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Opinions of Wednesday, 20 March 2019

Columnist: Emmanuel Tweneboah Senzu

Inquiry into the Ghana Cedi value-decline in the exchange rate market

There are varied aggregate factors that macro economically determine the State of Welfare or the unhealthy nature of a nation. Among these factors, the most easily noted symptom indicator is the performance of a national currency.

Therefore it never theoretically wrong for an economist to assert, “You could do all politricks with your economy about its welfare, but the free fall of your currency will expose you”. Such a statement is a practical fact that sieve the truth from lies about the honest status of an economy.

However, this article is premised on these bases; there is one thing in knowing the cause of a problem and ambiguously narrating it to score a political point and another thing of appreciating the causal existence of a problem and meticulously striving to address.

The discussion about the declining value of the cedi- currency and it varied cause of factors could attract different economists with different perspectives depending on their strategic position in the labour service of Ghana.

But the effort of this article is to argue on the functional root cause, responsible for the numerous subset of causes at the macro-level, complicating the cedi-value decline issue, making it to be perceived as an unsolvable problem on the economic board per it stabilization or appreciation of value.

A keen observation to the Ghana Cedi fall before its trading counterpart does go beyond the average analytical indicators used by economists to probably predicts it rise or fall.

If it wasn’t so, I believe the current economic managers would had done everything possible to address the challenge to buttress their competency argument as a political score. Hence the most anticipated question is, what is the functional cause? Such that, the economic managers seem hopeless to resolve.

The problem lies in a distorted ideological path of the current government as my observation, affecting it principle execution of policies that supposed to be governed by a formidable theory of action. It must be acknowledged that a good policy that worth implementation is always guided by a theory and a well-constructed theory is ideologically driven to define it parametric efficiency.

However, this article seeks not to prescribe an ideological stand relevant to the Cedi stabilization or appreciation of the value that will lead to an economic growth but rather to open the floor for an analytical debate that presumably may hold the best solution to the predicament of our country as a sovereign nation.

We should recognize, most of our challenges we face today as a nation is rooted from our thinking and actions, whether conscious or unconscious, which has it DNA from how this nation was birthed in 1957; a socialist movement in orientation towards our decisions and actions. Traditionally, it is the character of the left-stylish political movement with perceived moral conduct to decide and act mostly, just by the emotion and empathy for the people wishes against a required act of precision and rigorous analysis of pros and cons of actions to an intended result.

These leaders run their political administration on the emotion of masses, which is noted to have a great effect on the monetary economy of any State, because such a sector, as an engine to the political economy, function in a method of precision, hence it policy implementation is always expected to be theoretically guided towards a scientific result. For the above assertion to be elaborately understood, will proceed to clarify with evidential historic facts as scenarios that has significantly contributed to the poor development of our financial market, the weakening of the cedi-currency in value and had projected a nation with a debt portfolio over the period of four decades.

In reference to Tsikata et. al (2000), they submit, Nkrumah government’s position on foreign direct investment and economic development, initially appeared to be somewhat controversial. While globally, foreign direct investment was regarded developmentally as an important component of the ‘engine of growth’, Nkrumah’s Marxist-Leninist political stance identified foreign Investors as a primary agent of neocolonialism and western capitalist exploitation, which made it very difficult for Dr. Kwame Nkrumah to attract as much Investment from the West as he envisaged. When they made U-turn to compromise their overzealous socialist position, which resulted in a major breakthrough with the agreement made with American Aluminum consortium Kaiser-Reynolds over the establishment of an aluminium smelter, Volta Aluminum Company (VALCO) at Tema to exploit the power facilities being generated from the Akosombo Dam.

It was realized, the content of the agreement was filled with overzealous terms in favour of the Investors as Tsikata submit, in other to entice foreign investors due to the hunting of their past ideological positioning and stance. Then came the era of “We shall not pay” (yentua) declaration, which sought to repudiate the country external debts with private investors as well as bilateral and multilateral agencies during the over throw of democratically elected government Dr. Abrefa Busia by then Colonel Acheampong, with the country driven under a socialist-based programme and dubious nationalization of foreign capital, making Ghana pariah in terms of foreign direct investment until the insurrection by Flight-Lieut. Jerry John Rawlings in 1979.

In all this period, the monetary economy of Ghana is bulky of foreign direct investment inflows, why? Because the Marxist-Leninist thinkers governing the country then has emotionally developed disdain to domestic-private productions, which really has a strong response to currency stabilization power of any sovereign economy. Hence Citizens in these regimes has become an addict to State dependency for easy manipulation and at the mercy of foreign direct investors. Up-to-date, the average Ghanaian still do not understand, there is nothing like “free” in any economic compositions, it purely deceit and a manipulative weapon.

We still have an estimate of 82% of the population in Ghana, who still thinks, government owes them the responsibility to address all their needs including their irresponsibility in managing their own welfare to basic life because of the treat from the old overzealous socialists movement.

Currently, the movement has progressed into a stylish left intellectual fascism, promoting and orienting the mindset of the masses on equality of outcomes, everyone should have the same level of living, or of income, should finish the race the same time without considering individual choices, preferences, interest, capacity, ability, desires etc. In such an attempt in promoting these trends of policies as government, has led to bigger government size and burden of imposing restrictions on the Liberty of citizens.

For instance, the overzealous in promoting free package initiatives of current government, without a reliable financial engineered sources of funding, as well as policies of empathy instead of precision, has now become a cost and a burden to the liberty of other citizens, with government resorting to rampant borrowing to satisfy most of it wishful thinking and political campaign promises, projecting a national debts antithetical to cedi-value stabilization promise. As a result frustrating domestic enterprises growth and expansion, all in the name of making the economy strong through infrastructural investment?

Let us remind ourselves, money like figures do not understand the language of faith.

Emmanuel Tweneboah Senzu, Ph.D. Dean of Research University College of Management Studies, Ghana. Fellow of Frederic Bastiat Institute

Academic Reference

Tsikata, K. G., Asante, Y., & Gyasi, M.E. (2000), Determinants of Foreign Direct Investment in Ghana: ODI- University of Ghana, ISBN: 08500034558, Portland House, London.