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“The bad economist sees only what immediately strikes the eye; the good economist also looks beyond. The bad economist sees only the direct consequences of a proposed course; the good economist looks also at the longer and indirect consequences. The bad economist sees only what the effect of a given policy has been or will be on one particular group; the good economist inquires also what the effect of the policy will be on all groups.”-Henry Hazlitt
It is almost 6 years since the Akuffo-Addo-led administration assumed office. In a democratic dispensation, one cannot downplay the role manifestos play in influencing voters. As convincing as manifestos may sound, whether in rhetoric or quality of ideas, they have consequences.
The purpose of this series beginning with this article is to bring to light some policy incoherence and the rationale for Ghana’s “two-steps forward, five-steps backward Babangida Boogie dance.” Secondly, to explore some ideas for sustainable economic development. Thirdly, to explore why socialist experiments keep Africa Countries like Ghana in the red ocean.
One of the concerns that emerged from the introduction of Ghana’s Electronic Transaction Levy also known as E-Levy is the economic repercussions and adverse impact on Ghana’s Fintech Industry. The government did not bulge despite the increasing agitation from the populace.
On 5th May 2022, the media space was filled with headlines such as: “E-Levy: Longer queues, more withdrawals at banks, ATMs” as reported by the Business and Financial Times. It was and has been a wake-up call on how the Mobile Money business is shrinking or better still an impediment to the growth of the mobile money sub-sector. In fact, the sub-sector lost GH¢10billion in value between November, 2021 and January, 2022 prior to the implementation of the E-Levy and currently, the government has only generated less than 7% of expected revenue.
It is worth noting that with such unproductive occurrences caused by the government, the banks would have been a point of rescue. Certainly not the case. One of the market women who double up as a single mother of three I met at the bank explained to me, that she has been at the banking hall with the hope of securing a bank account. She was left to her fate for not having a Ghana Card. She quizzed me on how she was supposed to fend for her family if she abandoned her trade for days, especially in a season demand for her products is on the rise. Throughout the discussion, one could tell from the glumness of her face and unapologetic rants how frustrated she was. Learning from a conversation with a bystander, she needed a flexible option, not insistence on the unrealistic timeline for issuance of Ghana Cards and a strict policy directive by the regulator that banks must adhere to.
Ghana has lost its path to building an inclusive digital economy. This is how the Ghana Card, which is a proof of identity, citizenship and residence of the holder is made to distort the entrepreneurial process no matter how good the intentions are. Through interventionism, the Government of Ghana creates unending inequality. Alas, the economist Ludwig von Mises has been vindicated again: “In a battle between force and an idea, the latter always prevails.”
In fact, with several calls unattended to and realizing the gross failure after the extension of the deadline for acquisition of the Ghana Card for re-registration of SIM cards, the Minister of Communication and Digitalization, Ursula Owusu-Ekuful in a Press Statement opined that: “Upon consultation with the industry and given the challenges enumerated above, I have very reluctantly decided to grant a final conditional extension.”
Contrary to the Minister’s directive is the CEO of the National Identification Authority, Professor Kenneth Agyemang Attafuah who has stated that the “NIA was not set up with a specific deadline. NIA is an organisation set up in perpetuity. What that means is that we are to deliver our mandate pretty much the same like the hospital or a maternity ward that people go there as and when they need to.”
He explained that the law that set up the NIA required it to conduct a mass registration within one year and get Ghanaians who turn 15 years and non-citizens the luxury to register.
Explaining further, Prof Attafuah said: “That is the scheme prescribed by law and that is the scheme we are implementing and we are doing so in perpetuity. There is no timeline and the intendment of the law is that people will go to the NIA at their leisure and pleasure to go and get registered and those people will be those who were not captured during registration.”
The question begging is, which of these approaches need to be adopted? The bottom-up approach, as permissible by law in the case of the NIA Boss or the Minister’s directive? Why the rush? Is this for political expediency or holistic socio-economic gains?
As argued with evidence by Daron Acemoğlu in his co-authored book “Why Nations Fail: The Origins of Power, Prosperity, and Poverty”, “Poor countries are poor because those who have power make choices that create poverty…Nations fail today because their extractive economic institutions do not create the incentives needed for people to save, invest, and innovate. Extractive political institutions support these economic institutions by cementing the power of those who benefit from the extraction.”
According to the Bank of Ghana, a directive seen on its website on 23rd August, 2022 stated, “In furtherance of its objective of ensuring the safety of the financial system, Bank of Ghana under Regulation 7 of the National Identity Register, 2012 (L.I. 2111), hereby directs that with effect from 1st July 2022, the Ghana Card shall be the only identification card that will be to undertake transactions at all Bank of Ghana licensed and regulated financial institutions…”
It’s important to note that, the NIA through its leadership has only expressed optimism that “a large chunk of Ghanaians out of the over 800,000 left will get their cards for the SIM re-registration before the new deadline.” This has not materialized yet.
How many businesses will be denied the opportunity to open company accounts because the NIA is yet to issue their cards? How many of them will miss out on funding opportunities because they may not have corporate accounts?
What about the employees at the banks who are unable to meet their targets because a certain directive from the Central Bank pushes entrepreneurs and customers away? Are we to expect mass layoffs from banks and other financial institutions because banks would soon be experiencing stunted growth which could cause them to cut the size of employees?
Already, by increasing the minimum capital required to set up banks, the Bank of Ghana has made it difficult for local entrepreneurs to operate in the banking space. By expanding the monetary policy, the Bank of Ghana has made it difficult for entrepreneurs to access cheap and flexible loans.
In times like this, one is bound to take a cursory look at Ghana’s constitution. Without digging deeper, is it not evident that some approaches adopted by those in power are an affront to the preamble of Ghana’s 1992 constitution?
Recapitulating the Preamble, “We the People of Ghana,
IN EXERCISE of our natural and inalienable right to establish a framework of government which shall secure for ourselves and posterity the blessings of liberty, equality of opportunity and prosperity;
IN A SPIRIT of friendship and peace with all peoples of the world;
AND IN SOLEMN declaration and affirmation of our commitment to;
Freedom, Justice, Probity and Accountability;
The Principle that all powers of Government spring from the Sovereign Will of the People;
The Principle of Universal Adult Suffrage;
The Rule of Law;
The protection and preservation of Fundamental Human Rights and Freedoms, Unity and Stability for our Nation….”
As a matter of urgency, the central bank must allow the use of other authorized identification cards whiles the NIA works on rectifying its own limitations.
Moreover, the E-levy from all indications is causing more havoc than good thus, its imperative government scraps the obnoxious tax.
In summary, as long as the power struggle continues, “this is the right solution” supersedes reason and perspectives, and decisions reflect the hope and aspirations of a few, not the masses, Ghana would still be in the red ocean which kills more aquatic animals (in this case businesses). In the end, citizens may not remember how many policies were implemented in haste but how these policies endangered lives and livelihoods or served as enablers for liberty and prosperity.