10 January 2014

Ghana: Mahama Was Reckless With the Economy


Let me begin today's analysis on the performance of President John Dramani Mahama's first year in office by apologizing to readers on two fronts - first for failing to honour my covenant with customers of this paper to write on the economy yesterday, and for the wrong word used in my analysis of Wednesday. In the issue of Wednesday, the word assess(ing), which means an examination of an issue was replaced with accessing, which is founded on opening up avenue(s).

My inability to write yesterday has its genesis in carrying out my second duty at the office. A number of government agencies owe The Chronicle in advertisement and subscription, which have conspired to put operations under strain at this office.

With my humble self wearing another hat in the operations of this organization as the Acting General Manager, I had to move to ensure that this organization remains afloat.

Instead of my appointment with the computer, I was climbing stairs, entering offices of the leadership of some public organizations and pleading that debts owed to The Chronicle were paid.

By the time I arrived back at the office, I was knackered. The bad news is that I had only promises. There were no cheques and no cash, which tells a lot about the economic performance of this administration in 2013.

State institutions are under stress because the state of Ghana is cash-strapped. I do not believe any official of state would deny that this economy, which had been trumpeted on roof-top of delivering a Better Ghana, had rather delivered an unmitigated disaster. The indices are not the very best to read.

The cedi has fallen from GH¢1.1 to the dollar as at December 2008, to GH¢2.4 to the dollar. Prices of goods and services are going through the roof. Yesterday, I bought a small tin of milk for GH¢.1.90. Milk was exchanged in pesewas when late President John Evans Atta Mills fumbled his lines at the swearing in ceremony at the Black Star Square in Accra, on January 7, 2009.

According to President Mahama, the economy grew by 7.4 percent in 2013, in spite of all challenges. When asked to tell the nation whether or not the growth on paper had translated into the lives of Ghanaians, he said a number of measures were in place to ensure that the economic growth translated into the living conditions of the people. In order words, he was pointing to the future for his delivery.

He talked about a number of contracts awarded, which in his opinion, would bail out the youth from the harsh realities of unemployment. The President pointed to the re-engineering of the Kwame Nkrumah Circle, into an interchange, the expansion of both the Tema and Takoradi Harbours, the re-construction of both the eastern and western corridor rail lines, the promise to construct 50 community schools, as well as many road networks on the drawing board.

President Mahama also asked the various universities to hold discussions with industry players, as a means of resolving the unemployment problem currently be-deviling the nation. In the opinion of the Head of State of the Republic, this nation, as an emerging economy, needs the services of graduates with technical and science background.

Unfortunately, most of the universities at the centre of the earth are producing mainly graduates with marketing backgrounds, but that sector is already choked.

I am not so clear in my mind as to how a dialogue between industry and institutions of higher learning could resolve unemployment among university graduates, without the state creating the enabling atmosphere for industry and service providers to expand their ventures.

Sadly, for me, the Head of State did not mention the Teacher-Mante-Suhum-Apedwa stretch of the Accra-Kumasi Highway, a clear indication that connecting Kumasi to Accra with a first class road network is nowhere near reality, which is likely to form a different topic in the series of analysis to be undertaken in this exercise.

For now, bread and butter issues take the centre stage of this analysis. It is as clear as today is Friday that in several homes at the centre of the earth, feeding the family has become a daily struggle.

It is not as if Ghana had ever been an economic paradise. We have always had our challenges on the economic front. But reckless spending in 2012, as this nation prepared for the 2012 vote, has so depleted national resources that a deep hole has been dug into the state treasury.

On Tuesday, spin doctors at Jubilee House tagged President Mahama's encounter with the media as: 'One year of responsible, transparent and accountable governance'. Evidence on the ground, though reveals a bout of reckless dissipation of state funds, under the watch of President Mahama.

"The acute fiscal difficulties the government is facing is directly related to the massive deficit of GH¢8.7 billion (12 percent of GDP) incurred in 2012," Dr. Mahamadu Bawumai, New Patriotic Party President running mate in the last election, told his audience at the lecture to commemorate the first anniversary of the passing on of former Vice-President Alhaji Aliu Mahama last November.

"This massive over-expenditure," according to Dr. Bawumia, has left the government cash-strapped and unable even to finance statutory expenditures. Some workers have not been paid for 22 months. "

He told his audience: "The data available, therefore, shows clearly that the blame for the current economic difficulties lies squarely in the area of government economic mismanagement and should not be blamed on the wages of workers."

At the heart of the nation's economic woes is a weakening cedi. We are told that at the time of independence in 1957 - .073 of the old cedi could buy one dollar. By the time the 1992 Constitution was promulgated to usher this country back to democratic rule, after the decade of culture of silence, one needed ¢520.8 or slightly higher than 50 pesewas of the new currency, to purchase a dollar. By the time Flt. Lt. Jerry John Rawlings exited the Presidency, after the vote of 2000, one needed 7,047 of the old cedi to exchange for one dollar. In 2007, the Kufuor Administration slashed four zeros off the currency and GH¢ 0.90 was sold on the open market in exchange for one dollar. By the time former President Kufuor's tenure at the Castle came to an end on January 6, 2009, GH¢1.19 was being exchanged for the dollar.

Sadly, by the time 2013 gave way to the New Year, one needed as much as GH¢2.25 to buy one dollar. In the relative period of five years of the Mills/Mahama administration, the cedi has lost more than 50 percent of its value.

Commenting on the cedi depreciation at the Aliu Mahama lecture on November 13, 2013, Dr. Bawumia, who was Deputy Governor of the Bank of Ghana and who was credited with pushing through the currency change of 2007, said: "For a small open economy like Ghana, this trend is worrying for all Ghanaians. Our economy is highly-import dependent and these massive depreciations in the currency end up pilling more hardships on Ghanaians, as the cost of living increases."

In the view of the eminent economist, the government could apply automatic adjustment formulae for pricing utilities and petroleum prices. "However, the exchange rate is a significant component of the pricing of these products and services.

"It means that all things being equal, if the exchange rate depreciates, we can all expect to pay more for utilities and products." These in turn impact the overall cost of living and the cost of doing business."

The depreciation of the cedi aside, reckless expenditure in the run-up to the 2012 Presidential and Legislative elections depreciated the state treasury. When girls, some horribly young, drove Hundai i10s, with the inscription 'Friends of JDM (John Dramani Mahama) on our university campuses, Ghanaians failed to challenge the administration to account for the resources used to purchase them. It was as if suddenly, leadership discovered that traditional rulers needed 4×4 Land cruisers.

The state was rushed into several bouts of unscheduled expenditures to cushion the ground, so that the ruling NDC could return to Government House. The result was a huge hole at the state treasury. When the chips were down, as much as GH¢8.7 billion had been blown, without authorization from the people's representatives - the House of Parliament.

In addition to this over-expenditure; cronyism, nepotism and outright corruption congregated to squeeze the ordinary man from the centre stage of economic well being. If President Mahama and his economic team had been a bit prudent with economic management, the ordinary Ghanaian would not have been so hard-hit.

In the next article, I will examine President Mahama's assertion that corruption is mass murder. I intend to establish that the administration has indeed committed a heinous crime if one goes by the Presidential definition of corruption.


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