The term “Building Back Better” has been increasingly and widely used in the context of the economic recovery from COVID-19 (WRI, 2020[) (We Mean Business Coalition, 2020). The notion originated in the context of recovery and reconstruction from physical disasters, with an emphasis on making preventative investments that improve resilience to, and so reduce the costs of, future disasters. To “build back better”, recovery measures can be assessed across a number of key strategies. The Ghana’s Strategic Direction is to build back better is to achieve the envisaged transformation in post IMF, the strategic direction for the medium-term development policy framework will be to leverage Ghana’s natural resource endowments, agricultural potential and the human resource base for accelerated economic growth and job creation through value addition, especially manufacturing. This will be underpinned by partnership with the private sector through PPPs to expand infrastructure by building roads and bridges; increasing electricity supply and reliability to support our economy’s needs; expanding access to good drinking water and providing quality healthcare for our growing population; improving sanitation and human security for all, and also transforming schools, colleges and universities to meet the demands of a new age with emphasis on mathematics, science, technology and innovation. The economic recovery in the post IMF could be assessed in the eight thematic areas.
First, in a short term, for Ghana to build back better post IMF we must be prepared to amend certain aspects of 1992 Constitution especially area of a Debt Cap or Debt Limit for instance the Debt to GDP ratio of 50% so that we can prevent future debt crisis as the current domestic debt exchange has basically destroyed both entire financial sector as well as Bank of Ghana. The debt ceiling is a limit on the total amount of government borrowing. According to OECD Policy paper 28 (2015), posited that for the emerging economies like Ghana the threshold should even lower at 30 to 50% debt of GDP as they are exposed to capital flow reversals. The OECD economic policy paper (28) 2015 posited that the high debt beyond the Debt threshold, the government could undermine economic activities and destabilize the economy. Second, at higher debt levels, countries like Ghana could lose the accessibility to international capital markets and also lose market confidence that would see their borrowing rates increase steeply. In the case of Ghana treasury bills rates increased from 22% in 2022 to 32.5% on the yearly bills. To prevent future debt crisis, the government and the legislature ensure that the 1992 Constitution is duly amended and the Debt to GDP Ratio is explicitly enshrined.
Second, building back better post IMF, the country would require aggressive agricultural development strategies with the private sector, over the medium-term, with view to accelerate the modernization of agriculture and ensure its linkage (Creating The Needed Value Chain System) with industry through the application of science, technology and innovation. Agriculture contributes to 54% of Ghana’s GDP and account for over 40% of Export earnings, while at same time providing over 90% of the country’s food need. Why should a country like Ghana bless with natural resources import Onion and Tomatoes from Niger, Burkina Faso, Mali and Nigeria it is incredibly shame and disgrace to our previous and current governments. Once upon Ghana used to export tomatoes, oranges and onions to Burkina Faso.
Third, build back better strategy the country requires that the country must adopt Economic Diversification from the Current Existing Mono-culture (Cocoa as the mainstay of the Ghanaian Economy). Ghana has to broaden its agricultural industry away from mainly cocoa to be one of the world’s biggest maize, and rice producers in Sub Sahara Africa. Growth comes through structural change – a shift of economic activities from low to higher productivity areas that would help to overcome to overcome Ghana’s economic concentration and challenges related to job creation (M. Geiger. World Bank, 2019). Ghana’s over-reliance on the Cocoa sector makes it vulnerable to fluctuations in the global commodity prices. Therefore, the new strategy should seek to boost GDP growth by diversifying the economy and promote non-cocoa sector such as rice, maize, tomatoes and onions and aggressively promote the other non-traditional export products.
Fourth, as part of the build back better Post- IMF strategy the government must harness and strengthen the inflow of International remittances helps to stabilize the exchange rate, reducing the impact of currency fluctuations on the economy.
According to the Auditor-General’s Report on the Consolidated Statements of Foreign Exchange Receipts: Schedule of earnings from 23 authorized dealer commercial banks in the period between 2016 to 2022: Transfers – Inward Remittances US$ 1,837,506,014.80 in 2016 US$ 10,766,037,529.00 in 2017, US$1,021,916,059.59 in 2018.US$2,005,542,497.90 in 2019 US$2,310,586,691.47 in 2020 US$ 2,110,512,179.69 in 2021) US$2,121,081,266.78 in 2022). However, World Bank remittance reports on Ghana from 2010 to 2022 showed marked discrepancies between their reports and the Bank of Ghana’s annual remittance reports recorded on Balance of Payments (BoPs). US$ 0.14 billion in 2010 or .8% of GDP; US$ 2.1 billion in 2011 or 10.8% of GDP; US$ 2.2 billion in 2012 or 10.3% of GDP; US $1.9 billion in 2013 or 5.9% of GDP; US$ 2 billion in 2014 or 7.6% of GDP; US$ 5 billion in 2015 or 20.3% of GDP; US$ 3 billion in 2016 or 10.8% of GDP; US$ 3.5 billion in 2017 or 12% of GDP; US$ 3.5 billion in 2018 or 7.3% of GDP; US$ 4.1 billion in 2019 or 5.2% of GDP; US$ 4.3 billion in 2020 or 5.2% of GDP; US$ 4.5 billion in 2021 or 5.9% of GDP; US $ 4.7 billion in 2022 or 6.1% of GDP. The Ministry of Finance and Bank of Ghana must strengthen its procedures and processes of capturing global inward remittance data collection and analysis (including an assessment of the World Bank yearly remittance aggregates) to improve on remittance data and the need for the Bank of Ghana to adopt specific practical guidance on data sources and compilation methods to improve on the existing methodology to address the discrepancies between Bank of Ghana data and World Bank inward remittance data.
Fifth, as part of building back better strategy, Ghana must start the re-negotiating with some gold mining companies who been surrendering a meagre percentage of 20% or 25% of their total export receipts. According to the Auditor General report on Consolidated Foreign Exchange Receipts and Payments of Bank of Ghana showed that surrendered exports by 23 mining companies of US$ 261 million in 2014; US$205 million in 2015; US$226 million in 2016; US$ 876 million in 2017; US$ 918 million in 2018: US$ 1 billion in 2019; US$1.1 billion in 2020; US$ 990 million in 2021; US$ 863 million in 2022. From the review of the data provided some mining companies surrendering 20%; 25%, 30% while local companies are surrendering a range between 60% to 100% of gold export earnings. Some of these agreements signed as part of foreign direct investment are just rippling the Ghanaian economy. Ghana government must adopt the renegotiation contract approach used by Anglo-American De Beers and Botswana government on rough diamond. The agreement also gave Botswana an increased 30% of diamond production for sale via the state-owned Okavango Diamond Company, progressively increasing to 50% in the final year of the contract. According to Auditor General reports on the Consolidated Foreign Exchange Receipts as of 31 December 2016, there were fourteen licensed gold exporting companies. Thirteen of the licensed companies were to surrender percentages ranging between 20% and 100% of their export receipts. In the review period, seven companies surrendered 20% of their four months’ export proceeds to BoG with the remaining two months routed through their commercial bankers. Goldfield (Abosso-Damang) and Prestea Sankofa licensed Gold mining companies surrendered 25% of their four months’ export proceeds to BoG. Owere Mines and Asanko Gold GH Ltd which was to surrender 100% of its export proceeds did not undertake any production during the period under review. Extra Gold and Noble Gold were to surrender 60% and 20% of their export proceeds respectively but did not produce. Newmont GH. Ltd. Retained 100% of its export proceeds and did not surrender any percentage of its foreign exchange to Bank of Ghana for Cedis. Some of these contracts signed by previous government and current government have all contributed to illegal exploitation, tax evasion, trade mis-invoicing, transfer pricing and under-declaration, were just a few of the practices contributing to this menace. Please Mr Moderator and my other co-panelists let me correct the errorenous impression created by one Minister recently said that gold alone contributing some $6.6 billion in export receipts in 2022 but the Auditor General Report on the Bank of Ghana’s Consolidated Foreign Exchange Receipts for 2022 was only US$863, 356, 251.00 but not the gross of US$6.6 billion. By using the percentage Ghana received only 13% of the total gold export proceeds of US$ 6.6 billion. Recently, Dr. Steve Manteaw of Ghana Extractive Industries Transparency Initiative noted that there is a need to contract transparency, sub-national reporting, budgetary, data disaggregation and enforcement of all environmental issues.
Sixth, for the country to build back better we must ensure that there is a need Strong Regulatory Reforms in Business Environment. Regulatory reforms to create a more business friendly and corruption free environment that encourages only foreign direct investment as well domestic investment. There is urgent need for the introduction transparent, highly disclosure and business friendly policies boost investors’ confidence. In addition, streamlining the excessive bureaucratic procedures and especially the meddling up business matters. eg. Make conscious effort to reduce corruption and bribes; in the Destruction of the water bodies by Stopping Galamsey popularly known as illegal mining and Sand winning: By far, the menace of small-scale mining, otherwise known as “galamsey”, has become the single most important source of environmental and natural resource degradation, and constitutes a major economic, social, and national security concern that requires swift policy action. A great deal of mining activity takes place in forest areas, thereby affecting the environment significantly, including the land, forest and water bodies. It is not common to find degraded forests reclaimed, particularly among the small-scale miners, after mining activities have been halted and the targeted mineral deposits extracted. In many cases, the land and water resources are never recovered as a result of severe pollution from chemicals used in mining. The total economic cost of natural resource degradation and poor environmental management including poor sanitation has been estimated at, at least 10% of GDP. The main challenges facing the effort at reversing the natural resource degradation and enhancing environmental governance are the weak institutional capacity for environmental management; poor coordination among the key Government institutions responsible for the sector; and the inability to sustain implementation of interventions related to reforestation and environmental management. The government should declare a state of emergency where the Security Agencies are empowered to use the necessary force without political interference to stop the Galamsay menace.
Seventh, building back better in the Post IMF the country would require comprehensive infrastructure development in the Area of Poor Road network and Rail Systems in the Agricultural Areas. Reducing Ghana’s infrastructure deficit requires the leveraging partnership with private sector. Collaborating with private enterprises through Public-Private Partnership. PPP can bring significant benefits while mobilizing private capital and expertise. These partnerships can address infrastructure gaps, promote economic growth and create jobs for the teeming youth. This strategic approach bridges the infrastructure gap and drives sustainable development.
- Lastly, to Build Back Better would require Enhanced competitiveness of Ghana’s private sector through cheaper financing;
Build Back Better requires that the Government continue to implement reforms aimed at improving the competitiveness of Ghana’s private sector; however, the environment for doing business has not recorded significant improvements. Ghana’s performance with respect to both its global competitiveness index and the ease of doing business ranking remain largely stagnated, especially in 2019 and 2020. Key challenges currently facing Ghana’s competitiveness include unfavourable macro environment, low industry specific skills, absence of basic economic infrastructure, high and uncompetitive operational cost, access to long-term financing and high cost of credit,
regressive tax regime, labour market inefficiencies, and the low productivity occasioned by low ICT application Ghana’s private sector remains uncompetitive in spite of several attempts by succeeding Governments to enhance its competitiveness in terms of higher interest rates, excessive tax burdens and high energy costs compared to other countries in the Sub-Region. The private sector under this policy framework is expected to partner Government and other stakeholders in the transformation of the economy through industrialization and modernized agriculture. The overall objective is to ensure that private sector work for Ghana, and share the benefits of growth and transformation process. The Ghana Development Bank and the GEXIMBANK must be repositioned to focus to developing medium and long term policy to support the private sector to address the access to cheaper finance, cheaper equipment and technology, input constraints, international and sub region market constraints, Higher cost of doing businesses and corruption in the environment. The government should seek credit from International Development Association (IDA) of the World Bank and other Donors for the establishment of a Fund for Small and Medium Enterprises Development (FUSMED) to support the private sector as done in the 1990s.
The focus of medium term priority policies therefore is to:
- improve private sector competitiveness domestically and globally
- develop micro, small and medium enterprise (MSME)
- ensure rapid industrialization driven by strong linkages to agriculture and other natural resource endowments
- develop tourism as a major industry; and
- develop and strengthen Ghana’s creative arts industry
These are to be achieved through: improving the investment climate; reducing the cost and risk of doing business; providing modern, efficient and competitive infrastructure; creating the financial sector which is responsible to the private sector; and making available human resources with relevant skills and competences. Others include:
- attracting private capital from both domestic and international sources
- promoting an enabling environment and effective regulatory framework for public sector management
- ensuring that businesses behave as good corporate entities which uphold the tenets of human rights, social responsibility and environmental sustainability; and • ensuring consumer safety and welfare.
The many barriers that confront investors and investments will be removed to make Ghana a more attractive investment destination. The various business registration requirements, levies for business registration, and several investment legislations, will be rationalized while MDAs that administer business regulations will be made more responsive to the needs and imperatives of the private sector.
To enhance productivity and efficiency, and reduce the cost of doing business, continued effort will be made to remove value chain constraints to improve service delivery through urgent and aggressive investment in both physical and social infrastructure as a national priority to improve efficiency and reliability in the production chain. In the medium-term, priority areas will include water, health and education, energy, roads and transport, ports and harbours, information technology and science, technology and innovation.
Priority will also be given to investment in relevant and quality human resource development to provide modern skills and competencies required for the industrial economy envisaged over the medium term. Priority skills and competencies will include specialized skills often missing in our domestic economy and which reduces opportunities for top leadership positions in business for locally trained professionals.
- CONCLUSION
The Ghana Government, IMF, World Bank and international donors must play a crucial role in implementing these home grown strategies by providing financial assistance, technical expertise, and policy advice. By working together, governments, opposition parties, civil societies, international organizations, and businesses can build a sustainable economy and dynamic business environment that promotes inclusive growth and resilience. Building back better the country would require the Home Grown Strategies with local contents in the eight key thematic areas. Mr Chairman, before I take my seat for this august function, I want to make three important statements on how all these Building Back Better Strategies that may prevent Ghana from seeking 18th Financial Assistance from IMF because Our 1992 Constitution needs a very, very comprehensive review to curtail the immunity of the Presidency and powers to appoint political appointees to some sectors of the economy. The country Ghana must seek to develop one National Development Agenda than the current ad- hoc political agendas that have only included party followers and activists that have these class of people more rich and wealthy and thus making the general populace poorer and poorer since independence in1957. The all-inclusive National Strategic Development agenda will clearly define the vision, mission and the objectives a country sets itself. It assesses at a macro-level where a country is in relation to those objectives and describes the policies, programs, options and trade-offs required to achieve those objectives. National Development Agenda Strategy will be about building an inclusive enabling environment that supports achievement of the country’s socio-economic development for the betterment of all Ghanaians irrespective of their social status by leveraging on different strengths and experiences for all Ghanaians but not only for party political activists. Over the long term agenda, therefore, priority policies to ensure and sustain macroeconomic stability will focus on: (i) comprehensive agricultural development with all value-chain systems (ii) make conscious effort to develop export diversification like L’ Cote D’Iviore (iii) improving international remittances resource mobilization; (iv) improving private sector as the engine of growth; (v) providing Debt to GDP ratio at 60%; (iv) ensuring price and exchange rate stability; (vi) improving private sector with enabling environment with a view of intensive job creation for the teeming youth whether in the urban, cities, rural and coastal communities or our large cities. This document will be become a Blue Print like the Dr. Kwame Nkrumah’s Development Agenda in the 1960s. (ii) The 1992 Constitution needs a comprehensive review after 30 years of party democracy to address the numerous shortfalls, inadequacies and unending indemnity clauses (iii) The current judiciary practices and procedures need to address the lapses including pro-long delays in the judiciary systems to make them relevant in the 21st century. Without inclusive approach to own domestic development agenda with all political parties, civil societies, academia, business owners, religious bodies and all Ghanaians home and abroad we may stop the country from time to time visiting the Bretton Woods Institutions and without amendment to 1992 Our Constitution with the Winners’ Take All democratic systems, low and poor judiciary systems have all contributed to the poor development as well as the growing poverty in urban, cities, towns, villages and hamlets even though God has blessed the country with all resources, land, conducive climate, hard- working people, minerals, energy and others, but we still live in abject poverty. The methodology used in drafting the 1992 Constitution could be adopted with all-inclusive approach to develop the National Development Agenda for which all parties will uphold the principles and values in the document.
The writer is a Corporate Governance & Banking Consultant
