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Feature Article of Wednesday, 23 June 2010

Columnist: Kufuor, Appiah Danquah

What Is Forbes Up To? Undermining Ghana’s Economy

Forbes description of Ghana as the 9th worst managed economy is grossly unfair unbalanced and was clearly meant to destroy the image of Ghana among serious investors. For the past three months, our organisation has been working closely with some serious investors to secure a deal for the rehabilitation of the Worawora Rice Mill in a poor part of the Volta Region. At one time, the Rice Mill was the main source of employment for people of Worawora and the surrounding areas.

With the closure of the Mill, most of the young people have drifted back to Accra without any meaningful employment.

These on-going negotiations had the backing of the President of the Association of Ghana Industries and other industrialists in Ghana. Just last week this group of investors pulled out of the deal citing one of their reasons the “damning” report by Forbes.
Forbes incorporated is a very influential and highly respected privately held publishing media company. Its flagship publication is Forbes, a bi-weekly magazine which is a must read for most MBA students.
Indeed, until its latest publication, I was one of the avid readers of Forbes publications from my undergraduate days at Keele, to my postgraduate studies at Manchester. It was on my must read list for my students at St John’s College, Manchester.

What has Forbes done to get me so rattled?

In its latest edition, Forbes ranks Ghana as ninth on its list of the world’s worst managed economies. According to Forbes magazine it screened IMF data for countries that have low and declining per-capita GDP, high trade deficits and high inflation, all indicators of bad economic management regardless of the country’s inherent wealth. On those indicators most European Union Countries will fit the bill quite easily- but that will be left for another day.
My question to Forbes is simple- How credible is the IMF? Part of Ghana’s economic woes can directly be attributed to this monstrous, huge, overbearing economic institution. Its only economic policy tool is structural adjustment with its sacred cow – job cuts in the public sector. No serious country with any economic muscle will swallow the IMF’ prescription- in most cases the pill just finishes of the patient.

How can any serious International Organization base its “economic destruction theory” on the sole statistics of the IMF? How can an emerging, democratic, small nation’s image be destroyed based on anecdotal evidence from the archives of the IMF?

To add salt to injury the Vice President and Head of the World Bank’s Poverty Reduction and Economic Management Network Otaviano Canuto said ”Most of these vulnerable low-income countries are in a trap- the climate is not conducive to investments, not only in factories and agricultural improvements but in education”. What nonsense. Was the Vice President referring to Ghana when I was kid, or Ghana of 2010? By the way, is the IMF not a sister organisation of the World Bank?

For the record, as a Ghanaian working with other key stakeholders in the country to help alleviate absolute poverty it makes me angry, sad and frustrated when our work is undermined by big players like Forbes.
On a personal note, I have written to Mr Steven Forbes CEO for Forbes challenging the basis, assumptions and conclusions of Forbes economic jaundiced report. My beef with Forbes is, the report was extremely selective in its findings, it was not comprehensive, holistic neither did it have any time span.
Of course, I concur with Forbes on one issue Ghana, despite its entire natural and human resources and favourable coastal position, lags behind countries like Mauritania with a per capita GNI of less than $700.

Furthermore, real per capita income in Ghana has barely doubled over the last 45 years. In contrast, during the same period, with its aggressive export-oriented strategy, Mauritius has sustained average annual per capita growth of above 3 percent, and its income level has almost quadrupled.

However, that on its own is not sufficient evidence to describe Ghana’s economy as the 9th worst managed economy in the world

Most Ghanaians would admit that during the early years of independence the political and economic policy environment of Ghana was not conducive to dynamic private sector investments, entrepreneurship, and growth.
In sum we did not do well. There is no point in labouring the facts and comparing ourselves to the South Korea’s, Singapore’s etc- we were just lousy. As a nation we failed to deliver the economic goodies for the next generation.
However, since the late 1980’s all economic indicators suggest that Ghana has significantly improved its macroeconomic management and economic performance.
For example, economic growth has averaged over 5 percent since 2001.The proportion of the population living below the country’s poverty line has almost been halved and hopefully Ghana may achieve the key poverty Millennium Development Goal (MDG). In the low-income African context, this achievement is remarkable.

Moreover, Ghana’s growth rate has been built on the foundation of the improved economic policy environment, based on sound fiscal management and investment climate. A World Bank Report (2008) states that “alongside Tanzania and Uganda, Ghana is one of the three strongest economic policy performers among low-income African countries”.

For the benefit of our readers who may feel and think - Hey Ghanaians Book-long People always defending the indefensible we are poor and lousy let us accept it – I say to them loud and clear – yes, we are poor – yes we accept constructive criticism but NO we must not be bullied .As we say in Akan language – Ohiefo didi- the poor also eat.
Let us examine briefly, other economic reports and publications from reputable, non- partisan, respectable and influential organizations. Based on the findings of these other august institutions would the reader arrive at the same conclusion as Forbes.
First, the United Nations Human Development Index (HDI) Report (2008) ranks Ghana 135 out of the 177 countries surveyed.
The HDI reports concentrate and explores challenges including poverty, gender, democracy, human rights, water scarcity, climate change, mobility, human liberty and globalisation
Second, World Bank “Doing Business Report (2009) ranked Ghana 92 out of 183 countries surveyed. The report ranks economies on the ease of doing business from 1-183 with first place being the best. A high ranking on the ease of doing business index means the regulatory framework is conducive to the operation of business.
The index averages the country’s percentile rankings on 10 topics, in a variety of indicators giving equal weight to each indicator.
Third, the Heritage Foundation Index of Economic Freedom ranks Ghana 91 out of 157 countries surveyed. The Heritage Foundation and the Wall Street Journal created the Index of Economic Freedom.
The Index’s 2008 definition of economic freedom is the following “ the highest form of economic freedom which provides an absolute right of property ownership, fully realized freedoms of labour, capital and goods and an absolute absence of coercion or constraint of economic liberty beyond the extent necessary for citizens to protect and maintain liberty itself.
Fourth, the Transparency International (TI) Corruption Index ranked Ghana 69 out of 179 countries surveyed. TI is the global civil society organisation leading the fight against corruption. It brings together in a powerful coalition to end the devastating impact of corruption on men, women and children around the world.
Fifth, Reporters without Borders (RWB) in its World-wide Press freedom analysis ranked Ghana 31 out of 175 countries surveyed. RWB is a founding member of the International Freedom of Expression exchange a virtual network of NGO’s that monitors free expression violations worldwide and defend journalists, writers and others who are persecuted for exercising their right to freedom.

Sixth the World Economic Forum (WEF) Global Competitiveness Report not ranked placed Ghana at number 59. The WEF is committed to improving the world it is impartial and not tied to any political, partisan or national interests.
Seventh, the Vision of Humanity Global (VHG) Peace Index places Ghana 40 out of 121 countries surveyed, The VHG index ranks countries by their peacefulness, and the Peace Index is an attempt to measure the relative position of nations and regions peacefulness. The index is the first to rank countries around the world according to their peacefulness and rising incomes.
Come of it Forbes- data and statistics can be s manipulated to arrive at a certain desired outcome. Have you any hidden agenda?
Ghana has enormous economic challenges including rural-urban migration, extreme social inequities, gender disparity in jobs and incomes, regional imbalances, poor infrastructure, aid dependency and poor housing.
Moreover, there are huge economic constraints that are crippling our country. The recent havoc that has been caused to the economy by the rains in Ghana is a glaring example of the fragility of our economy.
Our economy is constrained by infrastructure gaps, especially in energy and water and sanitation. Low productivity especially in agriculture and a weak business and investment climate, a crony capitalist system which is extremely inefficient, a peasant led agriculture system and a weak manufacturing sector.
Our country is not in denial neither are we complacent on the issues confronting us as a nation. However, Forbes reliance on just IMF statistics to portray Ghana’s economy as a lost cause have provided ammunition to our detractors and caused a lot of “collateral economic damage to the economy”.
None of us would have challenged the findings of Forbes if its research had been comprehensive, holistic and balanced.
For example, a World Bank (2008) report states, “as a small open economy, Ghana remains vulnerable to external shocks over which it has little control: commodity prices, climatic conditions, regional tensions, and fluctuations in global, international trade and investment flows.”

In concluding, I hope I have not used any economic jargons. My message is simple: Ghana is a small, poor country working extremely hard in a harsh global economic climate to attract inward investment and make life a bit easier for our folks.

In recent times, Ghana has been working hard to improve its macroeconomic policy, especially fiscal and monetary management efficiency; and sector policies.

Hopefully, by strengthening our policies, institutions, and embedding democratic values in to our body politic we may leave a better Ghana for the next generation.

Forbes owes Ghana an apology.

Kufuor, Appiah-Danquah

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