Economy: Hope, not despair

Opinion May - 09 - 2014 , 10:08

When you are confronted with the situation of rising utility and food prices- two basic components of household consumption expenditure- then you become extremely wobbly with your finances.

But does it mean that in totality a country confronted with these challenges has failed? We will soon find out.

In fact in the past few weeks, l have had to resort to dictionaries and other print and online sources to search for information to improve my knowledge on what a failed state really is.

Why did l have to do that? Well, it was pretty simple: Messages received from two ardent readers of this column had literally posited, in summary, that since we lived in a “failed state”- Ghana- there was no need for one to think of investing his or her money in the country.

All in all, the investment arguments, l must admit, were pretty sound from these two gentlemen but their conclusions were wide off the mark.

That was one reason. Another reason was what l heard on some radio stations about two weeks ago.

Some of our admired “expert serial callers” and, sadly, some politicians, in their contributions to discussions, used the “failed state” approach to advance their arguments.

Since the effects of a failed state are not the same as failing an exam (its far more serious), l decided to look into what a failed state is and whether or not ours is within that category to inform, first, myself, and, then, readers!

So let us now look at what a failed state is.

According to Wikipedia, the free encyclopedia online, “A failed state is a state perceived as having failed at some of the basic conditions and responsibilities of a sovereign government”. However, it points out clearly also that there is no general consensus on the definition of what a failed state really is.

But it continues that “The definition of a failed state, according to the Fund for Peace, is often used to characterise a state with the following characteristics:

• Loss of control of its territory or of the monopoly on the legitimate use of physical force therein,

• Erosion of legitimate authority to make collective decisions,

• Inability to provide public services,

• Inability to interact with other states as a full member of the international community.

Okay, this is where the real lines are in the definition offered by Wikipedia: “Common characteristics of a failing state include a central government so weak or ineffective that it has little practical control over much of its territory; non-provision of public services; widespread corruption and criminality; refugees and involuntary movement of populations and sharp economic decline”.

Adding also that: “The level of government control required to avoid being considered a failed state varies considerably amongst authorities.

Furthermore, the declaration that a state has "failed" is generally controversial and, when made authoritatively, may carry significant geopolitical consequence.”

Armed with this knowledge, l began my search for where the “failings” of Ghana are and where the country sat on the barometer of failed states, of course this time using the characteristics as prescribed by Wikipedia, courtesy Fund for Peace.

So this is what l found about Ghana: Inflation is above 14 per cent, the cedi depreciation against the US dollar stood at 17.8 per cent by the end of March this year, widening government deficit and excessive expenditure due to infrastructural development, and high unemployment due to the expanded tertiary education base, with annual graduates far higher than the rate of employment creation.

I also found this too: A vibrant press freedom which is among the top five in Africa, average electricity penetration which is second to South Africa on the continent, a highly attractive country to the international capital market following successful bond issues, infrastructural development to expand and support the economic base and, of course, a country that has all too soon assumed a middle-income status which has sadly pushed up its cost of borrowing and reduced its access to concessionary loans on the international market.

The facts certainly point to challenges confronting the economy but in no way denote a condemned situation necessitating, therefore, that Ghana can be described as a failed state. Surely far from that!

If we concentrate on the positives or decide to accentuate them, we will mostly likely find that we have a lot of positives to be hopeful about.

In fact, the President of the country has assured that even though the whole of 2014 could be difficult for the country, it still does not mean that the country is a failed one.

The economic managers too are hopeful about the future prospects of the economy, which means that we should equally become hopeful.

The Governor of the Bank of Ghana, Dr Henry Kofi Wampah, has said given the country’s reliance on primary commodities, especially cocoa, we should see the cedi and the economy generally stabilising in the second half of the year.

This is because COCOBOD, the agency tasked with the management of the cocoa sector, would start receiving some funds into the kitty. This will, no doubt, cushion the economy.

“This year we are expecting a bigger crop in terms of value because the price is higher than last year.

It is going to be more than 50 per cent higher than last year so, at least, the second half of the year looks a lot better than what we have in the first half. I believe that going forward, we will see stability,” Dr Wampah is quoted as saying.

This is just one of the many policy initiatives instituted by the government to ensure that the economy continues to grow, even if it is at a much slower pace than previous years.

We may have challenges but surely not in a desperately failed state!

botabil@gmail.com