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Opinions of Sunday, 1 June 2008

Columnist: Asomaning, Hannah

Does the average Ghanaian understand the economy?

The news of the reduction of taxes on Rice and other agricultural product as well as various mechanisms to cushion the average Ghanaian of the impact of the high oil prices on the world market came with mixed feelings While some people linked this to strictly political reasons others saw sense in the deal and praised the government for the venture.

Whether the announcement of the reduced taxes would have impact on the Ghanaian economy is another debate altogether which is not part of the reason for this article.

Translating what President Kufuor did on Thursday night, in literal terms one would say that “prices of rice have been reduced” This in actual terms is not what the President said. “He said the Minister of Finance has been directed to urgently seek approval for the measure to take effect.”

Does this communicate anything to the government? It seems a lot of people do not understand what controls the economy and what goes on to affect price increases or reduction. Ghana for now does not produce oil nor export oil, even though Ghana had struck oil. This means that no matter what government is in power, there is the need to buy oil from oil producing countries. Ghana does not determine oil prices, it is unthinkable, neither does it determine the prices of cocoa or gold which is produced and exported by Ghanaians.

So for instance if the buyers of cocoa and gold decide that the prices of these goods have gone down the country have no option, which means that income to the country in terms of cocoa and gold would reduce while the government would need more money to buy oil.

How does one analyze a situation like this, it means that taxes remain the only option to enable government get money to run the country apart form the donor support from other countries.

In this case one would say that reduction of taxes on imports is not the best solution to the problem even though it is acknowledged that there is a problem which the whole world is facing and Ghana is not an exception. But Ghana does not act in isolation, the world has become a global village and what affects one country could affect other countries.

An example is the famous September 11 in the United States, it affected tourism and travel in the whole world including Ghana.

Similarly the increase in oil prices on the world market affects the poor boy selling on the streets of Accra even though he does not really know about it. Perhaps that is why it is important for governments (not this particular government) in Africa to make it a duty to explain in simple and plain language the need for development cooperation between countries.

It is important to mention an organization like “The Third Chamber” a Netherlands based organization that advocates for strengthened development cooperation between Europe on one hand and Africa on the other. The Third Chamber in a bid to create awareness about Development Cooperation recruits volunteers who bring proposals on developmental issues and engage in activities to create awareness. Development cooperation is with us and has come to stay but until the average Ghanaian understands and appreciate this, people would not understand what really controls the economy.

Let us attempt to define “development cooperation” in a lay man’s point of view that is every country wants development and in pursuit of that, one country could come up with strategies that could affect another country positively or negatively.

Development cooperation could be positive when all countries agree that we want to improve the world and starts working towards that goal, perhaps one of the reasons that motivated the Millennium Development Goals by the United Nations.

In development cooperation, countries do not forget the fact that some nations are more powerful in terms of the economy than others because of what a nation is capable of producing.

Back to the Ghana situation, even though the country produces cocoa and gold and in sometime to come oil, the determination of prices on the world market is not solely in our power. The government therefore can not be in control of oil prices and therefore the country’s economy.

What this piece seeks to do is to encourage governments to educate Ghanaians on the dynamics of the economy in relations to the world market as well as the influence of the International Monetary Fund, the World Bank and the effects of the Development partners’ activities positively or negatively on the average Ghanaian.

President Kufuor confirmed this in his nationwide broadcast that government was already in consultation with its development partners to import and stockpile additional supplies of rice and wheat to enhance food security. Yes it has to be in consultation with development partners who may either benefit or lose if the terms are not well spelt out. In this instance even though it looks like help the development partners also stand to benefit because Ghana will eventually buy the loads of rice from them and please remember no big taxes on them at the point of entry.

It is time that governments explain to her citizenry, the nitty gritties involved in the international economy and how Ghana fits into it. For once Ghanaians should know that it is not how good or bad a government is that makes it decide to reduce fuel prices or increase it, so that people would stop saying things like “Kufuor has done well oooo, he has reduced fuel prices.”

Perhaps by understanding the economics better Ghanaians would be willing to change their attitudes and work hard to improve production capacities in the country and God willing be able to handle the “hardships” no matter the price of oil of the world market.

Views expressed by the author(s) do not necessarily reflect those of GhanaHomePage.