Advancing “Better Ghana” In the Wrong Direction
Feature Article of Tuesday, 5 March 2013
Columnist: Baafi, Alex Bossman
By Alex Bossman Baafi
The departure of the NPP administration ussured in the NDC government with a big welcome by people who had yearned for change, not for change sake, but change for a “Better Ghana”. Hopes were raised and many thanked their stars because the late President Mills, who propounded the Better Ghana Agenda to improve upon the well-being of the mass majority of the people, had taken the mantle of leadership of this country.
More than four years under the “Better Ghana” dispensation, many are worried because the Better Ghana promise is fast becoming a mirage. Anatomy of failures under this Mahama administration had made many good people of our country dejected because things have changed from good to bad and is fast heading towards worse. The situation now is rather heading in the opposite direction of the better conditions promised by this government. For the NDC to promise a Better Ghana when in opposition was an indicative of the fact that they accepted that there was a Good Ghana under the NPP Administration.
There are a host of factors that have made life “Bitter” instead of “Better”, but for want of space, I will raise a few of them for you to evaluate and be the judge.
The stock of our public debt now has worsened the economic hardships of many people of our country. Debt is borrowing money from outside source with the promise to return the principal in addition to an agreed – upon level of interest. Although debt tends to have a negative connotation, startup companies often, turn to debt to finance their operations. The most popular source for debt financing is the bank but a private company or even a friend or a family member can also issue debt.
In much the same way, a government can also result to debt financing to prosecute its development programmes and our country is no exception.
One advantage of debt financing is maintaining ownership. That is when you borrow from the bank or another lender, you are obligated to make the agreed – upon payments on time and that is the end of your obligation to the lender. However, there are also drawbacks to debt financing. As mentioned above, though your sole obligation to the lender is to make repayments but the unfortunate thing is that even if your business falls or fails, you will still have to make these payments. You may also have to pay higher interest rate. Interest rates will vary with macroeconomic conditions, your history with the bank, your business credit rating and your personal credit history.
Our nation now is in serious debt. The fact of the matter is that, the rate of growth of public debt of our country is a matter of concern to the good people of this country. The total debt of this country increased from $3.9 billion in 2008 to $7.1 billion by 2011 showing an increase by 82%. This is excluding the $3.0 billion China Development Bank loan and many others that had been borrowed thereafter. The country’s total public debt has increased from GHc 9.6 billion in 2008 to GHc 33.5 billion by the end of 2012 just within 4 years of this NDC Administration. Financial analysts believe that the stock of public debt that has been accumulated within this short period of Mahama administration is higher than the stock of public debt accumulated by all the governments since independence up to the end of Kuffour administration in 2008. That is shocking.
What is making many Financial Analysts worried is that it is very difficult to identify productive infrastructural projects that this huge borrowed money has produced that guarantee smooth repayments when they fall due. If this argument is anything to go by, then we are being reckless with our debt financing because we are simply mortgaging the resources of this nation to our lenders and that will deny the future generations of this country to lead any meaningful socio-economic lives. Huge size of the borrowed money have ended up in certain individuals’ pockets through corruption and inflated contract prices.
Prudent “leverage” practice requires that even if you plan to use a loan to invest in an important asset or infrastructure as in the case of a nation, you need to make sure the asset will generate sufficient cash flows by the time repayment starts. In addition, you will be required more often than not to put up collateral on loans in case you default on repayments. Most of our lenders demand certain conditionalities that are inimical to the well-being of our people.
The Highly Indebted Poor Countries (HIPC) initiatives opportunity came but once. Therefore, this government should not mislead us into thinking that the country can afford to go to HIPC one more time, never. The mad rush to borrow money for political expediency by embarking on not thought through shoddy projects just to win elections through the ballot box does not make economic sense to me.
In my opinion, we must work hard as a nation; make judicious use of our resources by investing in quality infrastructure whilst fighting corruption seriously. We must eschew the habit of borrowing all the time.
Under the better Ghana, the vast majority of the people have been worse off economically. Erratic supply of fuel like gas has disrupted many businesses including the hospitality and transportation. Many had suffered reductions in their incomes under this government. Our people living in the villages find it notoriously difficult to get access to regular supply of kerosene and gas. Our fisher folks are still suffering from high cost of pre-mix fuel under this government.
Just recently, the government increased the prices of petroleum products up to 50%. Gas, which many believe to be economical, went up by 50% but it is not even available in sufficient quantity on the market. These increases show how the government is resorting to desperate and panic measures to raise revenue to fill the national coffers because the nation is going bankrupt.
The dumsor-dumsor, the energy crisis, we are going through is because Mahama administration cannot find money to purchase crude oil to fuel the Thermal Power Plants in the country to generate enough power to supplement Akosombo dam. This is because the government is not credit worthy. I have not even mentioned non-availability of water and power and their adverse effect on our Homes, Schools, Hospitals, and businesses in the country. How can the government convince the good people of this country that there is a Better Ghana instead of Bitter Ghana and it is being advanced in the right direction?
Excessive borrowing, profligate and reckless unproductive spending we experienced under Mahama Administration during the 2012 electioneering campaign had led to rationing of water, gas and electricity. There is mass unemployment, filth, diseases, broken-down and unfinished infrastructure, poverty and underdevelopment which have thrown many in a state of despair and hopelessness. We are on our way to HIPC again and fast becoming slaves to the Chinese and IMF because of debt.