Urgency required in efforts to diversify
INFLOWS from the latest US$1 billion Eurobond issued last week are expected to hit the Bank of Ghana’s account this week. Coupled with inflows from the cocoa syndicated loan, the country is expected to receive US$1.8 billion in its foreign currency accounts.
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This will bring some stability in the outlook of the value of the Ghana cedi, which has been wobbly over the last three years. While the cedi recorded significant gains last week – it gained 2.68 per cent and 2.31 per cent against the dollar and the Euro to close at GH¢3.71 and GH¢4.15 respectively on October 9 – the currency has altogether lost about 15 per cent of its value to the dollar, year-to-date.
The Bank of Ghana has been trying various measures to stop the decline, unfortunately, these have not been holding, since remedies such as injecting fresh dollars into the economy are only a temporary stop-gap measure.
Economists and experts have consistently drummed home the need to change the structure of the economy; a claim the government itself has embraced. It is fair to say that the government has announced some steps such as export-oriented policies, but it has taken rather long for the announcements to the facilities and structures to become a reality.
The GRAPHIC BUSINESS has consistently drawn attention to the need to recognise the times the country finds itself in as ‘emergency’ that requires urgent actions. Time was when if even all parts of Africa were experiencing low growth, Ghana braced the storm, kept its head above water and posted remarkable growth rates above the African or world averages.
Today, Ghana’s growth rate and projected growth rates are once again at par with the grim African growth projections. For a country that prides itself on a lot of firsts, we should be dissatisfied with the outturn and work our way out of the quagmire with urgency.
The foremost often cited issue has been the lack of revenue, particularly for the government. However, it should not be lost on anybody that the growth and economic performance that the country posted in the past continue to rake in investor interest in the country.
This is why although the ‘no money’ refrain persists to a crescendo, the economy is witnessing, perhaps, some of the most palpable developments than ever in the history of the country, especially in the expensive real estate space. Ironically, these developments are all targeted at the high-end income bracket.
Perhaps, what the economic managers should be doing is to play a facilitating role to leverage private capital, preferably local, to power our development. This week, one of the hardworking pharmaceutical companies, Danadams, cried for government assistance to raise US$6 million to enable it to obtain a World Health Organisation (WHO) certification to enable it export some of its products.
The paper thinks this is one of the plausible areas that the government can direct resources to since it is a worthy intervention.
In addition, the country can equally raise many Danadams and walk them down the export market, even before the slow-paced Export-Import (EXIM) Bank becomes operational.
For instance, is it not being possible to replace the importation of clinker, semi-finished cement, with local limestone and laterite found across the country, to produce cement locally? When this is done, the local cement companies can explore similar opportunities and mineral deposits in the sub-region and make the country a cement hub.
This is the direction in which the country and its leaders should be thinking. It is the only direction that can save the local currency, the cedi, from depreciating, as it has brought in its wake, a pass-through hike in almost every commodity in the local economy, since we are a nation of importers.
As this paper keeps saying, the time to act is now, and the speed with which this should be done is no longer negotiable.