically reduce illegal small-scale mining. In fact, after the enactment of Act 995 the president – whose Attorney-General filed the nolle prosequi that enabled Aisha Huang to escape trial in 2018 despite the stiff penalties introduced by Act 900 – reportedly admitted the deportation of Aisha Huang “…was a mistake; and the response to that has been amendment of the law that has now stiffened and enhanced the sanctions for offenders, both Ghanaians and foreigners”. A few years later, this same president all of a sudden became unsure regarding whether Aisha Huang was deported or if she fled Ghana in 2018.
The state of affairs in Ghana is so bewildering and incredibly frustrating that a learned senior of mine once observed that: “Ghana’s official, default solution to problems is to first throw some law at it, then not enforce the law; and finally to break the law anyway”. What he failed to add, which is perhaps the crux of my observations, is that the cycle continues after those responsible for enforcing the law end up breaking it – those who break the law then draft new laws, get them enacted and then begin the cycle of non-enforcement and enactment all over again. This leads me to my second theme.
Political governance
The one thing that becomes abundantly clear after you consider the many illustrations of this non-enforcement cycle is it’s our political governors who are the architects of our national woes; they are mandated to draft laws for societal good and implement them to spur the national development agenda. Instead of doing that, they fail, refuse or neglect to enforce the laws and enjoy private benefits from their failures; and then absolve themselves from all blame by attributing the problem to inadequacy of the existing laws. Thus begins the futile cycle of giving the masses hope that we can legislate our problems away, all the while maintaining the status quo by failing to enforce the very sound laws that we have.
Learning from the past tends to prevent negative experiences – and even when it does not, lessons from the past are powerful tools for illuminating the present and guiding future actions. Do our political leaders learn from the past? I do not think so. How do I know? Because the hallmark of Ghanaian politicians is to repeat the mistakes of past governments. A government is voted out of office because the citizens are unhappy with the performance of government’s officials. Then the new government, which ought to know better, assumes the reigns of power and starts to repeat the very same mistakes the previous government made (leading many to assert no mistakes are being made, it’s all deliberate plundering of the national coffers through a kleptocratic governance set-up).
When the citizens complain, they are reminded of the previous instances when the outgone administration committed the same errors. I find this attitude, which Ghanaians charitably call the “politics of equalisation”, very confusing. What’s even sadder is that partisan citizens are actively engaged in this game. We should be the loudest critics of our favoured political parties if we desire national development. Because if it is the members of a different political party who are complaining, who benefits when we point out that the subject matter of the criticism are ‘mistakes’ which were also made by an outgone administration? Shouldn’t the goal of favouring one political party over another be to be able to say objectively that our administration has learnt from and avoided past ‘mistakes’, and in so doing enabled our beloved country to flourish?
Conclusion
Learning from our history should teach us that we do not have a law enactment problem – we have a law enforcement problem. Learning from our history should teach us that by allowing politicians to pay lip-service to development and repeat avoidable errors while we the masses play the equalisation game, we actually reward and reinforce the negative attitudes of our political leaders; and no good can come of that.
Operant conditioning should teach us that our problems persist because we do not punish wrong behaviour or create negative experiences which are strong enough to deter wrongful conduct, so there is no incentive for our leaders to act right. It’s about time we realised that voting out leaders during 4-year election cycles is not the punishment we think it to be. If we want to break the cycle of kleptocracy and engender development, we must all be interested in ensuring that our laws on substantive matters like economic management and corruption are enforced.
