Addo's economic plan: what else is new?
Emmanuel A. Annor
Jerry Rawlings seized power ostensibly to make life more bearable for the common man and to redistribute equitably the wealth of the country. Experience in government has probably taught the PNDC that the problem as they identified it was not that simple.There is nothing substantively novel about the strategies for economic recovery proposed by Mr J. S. Addo, Governor of the Bank of Ghana as reported recently. The significant thing is that his proposals are being allowed to air at this time. The essentially capitalistic nature of the strategies, namely, the notion of privatisation, profit, and de-emphasising the state sector, are all strategies that have been tried before.
In fact, for the governor to point to 1967, and 1972 as the only years when we had "some courage" to devalue the cedi, is in essence to vindicate the pragmatism that underlay the Afrifa/Busia economic plan. Mr Addo is essentially suggesting that by failing to face the economic realities of the times, we have postponed the inevitable, hence the huge devaluation in 1982, and the continuing floating of the cedi.
The rehashing of this well-known conventional economic wisdom will amount to very little, except for the serious political consequences for the PNDC if it were to stick out its neck to adopt the programme. Remember that Jerry Rawlings seized power ostensibly to make life more bearable for the common man and to redistribute equitably the wealth of the country. Experience in government has probably taught the PNDC administration that the problem as they identified it was not that simple. While the question of equity and social justice remains moot, it will be interesting to observe how government will react to the proposals.
But assuming that this considerable private participation becomes government policy, to what extent is the poor man in the street going to be protected? Clearly, initial capital outlay for private investment may not be readily available to the poor farmers even if they had the best intentions to extend their acreage. Similarly for the urban dweller, the lack of collateral may not make them likely candidates for loans if they wished to return to the land. The likely beneficiaries of the proposed plan will be the very maligned 'rich.'
Another interesting development is the several thousand government employees who have opted to go on voluntary retirement and be paid their severance emoluments. If this voluntary departure is to enable them to engage in private ventures, ostensibly farming, it is likely that they will have ready cash for investment, thereby creating a new class of monied people with the potential to exploit those who are not so advantaged.
Two issues lend themselves for analysis here. First, if these new retirees decide to really go into farming, what will be the effect on land tenure and small holders? Second, if they fail to farm but rather invest their money in the retail trade, and thereby unleash their new incomes into the economy, what will be the impact on inflation?
In spite of all these issues, Mr J. S. Addo's proposals are bold. They probably point to the fact that we have wasted a great deal of time dabbling in rhetoric that has had the effect of pushing us downhill.
Another strategy proposed by Mr Addo is trade liberalisation under which price controls will be lifted and those who have foreign exchange will be allowed to import into the country whatever they can afford. On the surface of it, this is a very rational programme. But that is not to say that it will yield the results anticipated by the governor. The predicted outcome of the policy is based on two false assumptions: First that Ghanaians, presumably those outside the country, have the requisite foreign exchange to bring in goods in substantial enough quantities to enable the government to earn income from taxation.
Second, such a strategy will put enough goods on the market in a way that will enable market forces to determine prices. While the first assumption is yet to be tested, it is reasonable to surmise from past experience that the foreign exchange branch of the commercial banks and the Bank of Ghana are going to be swamped with petty traders who will hustle for their foreign exchange allocation in order to bring in a dozen tubes of toothpaste to sell at the Makola market. The other effect is the promotion of the already viable black marketing in foreign exchange since the profits to be raked in outstrip the risks.
The fallacy of the second assumption lies in pure economic common sense. Because of the erratic behaviour of our present and past governments, traders have become adept at conserving whatever consumer items they have in storage, or withdrawing them from the market in order to maintain high prices. But even if these assumptions were correct, to what extent will the 'new' system differ from the Special Unnumbered Licence introduced by Acheampong and abused by the kleptocratic military oligarchy? What guarantee is there that the Middle Eastern and Asian merchant community won't once again take over the retail trade and thus deprive Ghanaians of "capturing the commanding heights of the economy?"
In spite of all these questions, Mr J. S. Addo's proposals are bold. They probably point to the fact that we have wasted a great deal of time dabbling in rhetoric that has had the effect of pushing us downhill.
However, as mentioned earlier, the political implications for the government if it pursues those policies may be disastrous. For the left-leaning ideologues of the PNDC: the NDC, the June 4th Movement, the Kwame Nkrumah Revolutionary Guards etc, etc, are going to balk at this highly rightist economic strategy. Maybe the smart thing for them to do is to follow up their rhetoric of scientific this and scientific that with their own concrete proposals. That way something mixed could be tried. Otherwise, sooner or later their screams will amount to nothing.
The next stage in all this development is the creation of the safe political environment in which this privatisation, this pursuit of profit, and this concern for recovery can take root. As abstract as the concept of a 'safe political environment' may sound, it is certainly crucial for the success of any economic strategy. The plain truth is that the people are scared. Not that they are naturally cowardly.
Rather they are appalled by the arbitrary behaviour of the Rawlings worshippers, who have a history of taking the law into their hands and escaped the consequences in most cases. The uncertain environment created by the apparent lack of a credible authority to resort to when one has been violated by one of the several PNDC organs scares the talented away from contributing to the development of their own country.
As an illustration, take the case of Akwasi Adjei (not his real name) who after working in Germany for more than 15 years, saved enough money to purchase reconditioned printing equipment. On arrival in Ghana, he was harassed by the Port Officials who apparently had been inundated with so many conflicting regulations that they did not know anything better than applying their arbitrary interpretation of those regulations. After fruitless efforts to take delivery of his luggage, he returned in frustration to Germany for good, cursing his motherland in the process. There are many such human dramas, some of which have been highlighted in the column 'A Touch of Nokoko' that make people, especially those in self- imposed exile, afraid of returning to their God-given land.
One may speculate that the PNDC after coming to terms with the realities of national development will pursue the path of so-called pragmatism. The extent to which it will be able to balance the countervailing demands from all sections of the Ghanaian policy will determine whether they are learning the lesson of government through practice. Even more important, they will be confronted with the challenge of ensuring that the gap between rich and poor does not widen in their efforts to rectify the economy. I tell you - it's hard.
