Business in Ghana

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If Tomorrow Never Comes. Critical News, 20th July 2014

Posted by Business in Ghana on July 20, 2014

Sydney Casely-Hayford,

Readers bear with me a few lines while I share a personal tragedy.

Twenty-five years ago next month, I lost my father.  I was living and working in the UK, a long sojourn abused, while I tried to make life out of a Margaret Thatcher deteriorating economy.  Interest rates were soaring way above realistic levels, the British economy was tottering and there was very little solution as Thatcher clung on to bad economic advice, her principle, “no turning back” despite the obvious signs of collapse.

Suggestions came from Labour but the political adversity was such that bashing Unions and weakening the Union front was more important to the Tories.

I wasn’t in the UK-political fray at the time, struggling to keep my household finances together albeit unsuccessfully.  I learnt many lessons in that time, came close to filing for bankruptcy.

I had been talking to my father frequently that year, there was glimmer of easing, talk of Thatcher stepping down and I made a commitment to be home in July, all things equal.

June came, and I was offered a decent three-month contract, which would give a significant boost to my fortunes.

I called home and Daddy reluctantly accepted a date change to October for my trip back.  It is my birthday month and we planned my three-week visit with business and recreation through my birthday.

He died August 6th, suddenly, after a long day working in the field on a documentary he was filming on the HIV Aids virus.

The next ten years were a hellhole as I struggled to come to terms with guilt, that had I made it home that July, I might have postponed his life a shade longer.  And I still hold to the belief, but with a lighter heart.

Now part two.  A year ago, I made a 60th birthday celebratory trip to Cape Coast, to my cousin Victor Degraft-Hayford.

Victor and I, we have been friends since childhood, I am as academic as he is a brawler (we nicknamed him Diggy Thunder) and our bonded day to day life was fashioned around me helping him with math and science and he gave me fist-cover when it was warranted.

Weekend before Republic day, Victor died from a heart attack.  I had postponed at least six trips in the last three months to the Hayford Lounge, which he run with his wife Utah in Cape Coast.

I am again going through familiar stages of regret, calling on coping mechanisms learnt from a very tragic past, twenty-five years ago.

But with all this on, I made it a point to listen to Finance Minister Seth Terkper and his review of the state of our economy in the first five months of 2014.

The after press conference was more meaningful than the delivery, which bordered close to JDM’s un-inspiring floor deliveries.  What I find similar about the two is their ability to converse better than they do presentations in formal settings.

I have had several conversations with Mr. Terkper and he is always engaged and animated on a one to three or four.  The floor of Parliament seems to either intimidate or make a joker out of the Executive.  Remember?

But what was the thrust of the statement?

The Minister came to the floor to explain missed targets of 2013 and even worse off-targets between January and May 2014.

What was glaringly unsaid in his delivery was any reference to events in 2012, which I think is the cause of all we are going through.  The Government does not want to admit it and there is this consistent harping back to Single Spine and some related expenditures, which they prefer to proffer.

The point of the matter is the NDC spent a huge load of cash in the six months to the elections.  They also issued a huge load of Treasury Bills and borrowed a huge load of money from various “non-banks”.

Then they processed a huge load of corruption through GYEEDA, SADA and other, which must have been siphoned in various ways.  Other than this, there is no toothsome reason for what we have to contain now.

Government’s explanation for missed 2013 targets are simple.

Lower import volumes and thus low import taxes, decline in gold and cocoa prices and thus low corporate and mineral royalties, a general slowdown in economic activities, and low tax compliance.  On the flipside, better oil production and prices cushioned the down drift.  But, our donor partners held back 42% of support.

In 2014, the decline in gold prices, implementation issues of some revenue measures, a slowdown in economic activity, rising interest rates, implementation of the COLA agreed with the unions, slow implementation of utility and petroleum price adjustments and the exchange rate depreciation derailed the budget targets completely.  And there is 69% of withheld donor support.

Other than the market determined prices of gold and cocoa, every failed target is NDC-made.  Policy decisions despite good advice provided by opposition and independent contributors and the consequent fallout, is a choice made for revenue and expenditure.

The Government has requested ghc3.2billion in additional spend, offering to bring in ghc173million.  And even this revenue is premised on hope that the donors will come through.  Not likely.

In 2014, donor support was down by 69% budgeted at ghc1.13billion.  The supplementary budget raises the target to ghc1.39billion despite the shortfall in the first half of the year.  The increase is ghc260million.  If this falls short, as it did in 2013 too, the ghc173million becomes a mirage.

To fund this deficit, Government intends to borrow from the international market and also from the domestic “non-bank” market.  It will make up the difference from the stabilization fund.

I can’t exhaust all the issues in this article, so I have decided I will do a more financial piece later in the week.  There is so much wrong with what we are doing and the answer is simple.

We need more revenue for sure, but even better to cut the expenditure.  And we should do both.  The answer is in how we handle the education costs and the Informal Sector.

Let me repeat myself, Government MUST take a closer look at education funding and pull out of managing schools.  Sell or agree a management contract for SHS schools and we could shave off close to ghc4billion in salaries and allowances.

Then formalize the informal sector, and rake in another ghc2.5billion (my calculations)

I have suggested this solution many times but I guess not being a card-bearing member of “Our Great Party” is a bad rap.

As for the Minister reshuffle, I couldn’t care less.  Spio in, Ahwoi out, Kabuki in, Bagbin back, makes no difference to the equation.  Same old non-performance.

Toma Imihere, a fellow panelist on “The Big Issue” on Citifm and editor of the Business Finder, mentioned that the Bank of Ghana (BoG) had changed the traditional content of their MPC report and taken out portions that could explain why there is a run on the cedi, which could be a result of capital flight and a growing gap in Government’s current account.

It made me wander to the BoG website to look for the Composite Index of Economic Activity, which is one of the better insights into what shapes the policy rate and explains the state of the economy in a more telling way.

It was gone, together with some history of the T/bill rates, not considering the gaps in essential publications.  Very sneaky and shameful.

We are hitting the streets with the Trades Union Congress (TUC) coming Thursday.  Organised Labour are yet to deliver their frustrations into the lap of Government, unlike the #OccupyFlagstaffhouse group who already made their point and are in the wings waiting for a Government comeback.

So TUC please join the queue and wait your turn, we have to take this in “dabu-dabu” fashion, one “dogodogo” line.

This Government is asking us to once more wait until they solve the impossible situation they have created with policy decisions they made.  They are asking us to postpone our life until they incompetently deliver solutions.

If you inconsistently budget and consistently return below targets.  If you do this for four continuous years.  If you incessantly come back to say there were circumstances beyond your measure, I say you are not tall to the task and we cannot accept that you short-change the citizenry for tomorrow.

I have learnt some hard lessons with personal tragedies.  I don’t believe in postponing and waiting for anything anymore.  What if tomorrow never comes for you?

Parliament rose a week early on Friday without extensive debate on the mid-term review.  Could it be the Government is struggling for cash?  Surely not.  Just “short term temporary challenges”.  They did not disapprove the extra spending of ghc3.2billion Government requested.

Should we blame those addicted to borrowing or should we censure those who approve their habit?  Methinks Parliament is letting us down.

Ghana, Aha a ye de papa.  Alius valde week advenio. Another great week to come!

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