The big Xmas debate on Ghanaian economy

“Fellow Ghanaians, I am particularly glad that our nation has turned the corner following the three difficult years we, and indeed the world, have faced.

“Inflation is being reined, we are experiencing a relatively stable exchange rate and growth and our economy is rebounding.

“We continue to attract domestic and foreign investment, re-enforcing our position as the gateway to Africa and remain a beacon of peace and stability in Africa.

“The country is not yet completely out of the woods, but there is a growing confidence that Ghana will make it with hard work and determination, and collectively we will secure our future.”

 President Akufo-Addo’s Christmas message to Ghanaians opened in an unusually deep Christmas mood.

The message quoted a passage from Prophet Isaiah: “For unto us a child is born; to us, a son is given and the government will be on his shoulders. And he will be called wonderful counsellor, mighty God, everlasting father, prince of peace.

“The celebration of Christmas provides us with an opportunity, once again, to reaffirm our faith, hope and trust in the Almighty God and his only begotten son, Jesus Christ, imbibe in us a deeper appreciation of hope in times of adversity and triumph over uncertainty.”

That part of the Christmas message that sparked the big Xmas debate on the Ghanaian economy was his declaration that the economy has “turned the corner” after three difficult years.

Reactions to that assessment came from notable academics, practising economists and experts in economics and finance.

The debate brought in voluntary participants who, at various locations, propounded economic theories, some clothed with Father Christmas and neo-communist sentiments.

Prof. John Gatsi, Dean of the School of Business at the University of Cape Coast, claimed, emphatically, that Ghana’s economy had not turned any corner.

“Definitely not so.”

He said in an interview on an Accra radio station that “all the economic indicators believe the President’s claim that the economy has turned the corner”.

He said multiple indicators must be aligned to illustrate this change.

Professor Gatsi further said that in sectors of the economy, where there was seeming growth, the growth was undulating and not robust.

“Manufacturing and industry, in general, have been struggling with multiple taxations, difficult environment to operate, very difficult to access credit, which is at huge costs, translating to higher prices.

“We have not settled our debts; we have not been able to demonstrate any effort to turn the situation around. There are no signs that these things are improving.”

He said inflation showing downward movement should not be enough evidence to claim that the economy had turned the corner.

Dr John Kwakye, Director of Research at the Institute of Economic Affairs, has stated bluntly that the economy had not turned the corner nor was it on the way to growth.

Dr Kwakye appeared to use the Christmas season economic environment as an indicator of economic growth.

He said while the government was using the fall in inflation as a sign of recovery, the Christmas mood of Ghanaians told a different economic reality.

“This is a Christmas to forget. Dry, dull, boring. Millions of Ghanaians can’t even afford a decent meal, as a chicken costs GH₵200.

“Yet we are told inflation is low and the economy has turned the corner. Really? Maybe it’s turned the corner for a few but not the majority,” he wrote on X, formerly Twitter, on Christmas day.

Prof. Godfred Bokpin of the School of Business, University of Ghana, has stated that Ghana’s economic woes are not yet over; and that Ghanaians must be measured in their expectations.

“Let me tell you, Ghanaians, frankly that we are not out of it yet. So that every Ghanaian will be moderate in their expectations in terms of how growth is going to turn out and how this is going to benefit Ghanaians.

“We can have growth at different levels. The economy can recover at different levels, but before it will benefit the ordinary Ghanaian, we need to maintain micro-economic stability for not less than 15 years.”

He added that although some aspects of the economy might experience some level of growth, total economic growth might take a while.

According to Togbe Afede XIV, Paramount Chief of Asogli Traditional Area, Ghana’s economy was designed to benefit a privileged few.

He mentioned a number of reasons, including huge debts, judgment debts and poverty as some of the causes of the economic woes of Ghana.

To him, those causes appeared to have been designed to make the economy benefit a few people in Ghana.

“Very alarming, as I wrote in my December 2022 article, is the fact that we have piled on so much debt and are now Africa’s most indebted country; yet we still lack the basic socio-economic infrastructure required for development – good roads, hospitals, schools, etc.

“Making matters worse are the massive judgment debts, the results of greed and recklessness staring us in the face.”

He cited Ghana’s inflation as still being high and mentioned failed businesses and unemployment among Ghanaians.

“We are victims of predatory economics, where policies or decisions were presented to us well-portrayed for us to realise during implementation that they were designed to benefit a privileged few…”

Mr Pierre Laporte, the World Bank Country Director in Ghana, the only one who spoke in favour of the subject of the debate, maintained that the Ghanaian economy had reached a point where it could genuinely be acknowledged as having “turned the corner”.

“When you look at where Ghana’s economy was a year or two ago, and look at the macro-economic numbers now, like inflation, you may come to accept that things have improved.”

He added that Ghana had to do more to maintain and sustain the marginal stability.

While speaking at the business edition of an Accra radio station, he added, “Maybe the reforms should have been early enough to deal with the challenges with the economy”.

On criticism that the COVID-19 pandemic and the Russia/Ukraine war were not the main causes of Ghana’s economic problems, Mr Laporte replied that there was some truth in such criticism because the country “didn’t do well in the area of mobilising the required revenue to support the economy”.

He, however, praised the government of Ghana for turning the situation around.

“I am responsible for other countries in the region and I still see how they are struggling to recover.

“It has been very difficult in Liberia and Sierra Leone. Things are very tough; these economies that were hit by COVID-19 are also struggling.”

Who had won and who had lost the big Christmas debate on the Ghanaian economy?

One has to look at the economics of the issues that the contributors had debated by way of their various contributions as their reactions to President Akuffo Addo’s Christmas message.

What do the words, “turn the corner”, mean?

According to the Merriam-Webster Dictionary, “to turn the corner” means “to get past the most difficult area or period in something and begin to improve”.

Obviously, it does not mean that the difficulties have been completely overcome.

For example, if a doctor told a patient that he/she had turned the corner and was on the way to recovery, it means that severe and life-threatening stages of the illness had passed and the patient would recover.

When he is told that, a normal person's psychological reaction is to rejoice. The rejoicing itself is an incentive for quick recovery.

Similarly, why should the citizens of a country not start to celebrate when they are told by experts that their economy has turned the corner?

Secondly, what are the determinants or indicators of economic growth?

The key indicators of economic growth include Gross Domestic Product (GDP); Per Capita GDP; employment; interest rates; inflation; external reserves and balance of payments.

If all or majority of the key economic growth indicators are positive, it is a sign that the economy is on the path of growth.

In December 2023, the major indicators showed some improvements.

From 2017 to 2019, the Ghanaian economy grew at an average rate of seven per cent.

The COVID-19 pandemic that set in in the first quarter of 2020 threw the economy into recession in the second and third quarters.

In December 2020, the economy recorded a GDP growth rate of 0.4 per cent.

The economy rebounded and registered an over five per cent GDP growth in 2021 – when the pandemic had receded.

In December 2021, Ghana’s inflation was 9.98 per cent. Within 12 months, that is in December 2022, inflation shot up to 54.1 per cent.

What were the causes of the unprecedented rapid increases in inflation in Ghana for 2022?

The Russia-Ukraine war that began in February 2022 was the main cause of the skyrocketing global inflation that hit the world, including Ghana, in 2022.

There were disruptions in supply chains of crude oil, grains, fertiliser and others, from Russia and Ukraine, the major suppliers of most of those commodities to the world market.

Can the majority of citizens of a developing country afford a GH₵200 piece of chicken at Christmas?

Economics is a study of human behaviour and of how right-thinking persons create wealth for themselves and how they derive maximum benefits from their earnings.

In all countries, only a few people are very rich – between 10 and 15 per cent of the population.

At Christmas time, those whose income is not in the top or middle brackets may decide to buy substitutes for chicken, for example, fish or pieces of meat.

Is Ghana’s economic system tailored to favour a few privileged people?

In a Laisser Faire economic system, everybody has the opportunity to create wealth for himself or herself and dispose of such earnings as he or she likes.

Ghana’s economic system can be described as a social welfare or social democratic one in which pro-poor policies and social interventions help, in some ways, to bridge the gap between the rich and the poor.

A social security system, national health insurance system, free primary, secondary and university education, legal aid to the poor and offer of monthly allowance to the abject poor (LEAP) -- are some of the policies that help to reduce poverty in a developing country such as Ghana.

Writers email: therson.cofie@yahoo.com