Ghana as Emerging ‘Strong’ Economy – Turning Potential into Reality


Ghana as Emerging ‘Strong’ Economy – Turning Potential into Reality

Some few weeks ago, I read an interesting blog of Michael A. Global Chairman and CEO of KPMG. It was an interesting piece. In the article he was narrating the experiences he had when he visited one of the world’s most exciting economies, Myanmar, to attend the World Economic Forum on East Asia.

What makes this article quite interesting to me is the similarity in the name of that country and another wonderful kid on the block, Neymar da Silva Santos Júnior, commonly known as Neymar, a Brazilian footballer who plays as a forward for La Liga club FC Barcelona and the Brazilian national team, he was a star attraction at the recently concluded FIFA Confederation cup held in Brazil. He has a great potential to become another Pele at that tender age. He was able to show the world, what lies ahead of him in terms of quality and breath taking moment of individual brilliance.

The question now is how can these exciting nation and individual of unusual abilities turn their great potential into reality?

I am not focusing my article on either of these two characters that I mentioned above but rather I am turning my radar on our nation Ghana, who has much in common in terms of characteristics and potential with these two ‘case studies’ Myanmar and Neymar mentioned above.

Ghana is a country with huge potential to become one of the major economic powers in the class of Singapore and Malaysia but still grasping with basic economic fundamentals like inflation, unemployment, energy and water supply, salary adjustment and the rest. We are all aware the transformation which rapid economic, political and social development could bring but what do we need to do beyond all the media ‘unguided’ criticisms and abusive tendencies of our people usually meted on political leadership of the country for failing to deliver  to them expected economic dividend of democracy?

We always receive with excitement the news of the World Bank and IMF reports stating that Ghana’s economy is expected to grow at an average of 13.5% per annum but at the end, the actual achievement is always at a wide variance with the realism. The reason is very simple potential is not always equal to actual. Nobody succeeds by accident, as no accident is a success. ‘I’ve tried to think about what really is crucial to the successful transition from emerging/frontier economy to developed nation. I have come to the conclusion that like any successful building project, the success is in the foundations’ says Michael A.

There are five key foundations which all emerging economies need in order to facilitate success: I will borrow some of the points used by the original writer and try to relate it to our Ghanaian context.

  1. Consistent and fair rule of law. No emerging economy can succeed without the help of international businesses and investment. In order to attract the right type (long term) of foreign investment it is crucial to create an environment that international firms are comfortable operating in. This means ensuring that there are clear and actionable laws on contracts, clear property ownership rights, a system which allows for the mediation of disputes and transparent rules and regulations on the repatriation of money. We need to look at our laws more critically and remove or ‘kill’ those that inimical to economic growth particularly those regulations that prevent repatriation of money either in form of dividend to corporate bodies or the SSNIT regulation that compels expatriate to make compulsory contribution to SSNIT when we know that the process of withdrawing the contribution may not be smooth more so the contributor may have return to his/her home country after completion of his mandatory period of service with his or her employer.
  2. Have a clear plan and stick to it. A great success of China’s emergence as one of the world’s leading economies over the past two decades has been its steadfast commitment to creating and executing a series of five-year-plans. As a business if you look at the plans you get a very clear sense of where the country wants to go, where it sees a benefit of foreign investment and where it does not and how it plans to reform regulations. This sort of certainty is invaluable to international businesses and investors. The Ghanaian government must take steps towards this. Taking a cue from the holy book. ‘Any enterprise is built by wise planning, becomes strong through common sense, and profits wonderfully by keeping abreast of the facts’. (Proverbs 24 v 3-4 TLB). Our five year rolling plans must be devoid of political gangstersrism. Unguided criticisms on the basis of someone want to gain cheap political points cannot solve the problem. We need strong people with proven track records to implement the plan. As we know implementation is key to the success of any plan. Planning alone cannot achieve the desired result but actual working it out. This means that we need people from different political divides to roll up their sleeves and give it their all to see the plans succeed.
  3. Financial capacity. Strong financial system is the bedrock of any strong economy. Business needs access to finance so it can trade, obtain loans to fund projects and have the ability to efficiently pay salaries. This financial sector must be well capitalised and must work under sound regulation which is capable of supporting the economic agenda of the country.Financial sector is the lubricant or the engine oil that lubricates the economic engine of any nation. We must see to it that government policies are geared towards ensuring banks and other Financial Institutions play their intermediation role properly. Businesses must have unhindered access to credit. All the impediments hampering easy accessibility to business financing must be pulled down.There is also the need for capacity building in the financial sector. Training of more people with sound financial understanding to render business advisory services and consummate big ticket deals like Merger and Acquisitions, portfolio management e.t.c This will also accelerate growth and develop professionals with relevant competencies to work in the financial services sector.
  4. Focus on productive infrastructure. The investments which will return the greatest value to an emerging economy are the ones which the government makes or facilitates into key infrastructure which supports growth. Power, water, aviation, ports, roads, all of these things will make it easier for business to prosper in emerging economies, businesses need to be able to get goods in and out of the country, and manufactures can do nothing without power and water. The need to increase the volume of FDIs (Foreign Direct Investment) into the country must be stepped up. Policies that also encourages Ghanaian living abroad (particularly sportsmen and women) to repatriate their money to the country should be fully encouraged so that from different angles foreign exchange is coming in. In addition to the point above is the issue of bribery and corruption. There should be a deliberate war against all forms of bribery and corruption in all facets of the economy. The Anas’s kind of story should be a thing of the past within our public institutions and government officials should leave above board.
  5. Prepare the workforce – with a good education. Education holds the key to long term success. In order to grow we will need suitably qualified graduates. The better the education system in a country the better its prospects in the long term, a better educated workforce will bring better and well-paid jobs. China again is a good example; in the next few weeks seven million new graduates will enter the Chinese workforce – continuing to fuel China’s transformation from a manufacturing to service economy. We need to design a module or a curriculum where by top business executives are involved in the training of our final year students. Particularly those that are in business and social sciences class to have a series of lectures on expectations of the business world from the graduating students. CEOs, Executive Directors and CFOs of Ghana club 100 can have a scheduled roaster for these institutions through the coordinating ministry, Ministry of Education as part of the CSR (Corporate Social Responsibility) to give lectures at various schools for the final year students. This one year practical lecture should be able to mould these graduates as well baked individuals ready to step into the world of business in a module that can be titled from ‘Campus to Corporate Board Room’

In his concluding remarks he said it is very easy to be excited about the potential of emerging economies, it is in all of our interests for economies like Ghana to be successful and I believe business has a key role to play. These foundations are not a blueprint for guaranteed success, but each of these, which business can play a key role in implementing, will have a significant impact on the sustained success or otherwise of an emerging market like ours.

Mike Osikoya
He is an Accountant and Banker and leaves in Ghana