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Opinions of Tuesday, 24 August 2010

Columnist: Ampong, Charles Horace

Synergy between Political and Economic Freedom in Ghana

Synergy between Political and Economic Freedom in Ghana – A Review (Part 2)

The recent rating by Newsweek magazine in which Ghana was ranked in the 86th position out of 100 countries is worth talking about in terms of the country’s potential to do better. From a statistical point of view, it means Ghana fell in the 86th. percentile position. Considering the numbers for the individual factors that make up the ranking, the country attained the following positioning: education (92nd percentile), health (89th percentile), quality of life (84th percentile), economic competitiveness (87th percentile) and political environment (44th percentile). Being in the 86th percentile position means we are in the bottom 20%. From an African perspective, it looks good since most of African countries fall in the last 25%. But from worldwide point of view it means there is more room for improvement. The results also show that our political freedom is not translating into economic freedom. We are below the 50th. percentile for political environment which is commendable. However, we are in the bottom 20% for economic dynamism. It depicts a negative correlation between our political environment stability and economic progress. Again, it suggest we are doing well politically but our politically stability is not translating into economic stability or growth. That is why from the first part of this article I outlined some of factors that were impeding the progress of Ghana’s economy and most importantly the need for enacting prodigious plan which will stimulate the economy producing a breaking effect on the country’s escalating unemployment rate. There are some who saw my analysis as being more idealistic than realistic. Fortunately, the rating by Newsweek has come at the right time to support my assertion. Now, in the next segments of this article, discussions on the strategic plans will continue. Additionally, social factors which can have a destabilizing effect on economic progress and political stability would be expounded.

Infrastructure and Energy Improvement & Corruption abatement

Judiciously, the government strategic plan should also articulate the usage of the oil proceeds for national development. This would curtail possible inter tribal and regional bickering. However, it must be made clear that, the oil proceeds will have a marginal impact on the economic conditions of Ghanaians. So the high expectations regarding this resource should be downgraded. Now, the plan can become redundant if corruption is not dealt with gravely. There is the need for the current government to have zero-tolerance policy for corruption in its plan. In the past, the country has seen task force being set up to deal with it but the situation is no better now. Ultimately, there is the need for fresh and unbiased policies to deal with the situation. Also the plan would also have to consider the country’s current poor infrastructure, energy needs or deficiencies which are deterrents to growing investments. Countries like China, Brazil have seen sustainable economic growth because of the investments made in infrastructure, transportation and energy sectors. Improvement in these sectors has become a driving force for attraction of investors into their robust economy. In fact, efficiency and effectiveness in the capital intensive industries which include chemicals(petrochemical, fertilizers), electronic and electrical equipment, metallic and non-metallic products, food & beverages & tobacco, textile & clothing, Pharmaceuticals, construction, transportation & telecommunications, ore and oil mining, production and refining depends largely on adequate and efficient infrastructure, transportation and energy sectors. Unfortunately, these sectors have become a problem in African countries and if Ghana is to become the gateway to investments in Africa, then there is the need to address these issues with expediency. The fact is that if we fail to address them with all graveness, we are likely to loose gradually even the investors that we have now. What the government must know is that investors are interested in how these sectors will affect their business model and returns in the immediate to long term. The financial sector also needs augmentation. The country has an ineffective credit facilities and policy system which is also a set-back to private sector investment.

IMF Loan Myth Impact

Now, going for IMF or World Bank loans to deal with economic problems is not a viable option. The IMF loan is designed to promote growth, generate income and to pay off debt accumulated. Now, the loan is based on the donor expectation of certain conditional reform policies normally termed “Structural Adjustment Policies” (SAP) to be executed by the recipient. Much as the SAP reforms can be immaculate predictors of economic freedom, there is a price to pay during their implementation. The reforms cannot be pursued without the government compromising some of the pledges made to Ghanaians during the 2008 elections. Some of the repercussions of these reforms include deregulation (a key component of a market-economy), inflationary pressures leading to increased interest rates, social unrest (due to stagnancy in state employment) among others. Indeed, the reforms are poverty reduction weapons but if not handled with discreet can result rather in poverty escalation. Nevertheless, the current government would have to do the “math” well to subdue the impact of the reforms set-backs as it works to advance the course of economic freedom and prosperity. Furthermore, continuous improvement in the country’s debt ratio through reforms will give Ghana a better credit rating in the eyes of international donors. It will offer the country an opportunity to receive loans from other development banks with lesser interest rate and longer pay back periods. A testament to that effect is that China is fast becoming Ghana’s donor but there is the need to consider other international governmental donors to avoid monopoly and create diversification the remedy for reduction of loan risk.

Ethnic and Political Cleavages & Rule of Law

Another area which constitutes a potential source of stalling progress is our ethnic cleavages and the respect for rule of law or better still the judiciary. No matter your ethnic or political background once you are born in Ghana to Ghanaian parents you are a Ghanaian. Conflict arising out of ethnic or political cleavages has the ability to gradually derail the political freedom, gravitating towards mayhem. It is indeed a potential “landmine”. We do not pray for that to happen. However, we need to avoid courtship with such potential implosive “landmine”. We may have differences because of our political or ethnic backgrounds yet this should not give us cause to perpetuate personal or political vendetta or vituperative tendencies. If the government seeks to have good governance and political stability then it needs to address the potential negative ramifications of political and ethnic cleavages in its plan. In spite of all these developments, we have to thank God for the recent peaceful elections conducted by NPP during the election of their 2012 flag bearer Nana Akuffo Addo. It is my fervent prayer and wish that NDC and the remaining parties will emulate the NPP exemplary elections to maintain the atmosphere of tranquility Ghanaians are enjoying. Next, Ghana needs God’s direction and the respect for freedom of speech in spite of the success chalked so far. Freedom is God-given and is an essential component of true democracy. For there is a saying that the voice of the people is the voice of God. Let’s not forget that the world is watching us to see how we can translate our model political freedom into a model economic freedom and prosperity in the long term. Countries like the U.S.A that epitomizes matured form of democracy have achieved that based on respect for rule of law and the judiciary. If we are to maintain our current political stability accolade then we have to respect the judiciary and let rule of law be preeminent in the country. In fact, freedom of speech should not be a platform for denigration of rule of law or the judiciary. A country that exhibits such tendencies is gravitating towards a lawless society and we need to be careful.

Closing Remarks

In concluding, I must say that the government should focus on creating jobs instead of its current too much emphasis on inflation reduction. It is good to seek for inflation reduction, reduction in volatility of the exchange rate, reduction in international debt but we also need reduction in interest rate as well as and most importantly creation of jobs to reduce the stunning and deteriorating unemployment rate. The quality of life of Ghanaians can be improved even though the recent 84th. percentile positioning is commendable in the African context. Finally, the government should continue to maintain the existing academic freedom which allows free primary school education, religious freedom and the freedom of the press. However, there is need for improvement in our technical education as well as University education. Being in 92nd percentile position is not commendable and it calls for pragmatic policies to deal with our educational sector.

God bless our homeland Ghana and make our nation great and strong!

Charles Horace Ampong