I’m sure the scenario I am about to paint here should give you an early understanding of the title of this article.

Let’s imagine a fresh graduate who is about 25 years old. He got a good job in a well paying organisation after two years of waiting and roaming around looking for a job. His starting salary is GHc2,000 per month meaning that his annual salary is Ghc24,000. He secured an apartment for two years in a very nice area of the town befitting his new status. He planned to enroll for his MBA program same year that will cost him about GHc15, 000 in order to stay competitive on his job. He wants to buy a car of about GHc15,000. He has dependant relatives that he needs to support with school fees and upkeep allowances. He is also planning his wedding same year and expects the woman to deliver twins after the first year of marriage and finally, he is looking for a land to start a building the following year. Remember his annual salary is only 24,000. In two years he is expected to receive about GHc48, 000 assuming this is his net salary.

Can this young man salary support all this above mentioned capital /recurrent expenditures? If he embarks on these massive ‘projects’ as we have them here, two things are likely to happen. First, he would be perpetually suffering from illiquidity. He would constantly be a net borrower from friends, colleagues, his employer and wife to be.

Secondly, if he cannot get enough money from these sources, he may resort to looking for other means of helping himself by trying to cut corners at the office to meet his superfluous and self imposed financial distress or engaged in sharp practices. What this young man is doing to himself is what financial experts refer to as overtrading.


Overtrading often occurs when companies expand their own operations too quickly aggressively. Overtraded companies enter a negative cycle, where an increase in interest expenses negatively impacts the net profit, which leads to lesser working capital, and that leads to increased borrowings, which in turn leads to interest expenses and the cycle continues. Overtraded companies eventually face liquidity problems and/or run out of working capital.

If this is technical, let us try to simplify it. Overtrading takes place when a business accepts work and tries to complete it, but finds that fulfilment requires greater resources of people, working capital or net assets than are available. Overtrading is a common problem, and it often happens to recent start-ups and rapidly expanding businesses. Cash often has to leave the business before more cash comes into it.

A situation in which a company or country is growing its sales or infrastructures faster than it can finance them. This usually leads to enormous accounts payable and lack of working capital to finance operations.

In a nutshell, it is doing too much, too quickly, with little resources.

Ghana economy can be likened to the scenario we painted above for the fresh graduate who wants to do many things within the shortest possible time but with little resources.

That leads us to the question whether a country can overtrade like an individual or a business? Yes, it is possible for a country to overtrade. If it is possible at the micro level it is also possible at the macro level. The relationship between the two is that one is small and the other tends to look at the ‘big picture’.

In our elementary economics, we were told that a country can suffer a balance of payment deficit if it imports more goods, services and capital than it exports. This may be good for a while, so that the country can fuel economic growth. However, if it continues for years, then the country may be seen as a net consumer or net borrower as they say in the money market transactions. Eventually, other countries may wonder if their investment will pay off. It may even lead to such countries being termed Dangerous Financial Zone (DFZ) you will recall that at heat of the financial meltdown some countries were labeled as DFZ.

Just as individuals or corporations get into overtrading position as explained above, a country can walk into overtrading situation by ‘aggressive’ development or growth agenda that may not easily be supported by strong economic fundamentals. This is the issue we are facing here. Unfortunately there is no equivalent productivity both at the micro and macro economies level to support the over aggressive growth agenda of both past and present governments.

The challenge

Over aggressiveness in developmental approach

For some of us that are careful enough to know what is happening, there is always a political undertone to the over aggressive developmental agenda of each successive administration in the country. There is this inclination on the part of each successive leadership of the economy to always want to prove a point that we outperformed our predecessors in terms of achievements and projects executed.

In the process of doing this, caution is thrown to the wind. There is no restraint or cautious optimisms as to which area we should focus on that will benefit the economy more. Every area is always important to them whether there is resource to execute it or not. To ensure we complete some of these projects within the tenure of the administration and before the next electioneering campaign, there is always compelling pressure to embark on endless borrowing both from the local and International markets. As at the end of February 2014 the country’s total public debt stood at a whooping Ghc56b. this is outrageous and unexplainable. For a financially shrewd person it is not the quantum of the debt that is scary but the ability of the country to pay back is a concern.

In the last few weeks we have heard calls from some strong members of the ruling party calling on Mr. President to fire the Honorable minister of finance for non performance because of the current state of the economy. In my place they say cutting off the head is not the solution to head ache. We need to be sincere with ourselves that we cannot continue to be a consuming nation and expect the country to continue to be strong. There is always a level you get to that the reality of your reckless will hit you on the face. For a drunker, two three bottles of beer may not cause any serious  problem but be sure when it gets above the tolerance level, he can fall asleep on a public transport and wake up at the end of the line.

We have taken too much of financial alcohol in terms of borrowing and some reckless decision in paying more than what the economy can support in form of salaries and wages to public workers and we cannot but suffer the brunt. Calling for the head of the Finance Minister is a medicine after death. If you remove him the problem will not go away.

If we are paying 15% of Ghc56b yearly as interest to service public debt how much is that in cedi terms? That is a whooping Ghc8.4b that is almost 9% of the GDP of 93.5b per Gross domestic product 2014 released by Ghana Statistical Service. The public wage bill we are told accounts for close to 70% of government expenditure. These two alone have taken close to 80% of the total expenditure if not more. Where do we get money to meet other competing infrastructural needs and ministerial funding?

Besides, what can we pinpoint as those assets that represent this huge borrowing on our nation’s balance sheet? If you ask Mr Tepker the Chief Finance Officer of the state to tell us what this Ghc56b represent on our financial statement. In capital market operations they call it facts behind the figures. (This is an expression they used for corporations to explain what brought about the figure they shun out as their performance for a particular year).   I am sure he would need the assistance of all the previous Finance Ministers to come to his rescue to account for their own respective regime portion of the figure even if he is able to answer correctly for this current administration.  I am sure it may be very difficult for him and others who have served in the same capacity to accurately point to those significant projects that accounted for this huge debts.

I don’t know how many of us that has been following government ongoing project and the ones nearing completion. I may not have the full dossier but I can tell you we are putting too many sticks into the fire at the same time.

Let’s start with Gas Infrastructure project at Atuabo to be complete in May 2014, Expansion project of the country Airports in Kumasi, Takoradi and Accra, building of 200 secondary schools across the country, the LEAP Project, The aggressive roll out of Community Health Improvement Compounds (CHPS), Equipment supplies and Rehabilitation worth about Ghc276m at Korle-Bu, The controversial Ridge Hospital expansion projects, the proposed free secondary education starting in 2015.  The Youth Enterprise Support (YES) and not forget the Black Stars world cup project, avalanche of road constructions going on simultaneously at various part of the country. These are just few of the unaccountable number of projects that the administration of President Mahama is undertaking at the same time with the little resources available to the state.

The Impatience of African Man

It is a good thing to want to catch up with others, particularly those that are well advanced in terms of achievement. At the same time to create impression to the populace or electorate that your government is doing so much to improve your lot. That is a laudable idea but it usually comes with a price.

Unfortunately, the price is far higher than the benefit envisaged by the people in the authority. The people we are trying to ‘impress’ or satisfy are not patient to follow the progress government is making with such an open mind. I think the worst culprit here is the ‘fourth estate’ the press. They are quick at comparing one government to the other. They set the public against the government in power through their information networks without having full grasp of what it takes to run an administration. What you hear on their air waves is that the government is not performing or they cannot see the effort being made to add significant value to their lives. If people are not having money to buy themselves decent foods it is government to blame. We are educated but some of us still speak like illiterates. Education itself is not only going to school to learn how to speak good English and ask provoking questions from your interviewee on radio.  It is more than that. I think education is the act or process of imparting or acquiring general knowledge, developing the powers of reasoning and judgment, and generally of preparing oneself or others intellectually for mature life.

In our impatience to catch up with the so called developed economies, in real sense of it there are no developed economies. There are advanced economies or developing nations. If you are developed do you need further development? What is needed then is maintenance but all over the world government is still striving to improve upon systems and achieve much growth. That is why every country measures her growth rate each year. We often forget that growth and development is a process. It is not a thing we jump into or rush into. We mature into it through painstaking effort and discipline.

I think this is where the country got it wrong, we want to impress and tell our people that our own government is better than the previous administration because we want to have something to point at during the next electioneering campaign that we did that is significant. That is a good thing to do but it must be done within your reasonable means. They say you don’t cut off your nose to spite your face. Just to prove a point.

Nation building is not like that you plan your growth through strategic planning.    That is why if you see countries that really enjoying growth, countries like China, India and the rest. The strategic direction is clear to all their people and even the international community. It may be a twenty years strategic plan broking down into a 4 years rolling plan. There is no unnecessary competition in terms of socio economic developmental programmes. It is enshrined in their white paper, clearly documented and it is the working document for the government of the day. Even if the political power changed ten times it doesn’t affect the strategic direction of the country. It is only the personnel that changed the vision and the programme is a going concern. This is what we must put in place in our country to ensure that we do not have this ‘mad rush’ to achieve everything within a tenure of a political party and whatever that is not completed within that administration becomes abandoned project with the next administration even within the same political party.

Nation building process is going concerns like accountants always say when they described a limited liability company. It is not a one off transaction like our press people are making it to look like. As a leader, if you are not very discipline, cool, calm and calculated in terms of your policy direction, the press may stampede you to take panic measures that will eventually backfire in the nearest future.


First thing I think we should do is to slow down, speed kills. I think we often here that from the road safety people that you don’t travel at a break neck speed and expect to arrive safely. A good step at a time through strong strategic planning can help us realize our dream of great Ghana without causing financial distress to the people and the state.

Secondly, our press should assist government in power to establish areas of priority and high light these at every opportunity they have to talk to the leadership of the country. They should also educate our people that no government can meet their need 100%. We must encourage our people to be productive, diligent in their work, use their head to get ahead and be constructive in their criticism.

The third suggestion is what Mr Tekper is doing that some people are not happy with and that is strong financial control. Closing the loop holes and blocking all the leakages that is avenue where money are slipping out of government covers in terms of bogus contracts and wanton stealing by public officials. This is what he called home grown solution. These are measure in the right direction but because his agenda is ‘business unusual’ many politicians are not finding it funning that they are in this government and they cannot get phony contracts to execute to make easy money that’s why the call for his removal.

There is need also for debt rescheduling or outright cancellation if possible. Government may have to engage specialists in this area to work out debt forgiveness arrangement with our foreign lenders in order to have a bit of respite or breathing space because this debt is choking.

Finally, this similar thing happened many years ago. In my curiosity to find out if a country can suffer overtrading. I saw a write up in the New York Times published in November 9, 1862. I want to use the concluding part of that great write up to close this thought provoking article.

‘A continuous rise of prices has for more than a year been taking place in a large class of articles. Let not the prudent caution of our merchants be relaxed by this. We are in a position where every influence tends to overtrading, but where overtrading can produce only ruin. The country may have the great commercial prosperity which Great Britain enjoyed during a large part of her Napoleonic wars, but our people must not and cannot endure a period of disaster brought on by overtrading like that which filled that country with gloom during the distressing years of 1810 and 1815. A little caution now may save us from incalculable suffering in the future.’