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Opinions of Sunday, 19 October 2008

Columnist: Atta-Quayson, Alhassan

Putting Bawumia's 16 Billion-Dollar-Ghanaian Economy in Perspective!

The Ghanahomepage published a news item on its website on Friday October 17 (sourced from Ghana News Agency titled Human resource development is vital to economy - Dr Bawumia) which mentioned that, the New Patriotic Party's Running Mate for the December Elections, Dr. Mahamado Bawumia, who is also the former Deputy Governor of Bank of Ghana, noted in a boastful manner that the successes chalked by his party is unprecedented in the economic history of the country.

In that coverage, and as he has mentioned on his campaign trail in Swedru and elsewhere, Dr. Bawumia made reference to the ruling party's ‘extraordinary ability to have moved the economy's worth of around four billion US dollars in 2000, when they took over the helm of affairs at the castle, to 16 billion US dollars in 2008, at least as at the time he was speaking. Although that is true, the eminent economist fell short to put flesh on the fact in order to put it in its rightful context. He only mentioned that it was due to sound and better economic polices implemented by the NPP government over the years, leaving out other intricacies particularly with regards to some developments in the economy. The former Deputy Governor’s statement is therefore viewed to have amounted to nothing more than an effort to confuse Ghanaians the more and to cover up the inefficiencies of the ruling NPP. This is most likely an ominous sign! I had a discussion on this issue with a technocrat colleague of mine on Thursday and we immediately pondered over how that compares with the growth rate of the economy over the same period. As we are made aware, the growth rate of the Ghanaian economy over the 8-year term of the Kufuor administration has averaged seven percent. For the purposes of argument, even if we assume that the economy has been growing at a rate of 10%, over the last eight years, this can only move the four-billion-dollar economy, as at 2000, to nearly 8.57 billion dollar economy {4(1+0.1)^8}. This is only half-way the journey! It was, and indeed is, incumbent upon Dr. Bawumia to have explained this huge difference between where he claimed we have gotten to and what our growth rates over the period also predict. The discussion got interesting when we actually resorted to the actual growth rates which averaged 7 percent over the period. That predicted 6.87 billion dollar economy by close of 2008, further widening the gap to be explained by the NPP's Running Mate for the December Polls, who is also an eminent and respected economist. What then was our explanation, or opinion for that matter, to the difference between the current worth of the Ghanaian economy and what the growth rate also predicts? We noted that the successful and peaceful transformation of power from one party to the other, thus from NDC to NPP, in the aftermath of December 2000 polls rendered the democratic dispensation in this country with significant trustworthiness and credibility. (And this, Dr. Bawumia’s NPP must take note of, respect and be willing to repeat should the polls request them to do so after the December elections). This development therefore shifted the focus and attention of the international community more on the Ghanaian economy. This meant cancellation of debts, especially when we joined HIPC, granting of more loans and other sorts of funding (Multilateral Debt Relief Initiative) to the country, and a lot more. All these meant that if the government had played its cards well the economy could have grown probably in double digits to commensurate what they are celebrating!

We also recognized that rather than the administration growing the Ghanaian economy, it grew its government over the period. The size of the government as a percentage of our gross domestic product which stood at well below 30 per cent is today around 40 per cent. This is unprecedented in the economic history of the country. It is again unparalleled and probably miraculous than quadrupling the size of the economy while growth rates remain under seven per cent (on average). It is worth noting here that this is radically contrary to conservative ideologies the party was found on and has been preaching around the world. In our candid opinion, this administration has been partying over the period, particularly after leaving the HIPC initiative about three years ago.

Fareed Zakaia of Newsweek has noted that “in a world of competitive capitalism, you need not big government or no government but smart government.” But this is certainly not what we are experiencing! The ruling government has been so far away from “smartness” but so large in size that it is engulfed in mismanagement and corruption. One of the recent reports of the Auditor General noted that half of public funds go waste or is mismanaged! For years, Ghana has attracted significant funds from the international community and, comparatively, little is seen about what these funds have been put to. The Auditor General’s remark is therefore not surprising. It is important to be mindful of the fact that in the coming years Ghana will have to fight like other performing democracies like Tanzania, Uganda, Malawi, Rwanda and Zambia to attract funds, as the golden era draws close. It is important to reassert our credibility and trustworthiness, and to investigate these spending in the near future.

Regards Alhassan Alhassan Atta-Quayson

M Phil Student, Univ. of Ghana +233 24 4986441