I sat quietly behind my computing device, reading carefully news report by citifmonline, apparently sourced from the Office of Nana Addo, flagbearer of New Patriotic Party. Right in the midst of raging controversies about presidential gifts, Manasseh’s insensitivity and Dr. Bawumia’s alleged cup-in-hand spree, Nana Addo had skillfully managed to yank the spotlight, again.
Initially I thought to myself, perhaps Hon. Ayikoi Otoo’s ‘Gbeshie’ theory was at play here. Or perhaps the excitement of rollicking political campaigns had the better of this experienced and lucid-minded political colossus. So to me, coming from that perspective, how it is that such a man of Nana Addo’s experience would throw caution to Asebu/Asamankese winds and make such seemingly outrageous policy announcements did not beggar belief. But see, the truth is this: upon greater reflection, I have become even more skeptical about the public skepticisms expressed so far.
By and large, most criticisms I have reviewed are founded on the sheer belief that it is impossible to implement such policy. Others have also questioned the ideological basis, pointing to a seeming contradiction in why a political tradition with sympathies for liberty and freedom of markets would propose a policy that may likely constrain market efficiency. I have brief commentaries about on positions.
1. No, It Cannot Be Done!
I find this viewpoint both interesting and disturbing to an equal degree. Interesting because the policy proponent, seem have history on his side. In 2012 electioneering campaign, NPP initiated a wave of controversy with the free Senior High School policy. The popular reaction was nothing different than what I see today. Many skeptics, cynics and genuine inquirers sought answers ranging from investment cost and project feasibility outlook to funding plans and opportunity cost. In the end, I can confidently assert, that consensus (even among political opponents) begun to shift towards policy feasibility. That is what I find interesting about all this, that a policy proposal that challenged the status quo eventually become a new normal, so much so the incumbent government managed to adopt the idea.
Here is what I find disturbing. I always say the typical Ghanaian has no less an appetite for risk as other counterparts from more economically developed jurisdictions. The difference is in plethora of opportunities, an enabling macro environment and availability of venture capital to grow an entrepreneurial base. The fact of the matter is, despite my positive outlook, the reality of our condition does not accurately reflect a people with the capacity to think boldly. And nowhere is this sad reality more vivid than the intersection between our culture, economics and public policy. Let me exemplify to clarify.
According to a paper presented by Dr. Sam Mensah of SEM Capital at a UNIDO workshop in 2004 (A Review of SME Financing Schemes in Ghana, p.1), data from the Registrar General indicates that 90% of companies registered are micro, small and medium enterprises. The rest are shared between Partnerships, Companies limited by shares and by guarantees. Many analysts have bemoaned the disturbing ownership trend which obviously reveal a very unhealthy cultural attitude towards anything economics or financial. The capacity to think big and boldly, beyond present conditions and to anchor one’s ambition in a pragmatic assessment of strengths and weaknesses; that’s a challenge we are yet to confront as a people. Am I saying that just one simple metric (business ownership types) reveal our cultural disposition towards small thinking? Yes, I am! Am I also saying that everyone who thinks Nana Addo’s 1-factory-per-district policy is an impossible, is a ‘small’ thinker? No. But am saying, that any critic or naysayer, who have not had the benefit of examining the proposal in detail (operating environment, financing, timelines, ownership arrangement, business model, etc.) but has managed to reach a firm verdict of ‘impossibility’, may have to look within for honest self-assessment. I will not dwell too much on this. Now let’s examine the constructive criticisms.
2. Is it Wise?
Now here is the group of critics that I find myself sympathizing with. Most have expressed legitimate concerns about whether or not it’s a wise policy path to walk given the context of our current IMF-sponsored commitment towards fiscal consolidation. That aside, budgetary inflows seem to have taken a nose dive. In 2014, Grants/Domestic Revenue ratio was 3.4%. Albeit it grew to 5.9% (data computed from MoF Provisional Fiscal Outturn Report), the increasing over-reliance on debt has burgeoned stock levels, now project by IMF to reach 74.1% by year end 2016. Implications of our debt binge is even more serious when you examine the Interest/CAPEX ratio (2014: 116%; 2015:154%). So essentially we pay more in interest on loans than we add to infrastructure, causing decreasing growth in Gross Fixed Capital Formation – a key indicator of economic development.
So at a time when the prevailing narrative is lean government, fiscal prudence and greater liberty for markets – none other than a political tradition that has capitalist leanings, threatens to throw fiscal reforms out of synch. I would argue, that besides having a substantive debate about which model of economic thinking is best suited to trigger the NPP’s planned industrial revolution, the party must also consider the issue of pragmatism and context. What factories types would be situated in which district to produce what output and with which power supply for which market? We need answers before November. Does the policy team of NPP have detailed district-based resource map and a strong business case for exploiting same? Again, we need answers before November. What is the sourcing plan, proposed capital structure, manpower and marketing plan to ensure sustainability? Do we need answers before November? You bet!
My overall verdict? It’s possible, even desirable, but the devil as they say is always in the details.
Author: Nkunimdini Asante-Antwi
E. D.
