Money Wisdom with Jerry J. Afolabi … Politics of the economy

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In so many ways, Ghanaians have played politics with the economy of Ghana – especially the politicians. This is terrible for growth of the economy. A country’s politics can seriously affect its economy, which impacts the living conditions of its people. Most countries have had their economies destroyed as a result of politics that creates political instability, hampering economic growth and development. This is the more reason why every individual, especially those in power and opposition leaders, needs to be very cautious and responsible for the things they say politically.

In Ghana today, politics and economic issues are the major topics being discussed in both traditional and social media; and this, to a very large extent, determines which political party wins an election. The significance of politics cannot be downplayed in any country, because the government in power determines the economic transformation and growth the people need.

The growth of any economy is dependent on the government in power, and this school of thought believes that economy and politics cannot be separated even though the latter can lead to distraction of the former.

Since the outbreak of coronavirus in the world, very important individuals, scientists, governments and institutions across the globe have taken to the stage, making claims of how they are contributing in finding a cure and vaccine for the virus.

The political parties in Ghana have taken swipes at each other on who has managed the economy well on several issues – like dumsor, COVID-19, inflation, public debt, BoG policy rate and cedi depreciation – but none have specifically highlighted the significant impact their policies have helped to change the lives of ordinary Ghanaians.

The onset of COVID-19 compelled government to take decisions for curbing spread of the virus and to save lives. Government in the early days of March 2020 effectively shut down the economy, closed borders, and issued a stay at home order for what will go down in history as the longest-ever shutdown of the economy.

However, after two months of its shutdown government has taken steps to reopen the economy with some measures; especially social distancing, using hand sanitisers and staying at home if you have nothing to do in town; as well as vigorous contact tracing and testing for COVID-19.

Some have said government may have gotten it wrong by reopening the economy, since spread of the virus is now agonising and may be very difficult for the frontline workers – especially healthcare workers – to deal with. While the number of COVID-19 cases recorded in Ghana is increasing, its direct impact on the economy is adverse as more companies are collapsing – resulting in individuals losing their jobs and being without incomes.  This poses a great challenge for government in its attempt to get the economy back to recovery.

At this point it is clear that the COVID-19 pandemic has decimated the Ghanaian economy, and it would be very unpatriotic for anyone, especially government, to play politics with it.

This is the time for government to get every Ghanaian around the table to deal with the failures in our economy; to think innovatively, proactively in finding solutions to the worsening economic situation in our country; think of how to mobilise resources locally to increase production so as to transform the economy and better the lives of our people.

The worst thing that can ever happen to a country is to lose its human resources to a pandemic such as COVID-19. Physical wars destroy mostly properties, but COVID-19 is taking away lives.

Government may have responded well to the monetary policy aspect of the economy by collaborating with the central bank to reduce its policy rate to 14.5 percent, even though this has not really translated into a change in the commercial lending rate of banks in Ghana. The fiscal policy of government needs more to be done on cushioning the private sector, startups and individuals.

With the microeconomic indicators surging in numbers, it may have direct impact on the economy and may translate into a high cost of living in the country – especially as inflation is going up (10.6%); cedi depreciation is hitting all-time highs (US$1 to GH¢5.95); unemployment at 7.4% (graduate unemployment is 6.2%); public debt stock hit GH¢236.1billion as of  March 2020 (60% of  rebased GDP) with GH¢21.8billion to service the interest payment; projected GDP growth of 1.1% at the end of the year; and a budget deficit at 7.1% of GDP.

This is a clear indication that the economy of Ghana is headed for a recession and may hurt people economically. Government should take critical steps to immediately salvage the situation, since recovery may take a lot of time.

Indeed, very clearly, the COVID-19 pandemic has laid bare the very structural weaknesses in our economy, and this is a worrying concern for many Ghanaians; especially when politicians claim they have managed the economy well, even though the economy could not stand by itself for a month after the outbreak of COVID-19 pandemic and government had to run to the IMF for support.

Why Play Politics with the Economy?

The undulating economic path of Ghana can only be fixed when there is a bipartisan governance structural change within the economy to deal with the country’s fundamental economic problems. In most cases, political elements also focus on the economy’s macroeconomic indicators without giving much attention to the micro – which focus is on the people. Most importantly, strategic and robust economic policies should translate into making living conditions better, improve private sector growth, and allow for foreign direct investment into the economy.

Interestingly, in Ghana today politics and economic issues dominate the frontlines of traditional and social media discussions. These discussions, to a large extent, determine which political party will win the elections – especially since this year is an election year.

Some parallels in the forefront discussions

  • Fuel price/power/energy
  • Unemployment/Job creation
  • Cedi depreciation
  • Voter’s register
  • GDP growth
  • Public debt stock/borrowing/interest payment
  • Policy rate/commercial bank lending rate

A well-managed economy should have policies on these parallels which impact directly on the people’s livelihood from social, environmental, fiscal, and monetary viewpoints, and create a business-friendly environment for both local and international businesses. Since independence, the Ghanaian economy has depended heavily on external assistance, and this hinders growth. The more external help our country gets, the worse off our people become; because the trade-off always takes the best of our resources away.

Economic priorities are very critical to the development of every country, but most often governments and political parties allow political gains to influence their decision-making process. There is clear evidence from the past when governments have taken political decisions over economic decisions, and they were self-centred and politically motivated.

In Ghana today, the most debated frontline issues are, first, the country’s accumulated public debt stock. Politicians, both in government and opposition, are playing politics with the country’s public debt, and the one question I have always asked is: “Where is the evidence to show the accumulated borrowings in the fourth republic for both the NDC & NPP?” And I ask again, “How has the borrowing impacted the living condition of ordinary Ghanaians economically and socially?”

Secondly, one of the much talked about and discussed topics on radio/TV and social media is the exchange rate/cedi depreciation. This is making the airwaves every day because of its negative impact on the Ghanaian economy; and the core reason is Ghana’s economy is about 79% dependent on importation. What politicians need to realise is that there is no NPP cedi or NDC cedi; all we have is the Ghanaian cedi, and when it depreciating, it affects everything and everyone in Ghana. Indeed, it’s important to note that the perialinial depreciation of the local currency is due to the fundamental structural problems within the economy, which need a bi-partisan approach to deal with them.

For the last couple of months, the voter’s register has been on the lips of most political communicators besides COVID-19 – and the simple reason is that it may be the deciding factor to determine which political party wins the December elections. Again, I ask a question: what is the economic benefit to Ghanaians when the voter register is entirely changed?

A school of thought believes that the existing register is very credible, accepted by all and backed by law; and their reasoning is simple – it has been used for two different elections, i.e. 2012 and 2016, and in those elections an NDC government was elected in 2012 and NPP government in 2016. Why the rush to change it and compile an entirely new one. I ask again, is this not a CREDIBLE register?

Why spend about US$800million of the taxpayer’s money to compile an entirely new register for politically self-centred gain at the expense of Ghanaians when we have COVID-19 and other very economically important issues to deal with.

Why is government bent on using about US$800million to compile an entirely new register when we need more hospitals; when businesses, SMEs need more affordable and accessible funds for their business; when the teeming youth needs jobs; when farmers need funding to increase their produce; when we need new technology to invest into education in order to go virtual?

Suggestions

  • Invest in business incubators and youth entrepreneurship to drive growth and create jobs
  • Invest into private vocational institutes and master craftsmanship to engage the youth and create jobs
  • Prioritise investment into healthcare, especially in the rural areas of our country
  • Invest more into educational infrastructure backed by technology for the development of our human capital

It is therefore clear that we have lost our priorities as a country, and I must say that growth is far less robust than needed to impact the living standards of Ghana’s people. That is why government should focus on a national bipartisan development agenda for the common good of all.

The Ghanaian economy needs a political agenda that provides an expeditious expansion in agriculture, manufacturing and entrepreneurship to create jobs for the teeming youth of our country.

©Jerry J. AFOLABI is a Financial & Economic expert who believes that ordinary people can do extraordinary things when given the opportunity. He is a leader in his field and community. His passion is to empower young people, adults and entities today with a love of learning and self-determination to become effective and self-reliant citizens.  Email: [email protected] ; Tel: +233541238987. #MONEYTALKGH SHOW#

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