Public Agenda (Accra)
Ebenezer Hanson
10 August 2007
Accra — President John Agyekum Kufuor has asked the Bank of Ghana (BoG) to develop the domestic capital market to include the poor in order to curb poverty.
According to him, creating a capital market for micro, small and medium enterprises dominated by the poor is the surest way to generate employment and incomes for the majority of Ghanaians.
" I challenge the Bank of Ghana to assume leadership role in building a globally integrated financial services industry and financial centre; one that also promotes financial inclusion of the poor as a basis for rapid growth."
The President made the call in a keynote address read on his behalf by his Chief Advisor, Mrs. Mary Chinery-Hesse, at the BoG Golden Jubilee Anniversary Symposium in Accra on Monday. The symposium was under the theme " Central Banking and the Millennium Development Goals", and was attended by Governors of Central Banks throughout Africa, and financial experts across the world.
President Kufuor said the central bank ought not to operate in isolation without regard to the imperatives of the society but should create partnership and co-operation between itself and government.
He said the theme of the symposium suggests BoG's vision of ensuring that the gains of macroeconomic stability and growth are equitably shared.
"Price stability is not sufficient even though understandably it is a core responsibility of central banks. Central banks in this part of our world should also take a pro active role to promote development process," he submitted.
Central banks, he noted, have a social responsibility, and need to ensure co-ordination between fiscal and monetary policies and consultation with Government.
"Let me, however, say also that asking central banks to co-ordinate and co-operate with Government does not suggest in anyway that they should be subservient in discharging their responsibilities. What I am saying is that central banks should be partners but yes, they must be independent too and part of the economic and social leadership," he explained.
According to the President, Government's own policy and programmes to raise standards of economic well-being of Ghanaians and to combat underdevelopment are consistent with the Millennium Development Goals (MDGs).
He said the government has incorporated the MDGs in the country's main development framework, and is implementing growth-inducing projects and programmes with the aim of doubling the size of the economy within the next decade.
He disclosed that the general development agenda of the country is structured around four thematic areas: continued macroeconomic stability, accelerated private sector-led growth, vigorous human resource development, and good governance and civic responsibility. "These serve as pillars in our approach to social and economic development."
President Kufour recognises economic growth as the single most important factor influencing poverty, and that since 2002, Ghana's real GDP growth has been rising at an average rate of 5.5 per cent, annually reaching 6.2 per cent in 2006; this compares to an average of less than 5 per cent in the late 1990s and early 2000, adding that the aim of the government is to achieve 8 percent GDP growth over the medium term.
He pointed out that the stable macroeconomic environment and the increased pace of economic growth have been associated with notable progress in reducing poverty with poverty per head count index declining from 51.7 per cent in1991 to 28.5 per cent in 2006.
He, however, concedes although the human indicators are improving and Ghana is on course to achieving the universal primary education target, child and maternal mortality rates remain a challenge.
The Governor of the Bank of Ghana, Dr. Paul A Acquah, said the theme for the symposium was informed not so much of the value of the Bank's history but because "we want to look into the future, informed by the past, to be able to capture all the ground lost in the international race for growth and prosperity and better standards of living".
He agreed with President Kufuor that central banking is not conducted in a vacuum regardless of the fact that it has operational independence or not.
He stressed that a stability-oriented macroeconomic framework that is conducive to growth and employment could be achieved in many ways, but it depends importantly on the structure and dynamics of the economy of individual countries, irrespective of the monetary policy anchor, it may chose as a guide.
Dr. Acquah said the BoG has chosen an inflation-targeting regime, having emerged from a period of strong fiscal dominance and armed with statutory operational independence under the Bank of Ghana Act (2002). "This is a sea-change from the heavily developmental role assigned to the Bank at its inception at the independence of the nation."
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