Window into heart of Ghana’s economic performance

The New Patriotic Party (NPP) and the National Democratic Congress (NDC) dominate the political space in the country.

 One party is an avowed capitalist, the other a brute Socialist. Other jargons used to describe the economic ideologies of the two parties are social democrats and liberalists.

Their respective ideologies attract varying levels of support and patronage from the grassroots. These two contending parties, though different in political teaching, are unanimous in the loot of incumbency.

Even though they attempt to distinguish themselves by touting divergent slogans of “competence,” past record, and the character of their leadership (honesty, corruptibility, charisma, and modesty) they converge on political rhetoric, public elocution, and economic management.

 Uppermost

Only one issue is uppermost in the minds of politicians: the spoils of electoral victory and conquests. This includes the right to appoint apparatchiks as ministers, presidential staffers, managers and board members of all parastatals, heads of academic institutions, and more importantly, the right to award contracts. 

These privileges are handed on grounds of promised infrastructure projects (roads, hospitals, and schools), utility price reductions, the restoration of allowances, provision of affordable housing, payment of arrears, and the elimination of school fees.

Unfortunately, neither party has accomplished in campaign promise delivery. Only on a few occasions have governments yielded to labour action and striking agitations.

Invariably, policies to alleviate suffering are perceived and/or presented as “gifts” from a caring government and not an entitlement. All ruling governments have consistently bewailed innocence to the high unemployment rates in the country.

They are willing to break no deals with the electorate on joblessness. They are scrupulously indifferent to the fact that the consequences of political action and the spill-over effects of myopic policies have implications for the weak economy.

They champion policies that almost always opt for indirect taxation as opposed to direct taxation for mobilising domestic resources. Though this approach keeps the tax-to-GDP ratio low, they accrue economic rents to the government as revenues for the provision of public goods and social amenities.

Government projects are mostly financed through foreign (sovereign) loans, government bond issues, and private-public partnerships (PPP).

But they nevertheless dictate downward trending interest rate policies to maintain bond prices and put a premium on exchange rate stability. In any case, exchange rate and tariff policies are designed to favour consumption as opposed to production.

 Growing poverty

This situation leads to growing poverty and economic inefficiency because full employment of labour resources cannot be achieved without increases in productivity.

The economic polity pursued by the government is inimical to inclusive and broad-based development. In the provision of public amenities, contracts are awarded to individuals perceived as sympathetic to the political party in power.

As a result, a viable and dynamic national private sector is slow to emerge as few contractors (engineering and architectural firms, for example) survive the eight-year cycle of political alternation of power.

Contracts awarded under previous administrations are often cancelled or forcibly renegotiated, leading to sizable judgement debts; another drain on the national treasury. These are the givens of political duopoly.

The rivalry between and within political parties for control over the management of infrastructure projects is debilitating.

Parties rarely complete projects initiated under other administrations.  The contracts awarded rarely go through any meaningful competitive bidding.

The poor execution of policies is responsible for a political phenomenon that creates crushing indebtedness, unemployment, and income inequality in society.

Determinants

While these determinants of economic welfare are improving in developing nations, it is grotesquely skewed in Ghana. The Ghanaian paradox demonstrates that democracy does not always get it right.

Though military interventionism offers no ideal solutions either, democracy is wrong and guaranteed to get it more wrong, if political parties continue in this trend of unpalatable choices for the people.

The agenda for reform in Ghana must include economic reforms which demolish corruption as the first step. Political campaigns must be reformed to eliminate “pay to play,” cronyism, and influence peddling.

It is an affront to economic efficiency and justice that contracts are awarded exclusively to party financiers, party-faithful, and family members.

We advocate a political system that is more inclusive and reflect the socio-economic aspirations of the people.

Moreover, we favour a political system in which educated civil organisations and professionals find their voices on issues, such as the management of national resources, economic and trade policies.

The writer is a Lecturer at the Department of Economics, GIMPA Business School.