4 April 2008
Accra — The President's State of the Nation Address points out the achievement of macro-economic stability in 2001-2007 to provide the platform for accelerated growth.
The country is also noted to be solvent with the economy strong and resilient to take the country into industrialization, with attendant employment opportunities and value addition to the country raw materials, especially agricultural produce to attain middle income status with a per capita income of at least U.S.$1,000 by the year 2015.
Reflecting on the information flow after the State of the Nation Address
Reflecting on the information flow among the populace in Ghana after the President's State of the Nation Address compelled me to reflect and further research for the real test of success in the implementation of the New Education Reform in Ghana. The real test of success now appears to point to how the New Education Reform will succeed to build the analytical minds of Ghanaians by the year 2020 to impact on the personal development and employability of the populace; and create opportunities for further advancement so that a new image and acceptance of the Educational System in Ghana, both locally and internationally will be carved.
The Birth of a New Nation
The birth of any New Nation such as Ghana begins with building the relevant analytical capacity and skills. Analytical minds will enhance data transparency and information flow. Analytical minds will help people to draw a distinction between true information and noise; rhetoric and realities on the ground. Timely released false information is a noise and no country in anywhere in the world can develop with mere noise. The fundamental challenge in our education system will be how to build analytical minds among Ghanaians to so that Ghanaians could easily distinguish false information (noise) from true information to move country forward to the next level of development.
Analytical Minds The inflation-fighting credibility of the Central Bank of Ghana is much higher now than it was in the past but how many Ghanaians will understand this statement when they do not have money in their pockets. One of International Monetary Fund rule of thumb points out that a US$ 5 annual increase in oil prices could results in a 0.3 percent dip in global growth. Empirical evidence further suggests that I percent expansion of domestic debt (relative to broad money) could cause the ratio of lending to the private sector (again as a ratio to broad money) to decline by 0.15 percent. If President Kuffuor takes all these empirical evidences and research findings and the global oil prices that affected our economy and where we are now into consideration and says; "Ghana is now solvent and the economy is strong and resilient", it takes people with analytical minds to understand the President and accept this statements and think of how we can move forward as the next step. The shocks in the economy due to the increase in the oil prices and other factors under normal circumstances should have increased inflation in Ghana to abnormal levels. So how will the man on the street understand and believe in the figures of the government when inflation is not increasing to that expected level and the Ghana currency appears to be still stable.
The Use of Research Findings
In 2000, for instance, people like me happened to have similar problems and used the opportunity offered by the Department For International Development (DFID), British Government to pursue Master of Science in Finance to work on "The Impact of the Ghana Cedis Exchange Rates on the Economy of Ghana", just to understand the systems in the economy of Ghana and, perhaps, their spiral effects on the education delivery in the country.
My understading in the research work in simple language was that when there is shock in the Ghanaian economy due to mismanagement or increases in oil prices to cause a crack in the economy it is not inflation that moves to absorb the shock but the nominal exchange rate (i.e. the currency of Ghana), like a petrol has to move instantly to absorb the shocks and these movement creates variation in the domestic cash markets of Ghana to affect or push inflation to move and the movement of inflation further creates variations in the economy to affect the currency to further accelerate. If this movement is not controlled becomes a vicious cycle and planning in the country for any business becomes very difficult and could break the economy.
This was what we experienced in Ghana in the Year 2000 and compelled some of us to research into this itchy experience in Ghana in the Year 2000. Consequently, the research findings suggested that if the country does not want inflation to go up when there is a shock in the economy the exchange rate of the Ghana Cedis should be anchored. Inflation on its own by that study is motionless. Inflation only moves by the spiral effects of the movement of the nominal exchange rate to absorb the shocks or cracks in the economy.
Consequently, inflation in Ghana in the Year 2000 was 40.5 percent. In the Year 2000 the volatility of the Ghana Cedis among the 65 countries randomly selected for the study was calculated to be 2.53 percent using a statistical tool such as the coefficient of variation. In the Year 2000 the Ghana Cedi was heading towards Sierra Leone Leone at that time, with a volatility of 14 percent, Sierra Leone, then a worn-torn country. Iragi Dinar volatility in the Year 2000 was 0 percent and the North Korean Won volatility was also 0 percent.
In 2003 the Ghana Cedi volatility when calculated using the same data set and method reduced to 1 percent from 2.53 percent in the Year 2000. The Ghana Cedi in the Year 2003 was moving towards the North Korean Won with zero percent volatility while Iragi Dinar had moved to 41 percent because of the challenges in that country at that time. This research findings was made available to DFID, Central Bank of Ghana, Ministry of Finance, University of Ghana, Legon and is available now.
It should therefore not be a surprise to people when there are shocks in the economy and inflation is not moving as would have been expected. The government statement that "Ghana is now solvent and the economy is strong and resilient", is therefore informed by some of these research findings in the Universities and even among the Partners in Development. Any contrary statement to the Ghanaian populace should be backed by scientific research findings and not noise or peddling of falsehood, either than that we shall never move forward as a country.
Delving into sophisticated approaches like Fisher Ideal index; the Walsh index; the Tornqvist index and newer statistical models such as "hedonic" regression; it is possible also for prices to increase and it will not affect inflation when the price increase is due to the quality of the product and not fewer goods chasing more money: the simple definition of inflation. Therefore the mere fact that prices have increased would not necessary lead to increase in inflation. In this respect when the government comes forward to announce inflation figures one could also challenge the figures only with scientifically analytical work that is based on a credible accepted figures and not by noise-making or the way one thinks should have happened.
Experience in other Countries
Why did Asia countries become so much attractive? In 2003, for instance, about two-thirds of all private capital flows to emerging markets went to Asia - about US $100 billion in net terms. China, for instance, attracted the bulk of the flows to the region, mostly in the form of foreign direct investment (FDI). India was another major recipient, though in its case portfolio investment flows predominated. Indonesia, Korea, Malaysia, and Thailand also experienced a sharp increase in portfolio investment.
The simple answer was that improving macroeconomic fundamentals created a powerful magnet for investment in these countries and this is what Ghana has been able to achieve between (2001-2007). The question that should bother the minds of Ghanaians is how do we move to the next level of industrialisation as was done by these Countries?
The Role of the Media
The Media in the country need to team up with planners, researchers and financial analysts and the universities in the country to do critical analysis of the economy and come out with credible and dependable data to better inform the public. This will be the surest way to accelerate poverty reduction in the country and attain middle income status with a per capita income of at least US$1,000 by the year 2015.
The New Education Reform
Perhaps, it is against all these background that in the wisdom of the Government the New Education Reform aims amongst others to achieve universal basic education by 2015, expand post-basic education so that by 2020 every child in the relevant age group would have access to second cycle education, just amongst others, to build the analytical minds of Ghanaians so that Ghanaians will have the needed capacity to distil falsehood from the truth and rhetorics from the realities on the ground to further move mother Ghana forward.
In conclusion, how can people with seemingly the same ends of alleviating poverty in Ghana disagree so much about the means to alleviate it. Here as noted in one of my write-ups, it is not a question of bombarding one theory against the other or to peddle lies and falsehood. It is a question and a must to reach consensus to alleviate poverty in Ghana. In diversity, being political or tribe or Matthew Karikari-Ababio or Charles Aheto-Tsegah we should be one Team one Match to alleviate poverty in Ghana because we are all Ghanaians; as one people and one team that is Black Star. Else as Keynes pointed out, in so much disagreements, lies and distortion of facts we could found ourselves one day dead by poverty and we shall all be compelled against our will to agree in silence when we are dead and in the grave.
Be the first to Write a Comment!
Copyright © 2008 Ghanaian Chronicle. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.
AllAfrica aggregates and indexes content from over 125 African news organizations, plus more than 200 other sources, who are responsible for their own reporting and views. Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica.
