The luxury of debt
We should not be fooled by our dubious classification as a Lower Middle Income Country. The reality is that we are firmly planted in the highly indebted poor country category. We still rely on handouts from our so-called development partners to balance our budgets.
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We are not indebted and poor because of some strange misfortune. We are poor by choice. If we were determined to get out of poverty, we would have been prosperous decades ago.
For a country in deprivation, it is paradoxical to see the number of high-end vehicles on our deplorable road network. It appears that the little revenue we generate and the loans and grants we receive go to provide individual comforts rather than the development of the country.
Recently, I received a whatsapp message showing the Dutch prime minister riding a bicycle to work while an African leader was in a 20-car motorcade going for a haircut! I thought that was a classic display of the “Luxury of Debt”.
Savings and Investment
If we were serious about getting out of poverty, we would have invoked the basic life principle known as the “Culture of Savings and Investment”. Saving does not only refer to what you put away regularly from your income; it also means getting maximum value for what you spend. The problem we have in Ghana is that not only do we not know how to generate wealth; we also have no idea how to judiciously use the little we have.
Transportation
One day in October 2015, I was going from Tema to Accra with a friend in the early morning rush hour. Between the Tetteh Quarshie Interchange and the Airport Traffic Lights, I asked him to count the number of vehicles on the road with single occupancy. When his count reached 30 I asked him to stop because my point was made.
All the occupants of the 30 vehicles could fit into six vehicles assuming there were five occupants per vehicle. Better still, they could all fit into one bus. The resultant savings in using the bus would be enormous both to the individuals and to the nation over a few years:
Savings
• It currently costs about GH¢40.00 in fuel alone to drive from Tema to Accra and back. If you commute 21 days a month to work between Tema and Accra, that translates to GH¢840 per month. For a year, that would total over GH¢10,080.00, excluding vehicle maintenance.
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• Compare this to the so-called “Kufuor Bus” which costs about GH¢4.60 for a return trip from Tema to Accra. The commuting cost per annum would be GHc1, 160, resulting in the saving of GHc8, 920.00 to the individual. Taking the over 35 years’ working life of the individual, that would be a whopping GH¢312,200. Even if no interest was earned on this saving, you could still buy a comfortable retirement home. I believe this saving is worth going after.
• The fuel savings will not accrue to the individual alone. The nation would save its equivalent in the foreign exchange required to import fuel. If 6,000 vehicles were taken off the road from all similar commuting areas such as Kasoa, Nsawam, Aburi, Dodowa, Tema and replaced with 200 buses, the annual savings would be about GH¢53.5 million.
• Indirect savings in increased productivity would be even bigger. People would get to work earlier and go about their duties much more efficiently due to reduced road congestion.
• Road maintenance would also reduce due to lower traffic volume.
Replicate these across the country and the savings would be staggering.
Why are we not doing it?
The BRT System
Not that we are unaware of these opportunities. We have been talking about the Bus Rapid Transport (BRT) system since 2003 (Ghana Growth and Poverty Reduction Strategy document). We even initiated a pilot project in 2008. Twelve years down the road, the pilot project is not operational, let alone to be implemented fully. From the little calculation above, we can all understand the quantum of losses the individuals and the nation have made and continue to make.
I have learnt that implementation of the project is now planned for the end of 2015. Maybe we are rushing to implement something because donor funding might lapse. The losses as a result of the delay are gone forever. Even when others offer to help us foot the bill, we are not motivated to do the work.
Idle oil refinery
We have an oil refinery in Tema which has provided us with refined petroleum products for decades. Just when we joined the ranks of oil-producing countries, we decided to shut it down in favour of importing finished products. We have workers who report daily to work at an idle plant, do nothing and get paid at the end of the month while we pay someone else outside the country to refine petroleum products for us.
Some of us do not understand the economic sense in these decisions. If the refinery is inefficient because it is government-owned, what prevents us from getting a private partner to buy majority stake in it and operate it efficiently for our mutual benefit?
I know that the refinery does not need power from the national grid to operate. It generates its own power when operating so “dumsor” cannot be the reason for shutting it down. As an oil-producing country, Ghana should recognise that this is the time to develop and sharpen our expertise in the oil industry and not increase our dependence on foreigners.
The above examples are just to illustrate our failure to go after the many beckoning savings that would reduce our suffering. When you start adding the fate of companies such as VALCO, you can appreciate the size of our problem.
We can get out of poverty only when we decide to do the needful. For now, we seem to be enjoying the “Luxury of Debt and Democracy of the Unbiz”.
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