PERISCOPE DEPTH
…With Our Publisher
“Great minds discuss ideas; average minds discuss events; small minds discuss people.”- Eleanor Roosevelt
01/12/2021
I recently attended the funeral of a friend of mine. This guy was one of the most vibrant people I know, extremely healthy and confident, until he fell badly ill virtually overnight. He woke up one day hale and hearty, and the next day, he could hardly crawl out of bed. Being notoriously shy of hospitals, he decided to contact a local druggist, who diagnosed malaria, and gave him an injection and a course of tablets. There were no noticeable changes in his condition, but just as he was about to decide to go to a hospital, another friend visited him and suggested, with great confidence and gusto, that what was ailing him was the dreaded Covid-19. Still intent on avoiding hospitals, my friend quickly sent to a pharmacist’s to buy zinc tablets and a host of medication thought to help with the treatment of Covid-19. Needless to state, after three more days of applying medication according to his own confused prescriptions, his condition had become so bad that he had virtually become incoherent, and it was then that his wife and children decided that he should be taken to hospital.
The doctors, after measuring his blood pressure with a sphygmomanometer (we civilians call it a blood pressure machine, ha ha), decided that what was really ailing him was blood pressure. The numbers were just out of the window. The doctors tried to bring him back, but he had been just too tardy getting himself to the hospital, and it was just too late. If only he had taken himself off to hospital a few days earlier, he would have survived. If only he had managed to diagnose his true condition earlier, he would be alive.
At this point, I must confess that my title to this piece is a bit deceptive. My title is ‘Does Ken Ofori Atta Understand Ghana’s Modern Economy?’ In place of Ken Ofori Atta, you may place Seth Terkper. Does Seth Terkper understand Ghana’s economy? You may place Dr. Kwabena Duffuor. Does Dr. Kwabena Duffuor understand Ghana’s economy? You may place Dr. Mahamudu Bawumia. Does Dr. Mahamudu Bawumia understand Ghana’s economy? You may place Alan Kyeremateng. Does Alan Kyeremateng understand Ghana’s economy? You may place President Akufo-Addo. Does President Akufo-Addo understand Ghana’s economy? You may place President John Mahama. Does President John Mahama understand Ghana’s economy?
Ultimately, though, I have to work with my title for the day, which is whether Ken Ofori Atta understands the needs/ills of his patient, Ghana’s general modern economy; because if he does not understand, if he misdiagnoses what is ailing the economy, he will kill the patient, as my friend killed himself. Or, at the very least, make the patient to suffer for long and in excruciating pain.
Why should I dare to ask the question whether a mighty economist and established financial person like Mr. Ofori-Atta, understands the economy? I am not educated in economics, I am not a finance person, I am not even a mathematics person, and I have no vast businesses, so what qualifies me to ask such a question?
Well, first, my interest was piqued by one fact that recently became public, which is the amount of funds that was shifted around the nation, in a single year, by mobile money transactions. The figure was put at GH¢ 571.8 billion (USD 99.67 billion) in 2020 alone. I might add, that this is just mobile money transactions alone. As is commonly known, a large number of patrons of the mobile money system, are the unbanked, the poor, those who are not formalized members of our society, the illiterates, you might say.
The question that then occurred to me, with my limited knowledge of economics and finance is; is if those who are poor, unbanked, not formalized, and probably illiterate, in just a single year, managed to electronically shift USD 99.67 billion within the borders of this our Ghana (pardon the colloquialism), how much did the rich, the banked, the formalized, the literates, shift?
Surely, it must be far higher sums of money?
I also asked myself, poor in economics as I am, about those whose activities dare not be recorded, that is the criminals and those who believe that their activities should be kept beyond the pale of all scrutiny, like money lenders, illegal foreign exchange dealers and criminals engaging in all manner of criminal enterprises in our system. How much money did they shift around in 2020?
Another issue that occurred to me, is that money being moved, is just a symptom of actual economic activity; which leads me to the question, how big is the economic activity that led to the transfer of the USD 99.67 billion by mobile money? I may not have made myself quite clear here and I will try to clarify. Supposing that an orange seller transfers GHc100.00 to her supplier, what we would record is the GHc100.00. We would not record her stand, her knife, and any other things ancillary to her business that led to the transfer of the GHc100.00. So, how big is the business of this orange seller? How big are her factors of production? How big is the basis of the business that generated and transferred USD 99.67 billion by mobile money in a single year?
Now, assuming that we were to contemplate the factors of production that generated this sum, and to seek to quantify these factors of production and use just the number 2 as standing in for all the factors of production that generated the USD 99.67 billion in mobile money transfers, we would need to multiply the amount by of USD 99.67 by 2. That is almost 200 billion dollars. And you would agree with me that is a huge amount of money, in the non-formalized sector of the economy alone.
And still proceeding along that line of reasoning, assuming, that we were to somehow track all the quantum of financial transactions that occurred in the formalized sector such as banking, payments, commerce, trade, sales, and many others which necessitate the exchange of money, how much money would we say is transferred in the economy of Ghana?
And if we were to then make an attempt at bringing on board the factors of production which led to the transfer of monies as set out in the preceding paragraph, how much would be the real worth, monetarily, of those factors of production?
How much, for instance, is the land selling business in Ghana worth? How much is the worth of the real estate industry, when a single building at Trassaco Valley is selling for half a million dollars? How much is the worth of Ghana’s agriculture? Our banking sector? Our manufacturing sector? How much is the worth of media industry? The religious industry? And the many more industries the knowledge of which I am too limited to know about? How much would they all be worth?
Surely, we may be very, very conservative in outlook if we were to put a value of one trillion dollars as the quantifiable figure, in monetary terms, of the factors of production that led to all the monetary movements in our economy. That is to say, in Ghana, the amount of investments that is in place, leading to all financial movements, that is the exchange of money and commerce, is over a trillion dollars. As I said, that may be a very conservative estimate.
Now, it is against this huge financial outlay, a trillion dollars of investments, that the Finance Minister Ken Ofori Atta makes this statement in his latest press release to the press on the 2022 Budget Statement;
“The Budget seeks to address the triple helix albatross of our time; high unemployment, high debt and inadequate infrastructure even as we pursue our agenda for increased social mobility and justice for all”…
Now, I have already said that I am a great economic ignoramus. But I must ask; if we have over one trillion dollars in production capacity installed in Ghana, but there is still ‘high unemployment, high debt and inadequate infrastructure’, what makes Mr. Ofori Atta to believe, that his budget with the puny requirement of seeking to raise a few billion Ghana cedis, would radically affect the factors of production?
I dare to state, that if the figures he puts forth as the statistics for the youthful population are true, that the population of Ghana’s youth between the ages of 15-24 stands at 6.3 million and that those under 35 stands at close to 11 million people, then the proposition that GHC 10 billion a year invested in youth employment would make any significant difference in the unemployment situation, is a laughable proposition. Mr. Ofori-Atta should be laughed out of the room for evincing a clear misunderstanding of the problems the Ghanaian economy faces when it comes to unemployment. He simply does not understand.
If a trillion dollars in production capacity (and that figure is highly conservative) cannot create enough employment, such that we have over a million young people unemployed, then a few billion cedis a year, here or there, to set up a few young people here or there (if we actually set up a few people here or there) would make absolutely no difference, in the short, medium and long term, in the real numbers of unemployed. I do not speak of the real danger that the money, even if we put it aside, would disappear into ‘political’ and corrupt tentacles. That is what has happened all these years. And that is what would happen with this initiative as well.
If would be far off from the description of being ‘ground-breaking’ or ‘historic’. It cannot tackle youth unemployment to any sustainable degree, not to speak of it being ‘comprehensive’. It cannot also be a game-changer. It is just a piss in the pond, a cup of salt water in the sea. It demonstrates Mr. Ofori-Atta’s basic misunderstanding of the problem of unemployment in Ghana, and how to resolve it.
And as I said at the beginning of this piece, a doctor who misdiagnoses the sickness of his patient, is likely to kill the patient. If one goes about applying wrong medicine to a sick patient, what one is doing is actually contributing to the death of the patient.
Now, if I say that one may actually be killing the patient, what do I mean? In ancient times, in medieval Europe and elsewhere, doctors actually bled (let out the blood) of patients in the hope of curing them. Taking more money from the economy with the hope of creating jobs, has exactly the same effect as bloodletting.
I will illustrate this point further.
The government says that it will seek to create jobs with the money it will raise. That being so, it will seek to train people who are currently jobless, then give them the capital to start.
The first problem that I see, is that the government is going to take money out of the hands of people who are already working, and give it to people who are not working. Is that not an anomaly in thinking? Why tax people who already productive, to give to people who are unproductive? I would have thought that the wise thing to do, is to give the people who are already productive, greater support, so that they can attract the people who are currently not producing, either through direct employment, or through serving as role models. You do not take the capital from people who are producing, because when you do so, what you are doing is actually hampering them. You are really creating unemployment, instead of the reverse.
Indeed, this type of thinking is not original to me. That is the way the mind of the Finance Minister used to work, until he went into government.
And the frightening thing, is that Ghana’s opposition is also similarly bereft of ideas. When they were in government, they did exactly the same things that this NPP government is now doing, taking money out of the hands of the private sector through excessive taxation and using and misusing it on various hare-brained schemes like GYEEDA and others, that ended with hundreds of millions of cedis lost and people in prison. Now, the NPP is talking of the same schemes, only in billions of cedis, instead of hundreds millions of cedis.
And I am dead certain, if Ghana were once again to experience the misfortune of an NDC government sometime in the future, that the term we would use would be the tens, if not hundreds, of billions.
Indeed, former President John Mahama has already given us an inclination of this intention to take funds belonging to the people of Ghana on a grand scale, and invest it in another avenue for corruption and misuse.
Addressing a program dubbed “Thank You Ghana” at the Kempinski Hotel in Accra on Wednesday, November 10, 2021, Mr. Mahama referred to the NDC’s one million (Edwumapa) Jobs Creation Plan. Essentially, the Edwumapa plan is the same thing as the current YouStart program of the NPP. The NDC says that it will train currently unemployed youth with the appropriate skills, and give them the capital to start with. The only difference between Edwumapa and YouStart, is the set of people implementing either program, and the name. Because both programs are essentially the same. The similarities in thinking is amazingly amazing. And both are dangerously wasteful. Because in essence, it intends to bleed people who are already working, to fund these unsustainable experiments.
Several years ago, I made a vow with myself, that I would not identify and critique a national problem, without offering a solution as I see it. Which immediately leads to the question; what should we do, as a nation, to create employment?
First, charity begins at home. We should direct all public and tax-funded procurement towards Ghanaian-owned entities.
Second, we must eat and wear Ghana to create jobs for our youth. The place to start is from the home. In this, I am gladdened that of late, most of the time, we are to see our President, Nana Akufo-Addo, in Ghanaian textiles in most exterior programs. That initiative has been a great booster for the local textile industry. Indeed, to spread the commendation around, many of our political leaders also like wearing the multi-coloured clothing that we all love.
Unfortunately, that is about it. Because when it comes to where it matters, our entire procurement machinery seems to be geared towards international contractors, and suppliers. You can check and verify this yourself. Our entire procurement machinery, targets foreign companies. It seems to be the case that every contract above a million dollars, and many below, must go to a company either foreign owned, or foreign registered. What this essentially mean, is that we take the taxes here, with the deliberate intention of creating jobs and wealth in other nations outside Ghana.
When all your contractors are foreigners, what you create is jobs outside of Ghana, because the real wealth in the contracts are exported outside of Ghana.
The third problem militating against job creation, is our acquired sense of taste. Ghanaians like all things foreign and imported, as against all things made here. We have trained our children to love noodles, instead of cocoyams, plantain, yams and cassavas, even though the latter are far healthier and tastier.
The fourth is our import policy. It is literally true that we import poverty with every shipment of finished goods that land at our ports. A container full of mobile phones or laptops, may be two or three times the value of an entire shipload of cocoa. We have limited ourselves to the production of cocoa, timber and gold, in a world economy that moved on to technology four hundred years ago. And to listen to our economists, that is still the best that we are suited for.
And until the Ken Ofori Attas of our economy learn these basic facts, we would be where we are, offering unworkable palliatives like YouStart and Edwumapa to a chronic national canker.
